Costs for starting a counseling practice in 2019

Costs for starting a psychotherapy practice

Costs for starting a psychotherapy practice

Updated February 2019:

Did you know that launching a successful psychotherapy practice is easy and an incredibly low investment?

You have done most of the hard work already- you have gotten a master’s degree, hundreds of hours of supervision and gone to weeks worth of advanced training. You have already made the most significant financial investment in gaining this clinical expertise that is wanted and needed in the world.

Now you are ready to start your own private practice AKA create a business out of your passion for helping humans heal.

Before we dig in, we want you to remember that most small business  invest tens of thousands of dollars into just basic start-up costs. A small training gym can easily spend $20k-50k on start-up, bakeries can spend $100k, restaurants $50k-200k, technology start-ups $10k-500k, and day spas $8k-80k. 

So, what do YOU really need to start a psychotherapy private practice and what are costs for each of those items? 

  1. A place to practice. That doesn't necessarily mean a traditional, full-time office. Therapists are practicing over the phone, doing walk and talk therapy, and subletting office space by the hour. Check into subletting when starting your private practice, many therapists find they can get started for under $100 a month if they research and negotiate well (that number can vary based upon your area). Subletting means no need for décor, couches, etc. Some will even let you graduate up- meaning you only start paying for the space when you begin to get clients. (I didn’t pay a dime for office space prior to seeing clients, and then paid an hourly fee up to a max of $75 a month for renting a space a couple night’s a month). Investment: $200 a month.

  2. Business Licensing Fees. Depending on your location, you may need a business license. Contact your city to find out. The average business license is under $100, and not all cities require them. Investment: $100 Startup

  3. An EIN and NPI number. These actually aren’t even completely required if you are running a cash-pay practice, but they won’t hurt! They are both free, can be grabbed online in a few minutes, and are needed if you are going to provide CMS-1500 forms or superbills for your clients to get reimbursed, or if you are going to work directly with insurance companies. Get your EIN here and your NPI number here. Investment: $0

  4. Liability insurance. Whether you are in private practice or doing agency work- I recommend you have liability insurance. Many insurance plans allow for a certain number of clinical hours in private practice without increasing your annual fee. You can also get general liability insurance on top of your clinical liability insurance. To be honest, I didn’t do that initially. I felt like if I wasn’t making a lot of income in the beginning- why would it help for them to sue me! However, look at your particular situation and make a decision based on what is right for you. Investment: $450 annually (even with the fancy general liability insurance)

  5. Clinical forms. You need to get your informed consent and policies together. many professional organizations like the California Association of Marriage and Family Therapists (CAMFT) make templates available for their membership, and some will even review your paperwork as a part of your annual membership. If you develop an online practice process, you can have clients sign online- so you may not even have any initial printing costs: Investment: $0

  6. A business line. There are call forwarding services that allow you to get a “number” for your clinical practice and have that forwarded to your mobile phone. Avoid having to carry two phones around if you can, and avoid that extra cost of an extra cell phone. Some services allow you to send calls direct to voicemail outside of business hours so you don’t have to worry about your personal mobile ringing constantly. Many therapists starting out use Google Voice to get a free line. There are some grey areas in regards to using this service. Worst case you can get a service that is explicitly HIPAA compliant for under $10 a month. Initial Investment: $0; Monthly fee $10 (Plus the the cost of your current cell phone)

  7. A secure e-mail account. You can use GSuite to get started with a business based e-mail that is HIPAA compliant for $50 a year. Investment: $50 a year

  8. A website. We love using for a website. It includes all of your hosting, security, and gives you access to numbers you can track to improve the success of your website. You may have heard that you MUST use WordPress for your website, but for most therapists that isn’t a good use of time or budget. Learn more about websites with our free Website 101 e-course for therapists inside of the Private Practice Library. The HARDEST part of your website is developing your voice and your practice vision. It can be expensive to have someone else uncover that with you and ghost write for you- but ultimately- you don’t have to have a website to be able to see clients (but it REALLY helps in getting new clients when done well). Investment $16 a month

  9. Practice Management System. Many people don’t believe you need to start with a practice management system. I will tell you it is an absolute necessity. It is your HIPAA compliant, completely secure portal for clinical notes, will keep all of your financial information organized (invaluable), lower your no-show rate, allow you to take credit cards, avoid printing costs, and so much more. Our current faves for private practices are Simple Practice and TherapyNotes Investment: $39- a month

  10. Referral source(s). You need a way to get clients. I built my private practice on 95% referrals from the Internet. I was newly licensed and wasn’t super well known in the community. There also wasn’t much competition to get to the first page of Google. I have colleagues who built their practice on a specific referral source initially- an adoption agency that they worked for previously. While paid therapist listings can be a piece of the puzzle- it is possible to get a steady stream of clients with good ol’ fashion networking and in person relationships. (Although having a way for people who hear about you to Google you and find an awesome website works a bit better!) the more saturated your market, the less specialized your work, the more competition for the first page of Google. When you sign up for your practice management system you will get a 6 month free trial with Psychology Today. Here is a link for 6 months free on Psychology Today. Some of the best referral sources you will have in your career will be built on relationships. Relationships don’t usually cost anything. Investment: Time! Top Tip: Focus your efforts on SEO or in-person relationships based on what is the most direct way for you to get new clients in your area, for your specific specialization. Are there a few dozen therapists with your specialty already on the first page of Google? Consider focusing on relationship building in a unique way. Is the first page empty of any other therapists- start writing a blog a week on that topic until you see yourself on page 1, and then you can move to monthly or less.

  11. Printer. Having access to a printer for receipts isn’t a direct necessity with a practice management system that can e-mail receipts- but it is a nice back-up. Does your sublet include a printer? Awesome! Score! Not so much? Bummer! Grab a printer that is wireless, can copy, print, scan, and e-mail. Investment: $100

  12. Computer Access. Must have you computer access to start your private practice? Not really. However, I think it is good business practice. Being able to Google resources, type up notes on the spot, and access your practice management system at the office will make life easier. However, that could be done via a Desktop, Laptop, Tablet, or Smartphone. Start initially with tech you already have. Worst case? Buy a Google Tablet or Chromebook if you absolutely don’t have anything else you can use. Investment $250

  13. Internet Access. While it isn’t an absolute necessity to have Internet access to start a private practice, it sure does make things a bit easier. Your office may come with wifi access, your smartphone may include internet access and turning it into a wifi hotspot, or you may need to get separate internet access. This may be something you want to specifically check in with potential office spaces about and choose one that does include internet access. Worst case, check out FreedomPop and get started for less than $20 a month. Investment: $20 a month

  14. Business Cards. Maybe… to be honest I’ve seen too many people focus on business cards for hours, weeks, months… Want to build a strong base of referrals? When you meet people, grab their business card and send them a personal note via email or text with all of your contact information (so they can easily search their e-mail). Get out there and build relationships! Here is a link to grab 50 free business cards. Investment: $50

  15. Professional Associations. Truth is, you probably already have these. If you don’t it may or may not benefit you to go grab it now! Check to see if you get a discount on your liability insurance through your professional association. In California, to join is $200 the first year. For that $200 you get unlimited phone calls to speak to a lawyer with any questions you have about your practice, client situations, etc. Ask around and ONLY invest if there is direct value. Investment: $30

  16. Other Costs: There are a ton of other things you could invest in while building your private practice: networking groups, throwing parties, certifications, high-level trainings, paid directories, etc. Which should you do? It depends. You can get over 10 hours of free webinars for therapists here in our Private Practice Library including free checklists, how-to videos, and more including a free webinar on starting a private practice from scratch.

My purpose here isn’t in helping you develop a thorough business plan and marketing plan for your business- but to really highlight how good we have it, and how our costs are actually relatively low to launch a psychotherapy practice!

The costs of starting a psychotherapy private practice

Have you been adding up the numbers? 

  • Initial investment of annual fees and purchases (worst case): $1600

  • Initial monthly fees: $447 a month (worst case)

Meaning worst case- one weekly client at $150 and you are already breaking even in your business and will have paid off the initial investment into your business in under a year… and that is if you only get 1 client.

HINT: If you can work it to start your practice with at least 1 cash-pay client, the process will be a lot less stressful. You can start networking and building referral sources now. 

What other business could you launch and get to a break even point that quickly?

What if you got some business consulting to propel you forward, some direction on how to build your website more effectively, someone to teach you how to develop a business plan, a quarterly marketing plan, to help you develop your marketing message? How much more quickly could you grow your income and your client base?

You could invest $1950 in our Business School Bootcamp for Therapists or purchase a block of consulting hours with Julie Hanks or Deb Legge

That would up your initial worst-case investment to about $6,300, and $457 a month to launch your private practice. Sixteen weekly clients at $125 a session and you will break $100,000 annually. How cool is that? 

Sit down, look at your numbers. Established therapists: How much did you invest before you opened your doors? How many clients do you currently see per week?

Just getting started? Look at what you already have access to: What are your start-up costs to sit down with clients? 

Ready to get started on developing your private practice? Want some specific guidance? Learn more about bootcamp and schedule an interview with Kelly or Miranda today

You can also simply download your private practice checklist to get clear on what you want in your private practice. Click here to join our free private practice library and download it now!

Miranda Palmer

My mission is to move Masters in Counseling Psychology and Masters in Social Worker out of the two top spots for worst paid master's degrees in the United States. I'm a therapist, what we do matters deeply. People walk around thinking there isn't the kind of help you provide. People every day decide not to pursue therapy because they can't find a good therapist. I teach therapists private practice marketing because it matters- it helps communities experience healing and support.