Private Practice Therapist Salary: What a six-figure practice really looks like
Updated April 9, 2024
Can Therapists Make 6 Figures?
Pull up a chair, there is a wild ride ahead and we don’t want you to miss a thing in this article. So take your time to read through the data because we are here to help you break the glass ceilings.
We see this question often posed in therapist groups- is 6 figures in private practice a reality for mental health therapists? Yes, it’s entirely possible to make 6 figures as a therapist.
Sounds awesome, but then follows more questions because knowing that alone is insufficient. With the financial limitations of agency/nonprofit work, people want to know - How much can you really make in private practice, then? And what’s a therapist’s private practice salary like when you as a therapist have your own business? We want to dig into the truth about the 6 figure private practice so you can discover the path that is right for you .
Why You Might Need to Make More Than a 6-Figure Therapist Salary
6 figures may sound like just the ticket as a therapist, especially when you’ve been underpaid in nonprofits or agencies for years, or when you have a lot of student loan debt. However, let’s break down 6 figures and why you may need to make more than $100,000 as a therapist.
When we ask people joining Business School for Therapists about their financial goals, we often hear "I want to make six figures."
Our response is: Where did that number come from? People have been saying that for years and six figures today is not as much money as six figures 10 years ago (or even 6 figures two years ago!). The value of our money has gone down.
We’ve been taught that those extra zeros will be enough to take care of our needs. Often there is assumption that over the 99k threshold will be financial security.
You’ll hear from therapist colleagues - “I’ve made $150k in my practice this year!” Which sounds really great! But what are we talking about? Does that mean total gross revenue that was collected, but they only profited and took home $30,000? Or, does it mean they actually brought home $150k after expenses and taxes?
And, ultimately, where do they live? Do they have a partner to share expenses with? How much debt did they go into to become a therapist? In one city, $50k take-home pay can be a fabulous income that allows someone to own a home, whereas in another, it may mean renting a room and no space to pay back loans.
What you need to bring home from your private practice will likely need to be more than 100k because you need to factor in expenses and taxes. A 6 figure practice alone isn’t sufficient in ensuring fincancial stability for your specific needs and lifestyle.
What About a Million-Dollar Private Practice?
As more therapists have branched out into becoming group practice owners, we also see REALLY big numbers being thrown around. Lots of 7-figure therapists AKA million-dollar private practices. But after talking to multiple accountants and bookkeepers specializing in therapists, the actual profitability can be next to nothing.
Without a solid financial plan, group practice owners often overpay in their practices and forget to factor in payroll taxes in addition to the self-employment taxes they have to pay. We have seen some practices with such poor profitability and, when you factor in group practice owners who are working 6-7 days and 70+ hours a week, many of them could take home more PROFIT if they were in solo practice and bringing in a lot less money overall.
How to Become a 6-Figure+ Therapist
So, we want to break down how to make 6 figures as a therapist and why it’s important to understand where that number comes from. Then we’ll talk about the variables that impact what you bring home as well as how to make multiple 6 figures — not just in revenue in your solo or group practice.
Private Practice Math: What 6 Figures Actually Looks Like
Before we get started, we want to share that we’re not accountants or attorneys. This is merely meant to spark some thought for you as you plan your next level of business growth. Heck, this is rough math we’re about to do here.
How Much Does a Therapist Make in a Year?
A therapist can make anything from $30,000 to $200,000+ a year, depending on the size of their business, the state they live in, their hourly rate, and the number of hours they put in.
To give you an example, we’re going to explain further. To do this private practice math, we’re going to figure out how much a therapist makes in a year with an example. Let’s say you have 20 sessions a week and charge $150 an hour, and you work 45 weeks per year, accounting for sick time, vacation time, and if your clients are out sick.
Your gross income (money before taxes) will be $135,000.
Congratulations: You’ve made 6 figures…sort of. When we think about what we want to make, we think about what money we want to bring home for us to use in our personal lives. Don’t you? The money we use to pay the bills, mortgage, groceries, retirement fund, savings, and vacation funds, that’s what we’re looking at. What do we need to make from our business to sustain the life we want/have/need?
Let’s say your expenses including rent, utilities, licensure costs (renewals, CEs, travel to training), and marketing costs (social media tools, your website, directories, networking) add up to about $40,500 a year.
Yikes! No way, you say? You may think those expenses are super high. We totally get where you’re coming from — we really, really do. But from our own personal experiences and from coaching thousands of private practice owners, we understand the expenses of running a business, even a lean one. You also may have to pay for your own healthcare.
For example, Kelly has her business match her retirement contributions (talk to your financial planner about the tax advantages for this). You need to have other savings for technology, for illness, for lean times, for emergencies. That’s 30% of your gross income going to expenses. That’s what we usually estimate roughly for businesses: A rule of 30/30/30 — 30% to expenses, 30% to taxes, and 30% profit in your pocket. (We’ll talk more about factors that contribute to what you bring home.)
Well, after expenses we’ve made $94,500. YAY! That’s pretty close to the 6-figure mark. But now, we have to pay government taxes. You have a self-employment tax and maybe state taxes (Go California!). Depending on your tax status, filing single, jointly, etc., you could pay upwards of 30% in taxes. Let’s roughly estimate the 30% to $28,350. This is really rough math if you’re in the United States because we have all sorts of new tax laws depending on the entity of business you run. But this is just to make a point.
Now you’re left with $66,150, net income in your pocket for you to live off of.
We are not saying that $66k isn’t enough to live off of, but that amount will get you further in some places than others.
Setting Your Private Practice Therapist Salary
So, what if you want to bring home 6 figures to live off of? What if you need that to live off of? We have to reverse-engineer the number. We need to calculate the take-home income and all the expenses, AND we have to look at what the taxes would be at that take-home pay so we can figure out how much GROSS income we need to collect in order to PROFIT the amount we need to be able to set our private practice therapist salary.
We have a free training for setting your fees, and ultimately your private practice therapist salary, that you can get access here. The training walks you through the formula, the expenses, how to navigate insurance, and more.
We also have a massive calculator in Business School for Therapists that will tell you what to charge based on all of these factors, but for simple math.
If you saw 25 clients at $175 and worked 45 weeks a year, you would gross $196,875. Because you only changed your fee, let’s assume your expenses don’t change a whole lot. We’ll leave it around $35,000, leaving you with $161,875. Then we take the 30% tax off of that and you have $113,312.50 in your pocket. You’ve profited 6 figures!
Why Do You Need a 6-Figure Private Practice Therapist Salary?
This is a judgment-free zone — we all have different needs — but ultimately, if you’re living somewhere like California, you need a 6-figure private practice therapist salary to have a truly solid, sustainable work/life balance and to be able to afford a high quality of life.
At the end of the day, every person has different needs and a different lifestyle, so maybe you don’t need a 6-figure practice. Some of you are single, some of you support a huge household, and others of you are part of a dual-income relationship. Many of you currently have debt, school loans, and other financial factors that play into your cost of living.
You need to make money to keep the doors open and to also sustain your life so you can show up as your highest and best as the business owner and therapist. Profit is truly necessary to be able to run a business and to pay yourself. But how much you need is entirely up to you. This is about being focused and truly looking at what you want to create out of your business.
Pick your financial goal based on your vision.
How Do You Scale to Multiple 6 Figures in Private Practice?
If you want to make more income in private practice, you can try some of these tactics:
Charge more.
See more clients.
Work more weeks per year.
Reduce your expenses as much as possible.
Offer higher-end services like retreats, intensives, and group work that have a higher price point and help more people in a shorter amount of time.
Expand your services through hiring staff.
These are all factors that play into how much money you take home at the end of the day. However, to scale into multiple 6 figures in a private practice setting, that usually does mean adding clinicians to your practice. I’ve seen people make low multiple 6 figures solo by adding specialized services and charging higher rates. Even if you become a Brené Brown, you’re going to have to hire a team to support you. So hiring is your next step.
With that said, your expenses will go up, sometimes beyond the 30%, depending on your group practice model — we work closely with our clients to keep this number as low as possible — but other expenses won’t change.
Pay Your Therapists Well
If you want to grow to multiple six figures, well, please hear us out on this: you have to pay people well. Be a person of influence and change the fact that we’re the worst-paid master’s degree. Trust us. We’re not asking you to sacrifice and not make money at all (though we have seen this happen, in fact — we’ve seen the cost of having additional clinicians).
We’re simply asking you to consider the power you have in your growth to make a difference not only in your community, the clients you serve, and your own bank account, but also in the lives of other clinicians.
With that said, we’ve seen and coached others to implement what works for their unique situations and believe you can grow a private practice to multiple 6 figures while paying well, having multiple clinicians, and being creative with your therapy model — adding in group therapy, retreats, or whatever you find to be transformative for the clients.
Having a solid financial picture in place is key. Here is a free training on how to pay your staff well.
Expand Into Group Practice and Create a Multi-Figure Practice
If you have 10 clinicians who see 20 clients and charge $150 per hour (keeping my math simple here), that puts you at $1,350,000 in revenue. Your expenses are going to be much higher.
Paying your clinicians $60 an hour (again, simple math, not saying to pay this amount: $540,000), plus payroll expenses, rent, utilities, marketing, software, receptionist, phone systems, laptops, and all the other expenses — even at 65% expenses overall (a rough estimate), you would net $472,500. Then taking off taxes (again? yay?) at about 40% (could be higher), you would net $283,500. That’s a multi-figure practice with some simple math.
Now, let’s look at how many group practice owners actually start their process. They might start with a percentage split of 50, 60, or even 70% for the payment to the employee. Let’s say we keep the expenses the same at $526,500 (easy to do when you have 10 clinicians plus yourself and 200 clients coming in per week). Even at a 50% split, your payroll alone is $675,000. Now you’re netting $148,500 BEFORE your own taxes and just over $100k probably working 60+ hours a week with an incredible amount of risk and liability. So, if you’re paying 60 or 70% splits, you aren’t making a profit at all.
We have a great training on group practice business plans that can help you! Just click here.
Shift Your Mindset with Money
Does this conversation make you uncomfortable? If you want to make money, you have to relate to it in a healthy way. It's time to change our mindset about the 6 figures by getting more specific and redefining success in private practice.
We all carry money stories, linked to our family of origin. There is ancestral trauma, systemic oppression and more tied up in how we feel about money. All of it is worthy of attention, compassion and healing.
However, it might make you uncomfortable because the thought of having that many clinicians and that large of a practice makes you want to run for the hills! That’s okay. We never wanted to own a group practice. We managed groups prior, and we liked it just being solo.
So, here’s what you need to do…
Explore holistically where you want to be physically, spiritually, relationally, emotionally, and financially in your life.
For Miranda, success is being able to provide for her family while still maintaining her overall wellness. No amount of money is worth a relapse in her autoimmune disorder.
Success is the ability to do things like taking trips with family, being creative, finding some "me" time, and building relationships. To be able to do these things means we have a happy, successful business that’s allowed for this not only by financial means but also because the work we do allows for freedom with our time and energy (our successful business isn’t creating a vortex of energy suckage). Success means that we have more peace in life, we are a better coaches, and our clients benefit. We have time for training and improving our craft.
Salaries for Therapists
But, is it okay for therapists to have a good salary? Shouldn’t you just be in this for helping people? The truth is, that statement often comes from a place of privilege. The idea that you don’t need to repay student loans is that you can continue to do this emotionally taxing work by working two to three jobs to get by.
There are more therapists leaving the field than entering it right now. We think it’s REALLY important that therapists get a sustainable salary so our profession can sustain itself. It’s maddening to see new graduates considering not getting licensed because they think they can make a better income as a coach or remain unlicensed. This undervaluing of the mental health field because of the systems in place is just not right.
We also aren’t being honest with out society and communities about the cost of being a therapist and what kind of salary it takes to sustain a life and show up as a great therapist. We’ve seen therapist never raise their salary in 10 to 20 years, and yet, the cost of living certainly has risen.
Average Private Practice Therapist Salary
This number will vary according to the state you’re practicing in as well as your credentials, although the average is anywhere between $50,000 to $140,000 per year. We’ve been surveying therapists for several years to find out what life is really looking like. And, the biggest thing we’ve found is that many therapists are underpaid and overworked but it isn’t just because of insurance reimbursements or lack of clients. Some of it is because of bad habits and poor boundaries we learned during our training. Check out this survey result and consider completing the survey. It will give you a custom report about how you can make more money and work less without changing much of anything at all!
On average, therapists are working an extra 4.3 clinical weeks every year UNPAID by going over the session length clients paid for and not charging for that additional time. That translates to over $11k per year in lost wages.
When we add in the time spent procrastinating documentation therapists on average are working an extra NINE 32-hour workweeks UNPAID every year!
On average, not charging for no-shows and late cancellations per their own informed consent policy is costing therapists $5,500 a year.
Take the survey and get your custom report today. We have a version for solo practice/employees as well as group practice owners.
LPC Salary Private Practice
The average licensed professional counselor (LPC) salary in private practice will also change according to state. On average, an LPC salary in private practice falls anywhere between $50,000 to $70,000, although this number can be higher as well.
LMFT Salary Private Practice
The average salary for an LMFT in California is around $92,000, although the range can be anywhere between $57,000 to $100,000 or higher. Continue reading to learn how to set fees that will help you determine the best therapist salary for you and your practice.
Therapist Salary in California
We’ve worked with therapists all over the country and all over the world. We often get therapists that make assumptions that living in a particular place (like California) is what allows therapists to charge a sustainable fee. While, in fact, in many cases, therapists in California actually make LESS money than in other states despite the high cost of living.
We see this often with insurance companies that will reimburse higher in a city or state with fewer therapists that have a lower cost of living like Conway, AK, while reimbursing near poverty levels for a therapist in Los Angeles, CA, where the cost of living is incredibly high.
The moral of the story always is this: You set what makes sense for you, your life, and your cost of living. Nobody else gets to decide but you. Oh, and read those insurance contracts carefully before you agree to them. DON’T assume the contract will pay a sustainable rate.
How Much Does a Therapist Make a Month?
Okay, we’ve been talking about annual salaries, but how much does a therapist make a month? In California, a therapist makes about $4,800 to $11,000+ a month.
In private practice, two things happen in terms of what you make or take home on a monthly basis. You have expenses that hit at different times of the year, and during the months where you take sick or vacation time, you’ll naturally bring in less money.
But don’t worry! When you calculate your fee properly, while your gross income and expenses may be higher or lower from month to month, what you actually take home and live off of can actually be quite consistent… IF you plan for it.
Our Business School for Therapists teaches therapists how to understand the difference between how much money is in their bank account versus what they make a month, so that it doesn’t feel like crazy peaks and valleys.
Starting Salaries for Counselors and Therapists
But, what if you’re just starting out in private practice? What if you’re new to counseling entirely, what’s your starting salary? We’ve seen starting salaries for counselors and therapists in California around the $55,000 to $70,000 range, but this can vary according to the state, your experience level, your expertise, and so many other factors!
It’s very easy when we’re new to something whether it’s this profession or new to running a business that we can start to let our insecurities run the show. The truth is, there’s no current data that suggests that years of experience are correlated with exemplary clinical outcomes in the counseling profession. In fact, there’s some research that shows that newer therapists will often perform better than established therapists.
What we believe and see consistently is that overworked, burnt-out therapists don’t get the best outcomes. If you’re working two to three jobs, struggling financially, or seeing twice as many clients as you should be, that’s going to impact your outcomes. And guess what… that will just make you feel worse about whatever fee you’re charging, no matter what fee that is!
Licensed Professional Counselor Salary
But what about setting my salary based on my license designation? Does it matter if I’m setting a mental health therapist's salary, a marriage and family therapist's salary, a licensed clinical social worker's salary, or a psychologist's salary?
According to Salary.com, the average Licensed Professional Counselor salary in California is $63,086 as of February 27, 2023, but the range typically falls between $56,684 and $70,673.
In private practice, you set your salary and fee based on what works for you and your expenses. An LMFT with $200k worth of student loans living in San Diego, CA, is going to need a different salary than a psychologist with $50k of student loans working in Tacoma, WA.
We believe that great therapists need to set salaries that allow them to provide the highest and best service. And that means regardless of your license designation, you create something that truly works for you.
Again, there’s no research that shows exemplary clinical outcomes were associated with a particular license designation or even with a level of education AKA master’s degree versus doctoral. In fact, many of our Ph.D. clients reported feeling high anxiety when entering private practice because they had less clinical experience and only felt confident in the areas of research and testing. In other words, every experience is different.
Do you want to be an amazing clinician? Let’s be honest about what salary is needed to do that. Let’s put the judgments away about what others are charging and just do our own math!
What Can a 6-Figure Private Practice Do for YOU?
6 figures lead to WHAT in your life? Is it more vacation time, a better life for your children, more money to spend on self-care, nutrition, and exercise? Speak to that. Speak to the change you want to see in the lives of others and in your own.
Making money in private practice is doable. Making multiple 6 figures is even doable. But it’s possible that making 6 figures isn’t important for you anymore. Regardless, have your financial goals so you know what to create in your business and how it will impact your life.