How To Decide When Raising Fees Is The Right Decision For You & Your Practice

Is it time for you to consider changing your current fee for therapy? 

Are you worried about how to implement this shift, and what your clients may think?

As you become more experienced and senior in your career, of course you'll want to raise your fees. As you earn new credentials and certifications, the value of your services increases. 

With the current economic landscape, we have to keep up with rising costs and inflation.

Not to mention your need for financial freedom. 

Think about the long-term sustainability of your practice. Do your current fees reflect what you need to thrive in practice? 

Undercharging can eat away at you from the inside out, leading to burn out, resentment, and a lack of joy in the work. You need to prioritize your own needs alongside those of your clients and your practice.

Because of this, it’s important to listen to your gut if you’re feeling a need to reassess your rates. 

If you're hesitant to raise your fees, take a moment to reflect. What's holding you back? 

Why Raise Your Therapy Private Practice Rates?

Before we answer the question: “how do I increase my rate as a therapist?” — let’s start with the why. 

Sometimes it's necessary to raise your rates with existing clients. This is a part of expanding your practice. Your clients will likely understand if you make a reasonable rate change. 

If you haven't raised your rate in years, your fees might not match with financial realities. As costs increase, you could start to feel burned out or run on empty for years. Your career should be financially rewarding. I've even heard people say that they're considering leaving the field. This is because they've met their limit -- emotionally, financially, or both. 

Self-Assessment in Raising Therapy Fees

Ask yourself: what might be holding you back? 

The main challenge many therapists face is in our own consciousness. We hold feelings towards our work, money, and our own sense of self. We each have a unique relationship with money and our own sense of worth. 

Do you have an impoverished consciousness around your practice, or one of abundance? Are you undervaluing or underpricing yourself out of fear or guilt? You might feel you're not worthy of charging more. This thought can limit the health of your practice. 

Trauma from Previous Workplaces Causing Fear of Raising Therapy Fees

I’ve heard so many heartbreaking stories about therapists feeling unappreciated. This is a result of being poorly compensated or unseen. 

Perhaps you’re reluctant to raise your fees because you’ve been underpaid in the past. You may have been told to “take a vow of poverty” at an agency, or work at a place that underpaid its staff. 

Address your willingness and resistance to see your worth. Challenge these negative beliefs that are so deeply ingrained. You must believe that you can build the private practice of your dreams. It doesn't have to be based on myths, limitations, or an impoverished mindset. 

Setting Fees in Private Practice with Humility vs. Grandiosity

It's equally important to address the mindset of being overly grandiose. 

Do you have the combination of expertise, relatability, and the ability to articulate why you charge what you do beyond, “well, that’s the market rate”?

Are you only willing to charge a premium price that’s higher than the market, without understanding the market?

Do you know your niche and what your ideal clients can afford? Are you attracting those clients? 

Take time to envision your ideal clients so that you can build a practice that aligns with your vision.

It’s one thing to have a grand vision, it’s another to confuse grandeur with grandiosity.

We all need to self-assess grandiose ideas. 

If you’re struggling to get clients at the rate you’d like, you may need to take a dose of humility. You could be cannabalizing your practice. Offering a diversity of fees can help avoid alienating potential clients.

Raising Therapy Fees to Keep Up with Ever-Increasing Costs

Rent, electricity, and groceries are a few examples of costs that continue to creep up year after year. Raising fees as a therapist is often required to keep up with the rising costs of running a business. 

Take a look at the difference between your earnings and expenses. You can make adjustments as needed to build a sustainable practice by doing this.

A few expenses that could cause your costs to rise the most are:

• Inflation: The average annual rate of inflation over the past few years has been about 3%. As a result, on average, the price of consumer goods and services has increased by 3%. If you haven't raised fees by 3% annually, the money you’re making today is worth less than the money you made last year. Your private practice therapy rates need to go up to account for inflation. This way you can maintain the same buying power as in previous years.
• Rental increases: Rent for commercial space is typically subject to a yearly increase. The exact amount can vary depending on location and the terms of your lease. If you don’t raise rates, your profit margins will drop. This could slow down the expansion of your private practice.
• Salary increases: Working in a private practice allows you to bring on administrative support. This could be in the form of a biller or more therapists. If you want to create and maintain a healthy working environment, you'll need to evaluate compensation every year. They will feel the effects of inflation every year, too. Employees should feel incentivized to continue working with you. Once again, if you’ve seen an increase in your expenses, and a corresponding rise in your rates is warranted.

Should a Therapist Increase Rates with More Experience?

Another year in a private practice means you've learned and developed more skills. You and your business can command higher compensation. This is in line with your increasing level of professional competence.. 

Does Professional Development Justify Raising Therapy Fees?

The extra income can be reinvested in you, your colleagues, and your practices professional development. With more economic flexibility, you’ll be able to invest in more. This includes resources, training, or certifications that will benefit your clients. 

Will Raising Therapy Fees Help Better Support Your Ideal Life?

When your needs are met, and you're living the life you desire, you can provide better care to your clients. 

Ask yourself the following questions to help you solidify the right time to raise your rates: 

• Are you burned out?  Finding the right pace and client-to-fee ratio can prevent further burnout. You don’t have to see more clients than your system can handle. If you need to reduce your hours, you’re allowed to think of how to ethically increase your income.
• Are you stressed? This may be a sign that you may need to see fewer clients and raise your rates. You need more time to relax, get re-balanced, energized, and in-tune with the work.
• Are you a highly sensitive person? If you’re a highly sensitive person, you may want to consider seeing fewer clients at a higher rate. A smaller quantity of higher paying clients can help you provide high quality work with each individual. You don't have to run yourself ragged. 
• Are you just getting started in private practice? When you’re building your practice at the beginning, you may want to start off more with a competitive rate. You could also work with a range of fees. You can consider raising your fees over time. When your weekly schedule and income reaches a place of comfort, you can be more discerning with your time.
• Do you have other sources of income? You may not have to raise your rates quite as much if you have access to alternative revenue streams. You can revisit your rates as your income ebbs and flows throughout your career. 
• Are you the sole provider in your family? It’s not easy to manage the stress that’s often associated with being a sole provider. If you are, you’ll want to increase your fees to better support your family.
• Are you financially stressed? Get guidance on how to set your fee with our Charge What You’re Worth calculator. This tool takes the big picture of your finances, income, and expenses. Seeing this helps you set a fee that aligns with the life you want to live. Temporarily raising your fee can also help you feel more at ease during a difficult period. Remember, you don’t have to take a vow of poverty.
• Are you thinking about expanding your practice? If you have an entrepreneurial spirit, what will it take to grow your practice? You’ll want to have a solid understanding of the costs and expenses associated with expansion. This helps to set you up for success. You’ll be clear on what extra income you’ll need to grow your practice and execute the expansion you envision.
• Are you planning for a significant life event?  A significant life event like buying a home, getting a mortgage, or starting a family could warrant a fee increase. As a self-employed person, there might be a period of time when you need to see more clients or raise your rates. 

How Does a Therapist Go About Setting Fees in Private Practice?

Hopefully something mentioned above resonated with you. Now that you know you're allowed to change your rates, let's go over how to do it. 

To help you figure this out, here are a few considerations to make when setting an hourly rate:

Research Local Therapist Fees Online

Many people are genuinely unaware that they can charge fees based on their location. This means according to your zip code. Your specialty is also a factor. 

You can look up what the rates are for your area on the fair health calculator. 

You can also find out what other people are charging. Therapist profiles in online directories like Psychology Today or Good Therapy give a great overview. 

This way you can find what the current competitive prices are in your market. You can then make decisions bout what range of fees you want for your private practice. 

Poll Your Private Practice Therapist Colleagues

Your network and colleagues can be a powerful resource for you. Connect with your colleagues and discuss setting fees. They can help you with choosing reasonable rates given where you are in your career. Ask them to consider what you bring to the table: number of clients, specialties, and years of experience. You can also include your personal and professional goals.  

Plan Backwards From Your Goals Rather Than Basing Your Price on Market Conditions

Another way to determine your fee increase is by basing it on your goals. 

There's a simple equation you can use to decide your annual income goal. Choose a figure and multiply it by 1.5. This figure should be enough to meet the financial obligations of your practice. That includes paying taxes. 

Next, decide how many therapy sessions a week you want to have. You can also think about how many weeks of vacation you plan on taking. This will help you decide how much you want to charge per session. To make this all simple, use the Clarity Cooperative's FREE therapist fee calculator. 

Understand Your Audience

It’s important to understand macro level trends and individual client needs with fees. Unless it's written in a contract, you can choose if increases affect your entire client base. You can choose to increase rates for everyone, only new one, or for certain specialty services. An example of a specialty service would be family or group therapy. 

Keep in mind that whatever you decide to do with your fees, make sure you're not being discriminatory. 

Consider Sliding Scale and Pro-Bono Work

The APA code of ethics encourages us all to consider accessible care and to engage in some form of pro-bono work.

There might be clients that can't afford your therapy services. If you offer them a sliding scale fee structure it could make the financial burden on them easier

I've had many occasions where I've had to assess if a reduced therapy session fee to be able to maintain sessions. I prefer to make a temporary reduction in fees so that I can be of service to a client. We can continue the work we're doing. There's also the expectation that one day they'll be financially robust again soon. At that point, we'd re-assess a fee thats more in line with my regular rates. 

On the other end of the spectrum is when a client has been coming in with a reduced fee. Their situation has improved. In these cases, you might want to raise your rate if they now have the resources or insurance to cover regular fees. This also frees up another slot for a new reduced fee client, without taking a hit to your practice's finances. 

Follow Trends in Insurance and Inflation When Raising Therapy Fees

You also want to be raising your rate based on trends in insurance and inflation. 

Unfortunately, insurance companies and federal agencies try to undercut their providers. Being in-network comes with some benefits, but the insurance company determines the rate. The rate could be less than what you desire. 

If you're out-of-network, you should raise your prices according to the rate of inflation. This is what you should do, at minimum. Otherwise, you're giving yourself a paycut every year. If your rates are increased every year, it accounts for the general trend of rising costs. 

If you’re an in-network, you’ll want to contact your local provider representative. With them, you can request a rate increase. 

Position Yourself as a Thought Leader

Finding a niche or specialty can help position you as an expert. This is one way you can raise your rates, and see fewer clients. 

To show your thought leadership in the field, you can use copy unity, writing, or connecting with the press. You'll also want to make sure you check your website's Domain Authority (DA) score. This shows your likelihood of showing up at the top of search engine results. This will help increase your Experience, Expertise, Authority, and Trustworthiness (E-E-A-T) score. shows your thought leadership in the field. 

Provide Options when Setting Fees in Private Practice

In deciding how you’ll implement your fee increase, you can consider two options:

In deciding how you’ll put in place a fee increase, you can consider two options:

1. Raising Fees Across the Board

If you raise fees for all your current and new clients, you'll have to communicate this to everyone. You'll need to feel confident in your fee and be able to explain that this is the same across the board. 

• Fixed point in time: Some people raise their fees every one or two years at a fixed date. For example, a therapist may choose to increase fees every two years in September.
• Flat percentage increase: Some therapists raise all of their fees by a fixed percentage. For example, you may decide to raise your fees for all services by 10% at the beginning of every year. Another option is to raise the fee by that percentage after one year of working with each new client. 
• Nominal value increase: Another way to raise fees is to add a value for every client. For example, adding $20 to every client's fee. 

I recommend blending the above options on a case-by-case basis. The practice of raising fees isn't cookie cutter. It should depend on what is reasonable and fair for your clients and your practice. 

2. Operating With a Range of Fees

If you’re like most therapists in private practice, you likely have a range of fees.

This model is very effective when you are first building your practice. I also highly recommend it. It helps you have more flexibility in your practice, which also helps with preventing burnout. 

• Different rates for allocated slots: Seeing clients with a wider range of fees can make it less stressful to fill your schedule. This also allows you have more opportunities to adjust as needed. For example, you may want to have 20 clients in your practice. So, you could take on ten people at a lower price point (perhaps $150). Then once those spots are occupied, you could take on five people at a higher rate. As your time fills up and becomes more valuable, you can raise your fees for the remaining 5 new clients. 
• Staggering increases: For clients facing financial difficulties, you may want to stagger your rate increase. Or possibly delay them altogether.
• Pro-bono work: You may also want to raise or lower your fees if you want to take on pro bono clients. If you do take on pro bono clients, you might want to take on a few higher fee clients to offset the difference and average out at a more reasonable rate. 

Finding Your Balance with Setting Fees in Private Practice

At the end of the day, we all need to feel balanced and grounded.

Think about how you can continue to practice in an ethical and legal manner. You'll want to strike a balance between the field at large, your financial needs, and what clients can reasonably afford. You have every right to offer a range of fees within your practice. These and  many others are reasons to explore your ideal caseload and fee model.

Keeping these considerations in mind will help you develop a plan for your ultimate success. 

I hope this helps,

LPJ