“You Make HOW Much?!” The Awkward Money Conversations Therapists Dread

The Awkward Moment: When a Therapy Client Assumes You’re Rich, When You Are Really Struggling

It’s a situation many therapists know all too well. A client glances at your full session rate—maybe $250 for an hour—and assumes you must be raking in the cash.

One therapist recently shared their experience on Reddit:

“I'm in a group practice. A client lost insurance, so the receptionist gave them a list of our base rates and a sliding scale. Client has been a little grumpy in the last few sessions while I've been trying to help them navigate their financial situation.

Finally they told me, "I know you're not just doing this for money, but I had no idea how much you were making." The base rate is listed at $250/hr. They had done the math and determined I must be making over $200K a year.

I explained the whole thing -- we charge $250 to insurance, they pay whatever they want (nowhere near $250), the clinic takes 55% of that, the remainder is spread over two hours, so I make ~ $41/hr.

Client was shocked. They deliver pizza and last year made $46K. I made $53K. L O FREAKING L”

Do therapists make more than a pizza delivery driver?

Yes, a licensed therapist with over six figures of student debt was making only slightly more than a pizza delivery driver—who had no degree and no student loans. This raises an important question:

Why do so many people—including therapists—misunderstand how therapist pay actually works?

The Restaurant Metaphor: Why Your “Rate” Isn’t Your Salary

Imagine going to a high-end restaurant and ordering a $250 prix fixe meal—a full dining experience with multiple courses, wine pairings, and a dessert.

At first glance, it seems like a huge price tag- and the chef must be making great money- they’ve made it, right? But does that mean the chef is walking away with $250 per meal? Absolutely not.

That $250 gets divided up:

• The restaurant takes its cut—covering rent, utilities, equipment, and supplies.

• A portion goes toward the ingredients—the food itself.

• Waitstaff, dishwashers, hosts, and managers all take their share.

• The time spent prepping before and cleaning up after the meal isn’t directly paid for.

• If a dish gets sent back or a customer cancels, the restaurant still eats the cost.

• Then there can be business taxes at the city, county, state, and federal level.

By the time everything is accounted for, the chef's take-home pay might be shockingly low—especially considering the hours of labor behind the scenes. In fact, top head chef’s average less than 100k per year- while often working close to 100 hours a week.

Therapy works the same way. Just because a session is billed at $250 doesn’t mean the therapist takes home anywhere near that amount.

Breaking Down Therapist Income: The Reality vs. The Assumptions

But Do Therapists Really Make That Little?

Many people assume that mental health professionals must be doing well financially. After all, therapy is expensive, right?

But the reality is starkly different.

• The average salary for a licensed therapist in the U.S. ranges from $53,000 to $75,000 per year, with significant variation based on location, specialization, and work setting. (Fun Fact: In 2019 MSW grads  had an average student loan debt of $67,000. ​socialworkers.org- And, of course, many, like this redditor have over $100k in debt)

• Clinical psychologists (PhD/PsyD) can average between $85,000 to $120,000 per year, but that comes after years of additional education and sometimes $200K+ in student debt.

• Private practice therapists can make much more—or much less—depending on their client load, insurance contracts, and expenses.

Meanwhile, let’s look at jobs that don’t require a degree:

• UPS Driver (with benefits & overtime): $80,000 - $100,000 per year

• Plumber: $60,000 - $100,000+ (no student loans)

• Electrician: $65,000 - $95,000 (apprenticeship instead of college)

• Massage Therapist: $50,000 - $75,000 per year

• Pizza Delivery Driver: $40,000 - $50,000 per year (plus tips)

That means many therapists with advanced degrees, licensing fees, and high student debt are making less—or barely more—than workers in these professions.

In the case from Reddit, the pizza delivery driver was making more than the national average for their profession, while the therapist was earning near the low end for theirs.

So when a client sees a $250 session rate, or any session rate and assumes their therapist is taking that home, they’re only seeing the price tag—not the reality. The other reality?

It isn’t just the clients that make those assumptions, it can happen for therapists too. Whether you are an employee, employer, or starting a private practice we can all misjudge the reality of the costs of doing business.

Hourly Rate vs. Actual Take-Home Pay: The Hidden Costs of Therapy Work

Let’s say a therapist in private practice charges $150 per session and sees 20 clients per week. That looks like $150 x 20 sessions = $3,000/week ($12,000/month, or $144,000/year) Sounds great, right? 20 hours a week- making almost $150k per year- wow! Not so fast.

Let’s talk about how many hours that therapist works that are unpaid:

• Returning phone calls and emails

• Marketing to actually find clients (This is HUGE- especially if you have a group or private pay practice)

• Clinical training

• Keeping up with legal and ethical changes

• Clinical notes and documentation

• Consultation and treatment planning

• Overseeing and being present for employees

• Billing clients, insurance, denials, appeals, clawbacks (This is HUGE if you have an insurance or hybrid practice)

• Bookkeeping, taxes, HR, benefits

• Honestly the list goes on and on

Easily we see a therapist who schedules 20 clinical hours work 32-40 hours per week even in solo practice. Running a group practice? That number can double or triple!

Here’s what actually eats into that income:

• Business expenses: Office rent, liability insurance, scheduling software, website maintenance, marketing

• Staffing and Support: Bookkeeping, intake coordinator

• Insurance expenses: Denials, appeals, clawbacks, biller and/or billing software

• Self-employment taxes and Business Taxes: About 30% of total earnings if they’re self-employed

• Client no-shows & cancellations: If not properly accounted for, these lower overall earnings

• Certifications and Trainings: Therapists LOVE our certifications- often because we hope they will lead to increased income- and they can- but only if we know how to market those skills

Once all of that is deducted, their actual take-home pay can easily dip well below $50/hr. In fact, we’ve talked with psychologists in private practice (as solo owners) making less than $15/hr BEFORE taxes and didn’t even realize it! They were too busy seeing everyone imaginable, trying to get paid, and trying to get the bills paid to sit down and look at what was happening financially.

Therapists are often shocked when they calculate their real hourly wage. Here is a quick calculation that can be helpful at the close of the year:

• Look at your net profit on your taxes for last year.

• Look at how much you paid on self-employment taxes.

• Now, look at how many hours on average you worked in or ON your business in 2024, and how many weeks you worked per year. How much are you really making per hour?

So in our example above:

• Gross Income $150,000

• Net Income After Business Expenses $93,000

• Self-employment taxes of 15.3% payed another 14k

• Worked 50 weeks per year

• Averaged 37 hours a week

• Average hourly take home pay is $42/hr

And, that hourly income is BEFORE paying the regular federal and state income tax. Wow!

In fact, in that same public Reddit thread, a former group practice owner shared: “As someone who ran a group practice that was not profitable, we did a 50/50 split. After 4 years the group over all never made money and at times I had to supplement the group with my own client payments (many months meaning I made $0 despite working). Where does all the money go? Medical Insurance Taxes 401k administration, and match, Vacation pay. After these expenses, the split was 79%, since these are all expenses that go directly to the client. 21% paid for supervision (it didn't as seldomly we had $ to pay the supervisors), office space, ehr, Professional insurance, and a shared administrator for office management and billing). I share all this because after being in private practice and in group and owning a group, my best financials were being a member of the group and having the group pay all those expenses for me.”

1099 vs. W-2: Understanding What You’re Signing Up For

Ok- let’s dive deeper into what throws therapists off when trying to navigate the money conversations. One of the biggest financial misunderstandings therapists have is the difference between being a W-2 employee and being a 1099 independent contractor. And let's be real—many therapists are working as 1099s without realizing they are actually business owners.

1099 Contractor: You Are a Business Owner (Whether You Realize It or Not)

If you’re a 1099 contractor, that means according to the courts and the United States government:

• You are running your own business

• You pay self-employment taxes (about 15.3% before federal or state income taxes).

• You cover all of your own expenses. This includes liability insurance, continuing education, business licenses, office space (even if it’s a shared group office), marketing, and retirement savings.

• You don’t get benefits (healthcare, PTO, retirement matching).

• You are taking on the liability for business decisions that are made. That may include HIPAA compliance, and other legal standards where your “employer” may be setting standards- but if you agree with them you could still be sued separately if they impact your clients.

A lot of therapists assume that because they’re working for a group practice or online tech company, they aren’t business owners. But legally? If you’re 1099, you are your own business entity—just without any of the perks of being the actual practice owner.

Some therapists opt for 1099 because they want flexibility, but many don't realize the hidden costs of self-employment. Before accepting a 1099 role, ask yourself:

• How much will I need to set aside for taxes?

• How much liability am I taking on under this status?

• Am I okay with no PTO, sick leave, or employer-covered healthcare?

• Do I have enough control over my schedule and fees to justify being a contractor?

• Will I have to market myself, or will clients be provided for me?

W-2 Employee: You Are a Staff Member, Not a Business Owner

If you’re a W-2 employee at a group practice, online tech company, or agency:

• Your employer covers part of your payroll taxes.

• You may receive benefits like PTO, health insurance, retirement matching, and paid training.

• Your employer provides the infrastructure—office space, EHR, admin support, marketing, billing, supervision.

• You don’t have to file quarterly taxes or track deductions like a self-employed person.

A W-2 job is often lower risk financially, even if the per-session rate looks lower on paper. When you add up tax savings, employer-covered benefits, and no business overhead, a well-paying W-2 job can actually net more than a poorly structured 1099 position.

Bottom line?
If you’re 1099, you need to be charging at least 30-50% more per session than you would as a W-2 employee to cover taxes, benefits, and overhead. $50/hr as a w-2 is NOT equal to $50 an hour as a 1099.

Revisiting Percent-Based Pay: Why It’s Not as Simple as It Seems

Many group practices offer a percentage-based pay structure, meaning you get a percentage of each reimbursed session or what the client pays. On the surface, this might seem fair, but this model often has hidden financial pitfalls for employees.

1. You Might Not Be Paid for No-Shows, Late Cancellations, or Admin Work

Percent-based pay only accounts for completed sessions. That means:

• If a client cancels late and your practice doesn’t charge a fee (or charges but doesn’t enforce it), you just lost an hour of income.

• If you’re required to spend unpaid time on marketing, supervision, meetings, or case management, you’re working for free.

• If you’re expected to attend networking events, engage in unpaid training, or answer client inquiries between sessions, those hours are not compensated.

In contrast, a salaried or hourly W-2 position typically accounts for admin work, supervision, and non-billable tasks. With a percentage model? You might be working more hours than you realize without pay.

2. The Mental Trap: “Why Am I Giving My Employer a Cut of My Money?”

Many therapists who work on a percentage basis start to think of the percentage going to the practice as money being taken from them.

• “I did the work! Why is my boss taking ?”

• “I could just start my own practice and keep 100% of the money.”

Here’s the reality: If you were in private practice, you wouldn’t be keeping 100% of that income either. The cut the practice takes isn’t just profit—it covers:

• Marketing & client acquisition (which, let’s be honest, is one of the hardest parts of private practice)

• Rent, EHR systems, phone lines, and admin support

• Billing, claim denials, and follow-ups with insurance

• Supervision and required consultation

• Employer-covered payroll taxes, insurance, and benefits (if applicable)

When a group practice is run well, this split isn’t about taking your money—it’s about covering the infrastructure that allows you to just show up and do the clinical work.

3. Not All Group Practices Are Created Equal

There are two extremes in how practice owners handle pay:

• Group practice owners who take care of their clinicians so well that they are subsidizing payroll out of their own caseload. This isn’t sustainable—eventually, they burn out or shut down.

• Group practice owners who set up business models with unlivable wages, low reimbursement rates, and still take a cut—without providing meaningful support.

A well-run group practice should be structured so that the pay model works for both parties. If it doesn’t? That’s a business problem, not just an employee problem.

4. The Truth: Private Practice Will Always Be More Profitable (If You Can Get Clients Easily)

If you are highly skilled at marketing and can keep a full caseload on your own, private practice will almost always be more profitable than being an employee. Why? Because you get to keep the entire income after covering your business expenses.

However, getting and retaining clients isn’t easy. Many therapists underestimate the work that goes into:

• Building a steady referral stream

• Managing cancellations, inquiries, and scheduling

• Handling billing, bookkeeping, and business taxes

• Marketing consistently to maintain a full caseload

For therapists who don’t want to handle those business headaches, working for a group practice can be the right choice—but only if the pay structure makes sense.

What to Ask Before Accepting a Percentage-Based Pay Offer

If a group practice offers you a percent-based structure, make sure you ask:

• What is the percentage actually covering? (Admin support, marketing, supervision?)

• Am I paid for no-shows and late cancellations?

• What percentage of clients come from insurance panels? (Lower reimbursements affect your cut.)

• How much unpaid work am I expected to do?

• What does this percentage actually mean in terms of real dollars per year?

Final Thought: A Percentage Split Should Be About More Than Just the Math

A fair percentage-based pay model isn’t just about what cut you’re getting—it’s about whether the business structure works for both employees and employers. If the model isn’t sustainable, either employees burn out, or the practice owner does.

Therapists, your work is valuable. If you’re working in a percentage-based role, make sure the numbers work for you—not just for your boss.

So, Why Do Therapists Struggle With Money?

1. “I Just Want to Help People” Syndrome

Therapists don’t go into this field for the money. Most of us love the work. We’re driven by a passion to help others, and we often:

• Work unpaid internships before getting licensed.

• Accept low wages at community mental health agencies.

• Feel guilt about charging clients directly, especially those in financial distress.

But what many therapists don’t realize is that even nonprofit agencies that offer free or sliding-scale therapy have millions of dollars in grant funding behind them.

Trying to replicate that nonprofit model in private practice—without the grants—leads to burnout and financial instability.

2. The “I Feel Bad Charging Too Much” Mindset

Many therapists worry that setting higher rates will make therapy inaccessible. But here’s the thing:

• If you undervalue your work, clients will too.

• If you’re burned out, overworked, and underpaid, you won’t be able to show up fully present for your clients.

• Plumbers, mechanics, and accountants all charge what they need to earn a sustainable living—why should therapy be any different?

3. The “I didn’t Do the Math” Quagmire

Many therapists just do some basic mental math without diving into the reality of being a business owner and it bites. them on the tush.

• You need to understand how many hours it takes to launch a business

• You need to understand the unpaid hours that go into maintaining a business

• Y’all if you are a 1099 employee or a private practice owner you are a BUSINESS OWNER. We need to sit down and do a full business plan. Yes, even though we didn’t learn that in grad school

• We look around at what others are doing are charging and we assume the reality

There are therapists who have spouses that are basically funding the private practice, therapists living off of trust funds, therapists who are deep in debt whose homes are being repossessed. And. yes, there are therapists who are taking home great incomes, paying off student loan debt, and living in a sustainable way while taking good care of their clients and any employees.

Unfortunately, the therapists who didn’t do the math regarding private practice before launching their solo practice, after expand to group practice to supplement the fact that they aren’t making a sustainable wage. If you take a cut of something that isn’t sustainable that doesn’t work for your employees either.

On the other hand, employees are often perplexed how a therapist who sees no clients can earn an income while running a group practice. They often grossly underestimate that this group practice owner is working as many, if not more hours than the people seeing clients.

How Therapists Can Get Financially Solid

1. Understand Your True Hourly Rate

• Track all the time you spend working—not just sessions.

• Calculate how much you’re really making per hour after expenses.

2. Charge Based on Reality, Not Guilt

• Set a sustainable rate based on business costs and income needs, not just what feels “nice.”

• Drop the lowest-paying insurance panels that don’t make financial sense.

3. Recognize That Therapy is a Business

• You deserve to be paid well for your expertise.

• Charging what you’re worth allows you to stay in this field long-term—which ultimately benefits your clients.

Final Thoughts: Therapists Deserve to Be Paid Well

Therapists, it’s time for some real talk.

• You deserve financial stability.

• You deserve to build a practice that doesn’t leave you burned out.

• You deserve to be paid like a skilled professional—not like an entry-level worker.

If you’re struggling with charging what you need to thrive, check out our free training How to Set Fees :

👉 ZynnyMe Free Training

It’s time to stop normalizing financial struggle for therapists. We deserve better.

References:

Bureau of Labor Statistics (BLS) – Occupational Outlook Handbook

• Provides official salary data for therapists, psychologists, and trade workers (plumbers, electricians, etc.).

• https://www.bls.gov/ooh/

Glassdoor & Indeed

• Real-time salary estimates based on self-reported employee data.

• https://www.glassdoor.com/Salaries/index.htm

• https://www.indeed.com/career/salaries

ZipRecruiter & Payscale

• Aggregated salary data for licensed therapists, UPS drivers, electricians, plumbers, etc.

• https://www.ziprecruiter.com/Salaries

• https://www.payscale.com/