How to Ethically Set Fees in Private Practice
How to Set Your Fees in Private Practice
Your fee will either make or break your practice. Not the clients, not the marketing, not the niche — the fee. This free training with Kelly Higdon and Miranda Palmer has helped tens of thousands of therapists calculate a fee that actually sustains them, with a formula that starts with your life and works backward to your rate.
In this training, you'll learn:
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The fee formula — a step-by-step calculation that gives you an actual number based on your expenses, your caseload, and your life. Not what others charge. Not what "the market" suggests. Your number.
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How to talk about your fee with clients — in a way that builds trust, reduces resistance, and supports the therapeutic relationship from the first conversation.
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The real cost of sliding — the math behind sliding scale decisions and why a $10 difference per session is worth far more than most therapists realize.
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How to address the fears — usual and customary, comparing yourself to other therapists, needing more certifications before you can charge more. We work through all of it.
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When and how to raise your fees — how to know it's time, how to handle the conversation, and how raising your fee actually improves clinical outcomes.
"This was hands down the most helpful online course I've ever taken that addresses being in private practice. This was transformative for me. I've been devaluing my worth for years using the excuse that I'm a clinician, not a businesswoman. That stops today."
"Thank you for reframing all of my old stories of money, business and how to be a therapist. There were so many helpful tips and food for thought that really helped me rethink the way I do business."
"I'm starting a private practice and none of my colleagues could provide me with concrete info on how to set my rates. It was so frustrating. I now have specific guidelines to use to set my fees versus guessing."
"This should be required for all psychotherapists. This has absolutely changed the way I will run my practice and completely changed my outlook. I can't believe I am 3 years in and just getting this information!"
"I've held a lot of guilt over the years in being full fee and out of network and have known I need to raise my rates. I give a ton each session and know deep down I need to raise my fees so I'm less burned out. This training gave me the confidence to do it."
"Really helpful in finally breaking through some of the barriers to taking my practice and my financial life to the next step!"
Enter your email to watch. You'll also get access to our free private practice resource library.
Download the fee-setting worksheet mentioned in the training to work through the formula as you watch.
Why your fee will make or break your practice
Most therapists set their fee by looking at what colleagues charge, or by accepting whatever a directory or insurance company suggests. Neither of these approaches has anything to do with what your practice actually needs to sustain you.
The insurance "usual and customary" rate — the reimbursement rates that feel like a benchmark — was set by insurance companies for the benefit of their business model, not yours. Therapists in high-rent Los Angeles sometimes get reimbursed less than therapists in mid-sized towns in Arkansas. The usual and customary rate has no relationship to your cost of living, your cost of doing business, or what it actually takes to provide quality clinical care.
Comparing yourself to the therapist down the street is just as unreliable. You don't know their financial situation. You don't know their student loan debt, their health expenses, their family obligations, or whether they're in credit card debt despite appearing successful. You build your fee from your life — not from someone else's.
Our profession has a culture of undervaluing itself that starts in training. You graduate having worked unpaid or near-unpaid placements, often while holding down a second job to pay the bills. You're taught to do as much as possible with as little as possible. And then you enter private practice carrying those same beliefs — that your needs don't count, that charging what you're worth is somehow at odds with why you got into this work.
It isn't. A therapist who is financially stressed, overworked, and burned out is not serving their clients at the level they're capable of. Your fee is one of the most important clinical decisions you'll make.
The three-step formula for setting your fee
The formula starts with your life and works backward to your rate. Most therapists start from the rate and try to build a life around it. That's why so many feel financially stuck despite working full caseloads.
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1How many clients can you realistically see per week? Not what others think you should see. Not what you did in an agency job. What can you sustain — from first client to last — while bringing the same focus, presence, and energy to each session? Some therapists doing intensive trauma work can sustain ten sessions. Others doing shorter-term work feel good at twenty-five. There is no right number. There's your number.
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2How many weeks per year will you work? Account for vacation, sick time, holidays, and the weeks clients cancel more than usual. We recommend a minimum of four weeks off per year for therapists just starting. Plan for time off from the beginning — it's much easier to protect time you built into your fee than to recover time you never accounted for.
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3How much does your practice need to gross to sustain your life? This is the number most therapists resist calculating. It includes your business expenses (rent, software, liability insurance, licensing, continuing education, supervision), taxes (plan for 25-30% of gross as a self-employed person), health insurance if you're buying your own, retirement contributions, disability insurance, business savings for slow months, and your actual take-home income. Add all of that. That's your required gross income.
Once you have those three numbers, the formula is straightforward:
Required gross income ÷ weeks working = weekly gross needed ÷ clients per week = your fee
This number is almost always higher than what therapists set before doing the math. That discomfort is real. So is spending years undercharging and wondering why the practice never feels financially stable despite a full caseload.
The math most therapists skip
Here's a common scenario that illustrates why gross revenue isn't the number that matters:
A $120,000 practice takes home roughly $58,500 after expenses and taxes — under $5,000 a month. In most cities, that's a tight income. In high-cost-of-living markets, it's genuinely difficult. And that's before accounting for retirement, disability insurance, or health insurance if you're buying your own.
This is why we say the goal isn't six figures. The goal is knowing your actual take-home number and building a fee that gets you there.
The real cost of the sliding scale
Sliding scale is a values decision, and we respect that. Many therapists have genuine commitments to accessibility that matter deeply. But most therapists who slide do it without doing the math — and the math is significant.
If you see twenty clients per week and every $10 difference in your average session rate equals approximately $10,000 per year in income. If your stated fee is $150 but your average session rate is $110 because you've slid significantly for many clients, that's $40,000 per year less than your fee suggests.
Making your fee work for you and making therapy accessible are not in conflict — but they require a thoughtful approach, not reflexive sliding for everyone who asks. A few considerations: know your actual capacity for reduced-fee work before you offer it; have a process for determining eligibility that isn't based solely on what someone says in a consultation; and know that your practice staying financially healthy is what allows you to keep serving any clients at all. Some therapists also choose to give back through cash donations to community organizations with staffing and infrastructure to handle sliding scale properly, rather than individually sliding themselves into instability.
Common fears about raising your fees — addressed directly
"I need more certifications before I can charge more."
This is one of the most common fee avoidance strategies we see — and it's rarely actually about certifications. The therapists doing the most impactful work are not necessarily the ones with the most initials. What clients need is a clinician who is present, skilled, and not burned out from undercharging. Your existing training is already worth more than you're charging for it.
"No one in my area will pay that."
We've heard this from therapists in hundreds of cities across dozens of countries. When we pull up what a facial costs at a spa in their town, most therapists discover they're charging less than the local aesthetic treatment that lasts an hour. The transformation therapy creates lasts a lifetime. The "no one will pay that here" belief is almost always a fear projection, not a market reality.
"I'm afraid of being seen as money-hungry."
You became a therapist to help people. We know. Nobody goes into a master's program in social work or psychology because they wanted to be wealthy. But running a for-profit business with a nonprofit mentality is one of the fastest ways to close your practice. Your clients need you to still be there next year. Your fee is what makes that possible.
"My clients can't afford more."
You often don't know what your clients can afford. We have consistently seen therapists surprised — after raising their fees — that clients they assumed couldn't afford more continued working with them without blinking. The assumption of inability to pay is frequently a projection of the therapist's own money story, not a reflection of the client's actual financial situation.
When and how to raise your fees
About 90% of therapists who go through this training and apply the formula change their fee. That's not because we pushed them to — it's because the math makes clear that what they're charging doesn't add up to what their practice requires.
If you haven't raised your fees in the past two years, it's time to evaluate. The cost of everything has gone up. Your rent, your software, your CEs, your health insurance, your groceries. Your fee should reflect that reality.
When raising fees with existing clients:
- Give adequate notice — we recommend 30-60 days
- Write it clearly: a brief, matter-of-fact letter or email stating the new rate and effective date
- You do not need to apologize, justify, or over-explain. Your fee is your business decision.
- Some clients will end treatment. Most will not. The ones who leave were often not the right fit at any fee.
- For new clients, simply state your new rate from the start
The conversation about fees with clients — both the initial one and the raise — is covered in depth in the training above. Watch it before you make any changes.
Business School for Therapists
The fee training gives you the formula. Business School gives you the full financial curriculum — the practice calculator, the budgeting tools, the coaching on how to actually implement all of this in your specific situation, at your specific stage of practice.
Learn About Business School → Breakthrough Sessions available for personalized 1:1 support