When I first started my private pay private practice, I set my rates in a very simple way. I looked at what a few practices charged and I then set my rate $10 lower. On the surface this sounds great, but imagine if I could have charged $15 more for my counseling rates.
At the time, the private practice was a side gig, I was doing 3-5 sessions per week. If each of those was $15, that’s $45-$75 extra per week. I didn’t raise my rates for about a year, so that’s $2,340-$3,900 in lost income, all because my rates weren’t aligned with my expertise and the community’s income.
Setting your private practice rates can often be difficult. It taps into a number of things:
- How much we value our own time
- Our own view of money
- Our sense of worth
- The way we see ourselves as a business vs. a non-profit
In this article, we’re going to touch on seven things to consider when setting your counseling private practice rates.
Target Market and Session Rates
In determining your rates, you first want to look a number of demographics in your area and your ideal client.
Macro Demographics of Your Area
Let’s first start with global things you should know about your area.
The lighter the color, the more difficult it will be to have a private pay counseling practice. It is still completely doable, but it takes some extra effort. You may also choose to have a mixed model (Take our Free 5-day course on adding insurance if you want to do this), where you take a handful of insurances.
Your Ideal Client and How to Set Session Rates
Next, focus on your ideal client. Who are they, what age, and who would they vent to if they had a problem?
Back to the question about local income, I often hear, “But my area is fairly blue collar, no one will pay out of pocket.” I’ll address this concern at the end, with the exact script I use, but here’s one thing to consider:
- How many people do you need for a successful practice?
- How many wealthy people are in your community?
- What kind of lifestyle do you want to live?
In this next section, we’ll discuss how to set rates based n the lifestyle you want to live.
How to Set Session Rates Based on Your Lifestyle
To determine this equation for setting your counseling rates, you have to determine a few things first, then we can run some numbers:
- How much money do you want to take home per year? (If you’re trying to leave your full-time job, use our How to Leave Your Job Calculator to help determine this number)
- How many weeks per year do you want off?
- How many days per week do you want to work?
- How many sessions per day do you want to do?
Say you want to make $60,000 per year, we’ll want to multiple that by an extra 40% to cover practice expenses and taxes (this is an estimate, talk with your accountant for a more accurate estimate).
- For $60k x 1.4 =You’d need $84,000 gross
- Divide that by 48 weeks (4 weeks off) = $1,750 per week
- Imagine you want a three day weekend, so you want to work four days = $437.50 per day
- If you want to do 5 sessions per day = $87.50 per session
I always recommend adding a factor of 20% to account for sliding scales and down weeks, since you may not always have 20 sessions per week. So that would mean that $87.50 becomes $105 per session.
Now use your own numbers to look at your “lifestyle rate.”
How to Set Session Rates Based on Getting Full
There are a few ways that tend to work in regards to getting full. The easiest is to have a lower price. However, when you compete on price:
- You can always get undercut
- You attract price shoppers, which is harder to scale
- It’s harder to make the case that you’re an expert, since non-experts charge so much more
That’s why if you’re just looking to fill your practice, I recommend knowing the local private pay rate and going $10 higher. This sets you up as an expert, but not so much more that it prices new clients out.
The Blink Model for Setting Session Rates
When I was working with a SCORE adviser (SCORE advisers as retired business professionals that voluntarily work with new businesses, it’s a great way to make connections in your community and get some free mentoring).
He asked, “How do you set your prices?”
I said, “I just keep raising them each year.”
“So you use ‘blink’?”
“You raise your prices until they blink.”
“I guess so,” I said.
On the surface it sounds primitive and like you’re trying to get the most out of the market. However, it’s actually a great way to find a sweet spot. What’s the most you can charge without leaving money on the table and also attract the most number of clients.
It’s interesting, I recently raised my counseling practice rates since my consulting practice was growing so quickly. My idea was that I wanted fewer counseling clients so that I could focus more on consulting and conferences I’m hosting this summer.
Instead of attracting few clients, I got five new ones! This rate hike wasn’t $5 or $10, I went up $55 more for my intake and sessions went up by $30. I’m now 300% more than when I first started Mental Wellness Counseling.
What’s interesting is how much more you can scale and focus on big ideas when you have fewer clients.
Fewer high paying clients helps you to:
- Really invest in each client
- Take time to dream big about how to create products or speeches that grow your message of hope for the world
- Feel healthier and focus on your own mental growth, which in turn helps your practice and clients
Let’s take that original formula and keep the finances the same of taking home $60k per year.
What are some other formulas for setting session rates?
- You could take two full months off if you charged $114.55
- You could work two days per week if you charged $210
- You could see three people per day if you charged $175
With all of these I only changed one factor. Think about the real life changes if you got a two month vacation, worked only two days, or says three people a day and took the afternoon off! What would your family life be like? What about deeper friendships? That’s not even looking at if you decided to work a little bit more, increase your income, influence,and impact on the world! (We’ll be going in-depth on this at Slow Down School)
How to Grow a Private Pay Practice
I want to conclude with some very practice tools to help you grow a private pay practice.
- A script for raising rates
- A script for a private pay conversation for your Intake Coordinator or you to use on a phone call
How to Raise Session Raise Rates
Throughout the year, I raise my rates for new clients. This is based on my schedule, new training and specialty, and desired growth. For example, if I was charging $175 for current session rates, I might text my Intake Coordinator, “As of today Intakes are $195 and sessions are $185 for new clients.”
All of the $175 and lower folks stay that rate for the rest of the year. Then, in October, I send this email:
Subject: Open Enrollment
During the months of November and December, most people have open enrollment for their medical benefits including HSAs (Health Savings Accounts) and FSAs (Flexible Spending Accounts). Since you are probably discussing FSA and/or HSAs I wanted to let you know that there is a small rate changes that will be occurring so that you may elect to add an additional amount.
As you know, I have been able to keep your rate below what new clients pay. Currently, new clients are charged $_____ per session. Similar to last year, due to an increase in insurance rates and other factors, I would like to move your session rate to $_____ on January 1st.
If this change will effect your ability as a family to receive services, please let me know. My primary goal is to offer quality services to help your family, that is why I went into counseling. Please let me know if this proposal seems reasonable. I look forward to continuing to work with you and your family!
I have literally never had anyone push back on this! Some people have decided to work harder to reduce their number of sessions and get done quicker, but isn’t that our goal? So by raising my rates, it motivated people to find more autonomy from therapy, what a great unintended benefit!
Intake Phone Call about Private Pay
Here’s the way a typical intake phone call is structured:
- Problem the individual is calling about with follow-up questions
- Normalizing the problem and the frequency we see that problem
- Pairing the problem with clinicians
- Finding times that work for the individual
- Discussing private pay
Start with listening to why the pre-client is calling for counseling. They may say something like, “My husband and I have been fighting more and we want to work on our marriage.”
The Intake Coordinator may say something like, “Wow, that must be a tough, what was it about the recent fighting that helped you decide to start counseling?”
After understanding the problem, seek to normalize the problem with a statement like, “A lot of couples come to us with similar issues, marriage can be hard.” Then pair the problems with the specialties of a clinician, “We have two clinicians that sound like a fit. Joe has been working with couples for 13 years, he has completed the Gottman Level 1 training. Also, we have Marilyn, who specializes in couples that have a history of trauma in their marriage or families. Do you have a specific day you’re looking for counseling?”
After the pre-client states the day, you might say something like, “Marilyn sounds like the best fit based on the days she is here and her specialties, would you like to schedule with Marilyn?”
Lastly, you’ll want to discuss being a private pay practice.
Here’s how I recommend talking about being private pay:
“We are a private practice that is considered an out-of-network provider. What that means is that you will pay for sessions and seek potential reimbursement from your insurance. Depending on your plan you may receive full, partial, or no reimbursement, so we recommend you contact your insurance about your plan. Just ask them about your out of network benefits. We decided this, because we were spending more time fighting with insurances to get paid for work we had done, rather than helping do counseling. Also, you can always use a Flexible Spending Account or Health Savings Account. Do you happen to know what your deductible is?”
“Since your deductible is $2,500 that means that if you see a counselor in-network from the limited list your insurance approves, you will pay the first $2,500 and that person will have to give you a diagnosis that will stay on your permanent record. Or you can choose your therapist and pay out of pocket. Does that make sense?”
At our practice, we don’t always do the entire script. Oftentimes, people already know that we are private pay, they don’t care, or they are more interested in our expertise. That is why you want your virtual assistant or Intake Coordinator to be trained to understand when to build rapport, when to explain out-of-network, and when to schedule.
The reason we start with start with problem, expertise, and scheduling is that it helps the client to feel heard and that we’re the best fit for them.
Final Thoughts on Setting Your Rate
When we think through our target market and then set rates based on our lifestyle, practice goals, and use the “blink model” it allows us to create a life of income, influence, and impact. As well, we then can live a healthier life, while building a practice that can scale and thrive in the future.
Lastly, being able to clearly articulate why being a private pay practice and your value is what will continue to set you apart from other practices in town. Now let’s go set your rates!
Meet Joe Sanok
Joe Sanok is the owner of Mental Wellness Counseling in Traverse City, MI. He is also a business consultant that helps counselors to plan, start, and grow a private practice. If you’re ready to scale quickly and increase your income, influence, and impact, schedule to talk with him about how to grow a practice.