How to Set Your Private Practice Rates (and How to Raise Them) | PoP 384

How to Set Your Private Practice Rates (and How to Raise Them) | PoP 384

Are you still struggling with figuring out how to set your rates? Maybe you want to raise your rates but are not sure how to do it. Want some inside info that will help you do both and make sure you are getting paid what you are worth?

In this podcast episode Joe Sanok speaks about how to set your private practice rates and how to raise them.

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In This Podcast


In this podcast episode, Joe Sanok speaks about how to set your private practice rates and how to raise them and he shares 7 tips you can put in place to make sure that you are not undercharging.

7 Different Tips of Things you Want To Do When Setting Your Rates

1. Evaluate your market

Research Psychology Today, Good Therapy or any online directory sites to look at the average rates. Get a good idea of what people are charging.

2. Work on charging 20-30% higher than the market

Once you’ve done the above research you should charge 20-30% higher. You will then be able to see fewer people then and it sets you up to grow faster.

3. Work backward based on your goals rather than just set it based on the market

Think about how much you want to make in a year – take that number and multiply it by 1.5 (this will give you enough for taxes and covering business expenses). As an example, you need to make $30 000 per year x 1.5 = $45 000

Then think about how many weeks you want to take off during the year. If you want to take off 4 weeks in the year then it would look like this: $45 000 / 48 weeks = $937.50 per week you need to make.

How many sessions a week seems reasonable? Maybe you can do 5 sessions a week so then: @937.50 / 5 sessions = $187.50 per session

This may be more pronounced than what the market is at right now, so then you need to have a specialty and niche in. If this is not doable then you have to further look at what numbers you can adjust to get your goal, so this means adding more sessions.

4. Insurance pulling down the average

Think through how many full paying clients you need to reach these goals.

5. When you’re 80% full you must raise your prices

This is when you want to start raising your rates for your new clients. Throughout the year, keep people at their rate, but then raise it in January of the next year.

6. Evaluate all your time as part of the equation

How much time are you putting into the practice over and above your clinical sessions? Make sure that you are as lean as possible outside of what you are getting paid for – outsource your admin work.

7. Raise your prices every year

Costs go up across the board every single year so you want to make sure that your prices are also being raised. Keep having substantial jumps in your hourly, send an email to your clients in October notifying them that rates will be increasing. Your email could sound a bit like this:

Dear Jane, 

It’s been awesome working with you in the counseling sessions, we’ve made such progress throughout this year. I look forward to continuing working with you and helping you work on your therapeutic goals. As you might not know, current clients are coming in at the rate of $195 per session and when you started in January of this year, you came in at $150 per session. It didn’t seem fair to raise your rates when new people came in, but in an effort to realign everyone, on January 1st I’m going to be raising everyone’s rates to that $195 per session.

I know that you’re probably looking for your health insurance right now, and even though we’re out of network I wanted to let you know that in case you were going to be contributing to a flexible spending account or an HSA. If this in any way gets in the way of your counseling and your ability to come, please let me know, we can change our schedule and we can discuss this as well.

Thank you, I look forward to hearing from you.

When you do this you are saying you went into this business to help people but that you also have very real costs that go up. Also, I recommend that your intake sessions be $25-30 higher than your hourly rate.

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Podcast Transcription

[JOE SANOK] When it comes to keeping your practice organized, you want software that is not only simple but the best. I recommend Therapy Notes, their platform lets you manage notes, claims, scheduling and more. Plus, they offer amazing unlimited phone and email support. So, when you have a question, they are there to help. To get two free months of Therapy Notes, just use promo code ‘Joe’, when you sign up for your free trial at Therapy Notes. com. Again, that’s promo code ‘Joe’ over at

This is The Practice of the Practice Podcast with Joe Sanok, session number 384.

Welcome to The Practice of the Practice Podcast. I am so glad you are here. It’s really fun when I jump on phone calls or do a Skype call with people that have been listeners for a while. You know, oftentimes people say ‘it’s so weird because I listen to your podcast all the time, or I’ve been following you for years.’ And, you know, I always say pretty much the same thing that never gets old to me, because I’ve got people that I look up to in my life that when I talked to them, I was so nervous and was so excited. And you know, it’s just such an honor to be that in someone else’s eyes.

And then what quickly happens is they realize I’m just a regular Joe. And that, yeah, maybe I have some experiences you don’t have. And maybe I can teach you some things that you didn’t know, but I’m just a regular guy, living here in Northern Michigan and doing what I do.
Well, today, we’ve got a solo show ahead of ourselves. A solo show, for those of you that are new, is where I just kind of talk about something, it’s sort of a soliloquy, one might say, where I’ve put together some specific things that I know are going to really help you. Versus when we have the guests show, when I have guests.

For the next three shows, we’re actually going to be doing solo shows. Let me just tell you kind of what’s coming up also. So today is all about how to set your rates. The next time we’re talking about Why Slowing Down Is The Key To Growing A Practice. And then the next one after that is The Three Stages Of Private Practice: From Solopreneur All The Way To CEO.

We’ve got the show today, that goes live on July 23. In two days on Thursday, the 25th is the slow down one. And that’s actually because right now, while this is live, I’m actually hosting Slow Down School here in Northern Michigan on the beaches. And then the 30th, next Tuesday, that’s The Three Stages Of Private Practice: From Solopreneur All The Way To CEO of your group practice.

We’ve got some fun things coming up. We’ve also got this guy, Cedric Bertelli who’s going to be live on the sixth of August and Cedric, he and I actually just talked today, on the day of this recording. And man, he has some amazing stories about people transforming really quick in practice. He talks about brain research and things that I’m just so excited about. So that’s all coming up pretty soon here.

Slow Down School is going on right now. People are hanging out, actually, today, Tuesday is our second day of really slowing down. We’re probably going on hikes, I think our massage therapists and Thai bodyworker is there, and we’re going to watch the sunset tonight. The next episode is going to be about slowing down. But I think it’s really important to take that time to reflect, to step back, to really understand where you’re headed. And when we’re talking about money, I’m going to take you through a number of exercises that will help you with that. That idea of being in community with people and around other people that have a similar mindset to speed you up is so important.

What often happens if you go to a large ACA conference, or you go to an online Facebook group, there are so many different perspectives. And diversity is awesome, but it’s also very confusing when you’re trying to build a practice from a certain point of view, and other people don’t agree with you or don’t even have the skill set to know why you would use LinkedIn to reach out to professionals or why you would use Instagram to reach out to more of an artsy client. What often happens at those large conferences or you know, those Facebook groups that a ton of different people join, is you end up just being more confused and actually spending more time than you should, it doesn’t actually save you time.

I bring that up because before we dive into this episode, I really want to encourage you to sign up for Killin’It Camp – this is our conference we’re doing out in Estes Park, Colorado, October 20, through 23rd. And those regular ticket rates actually are done on August 19. You’ve got about a month or so to make this decision. Reach out to me if you’re not sure, at this point, we have over 100 people that have registered we’re anticipating, if we’re really sold out, to be around 300. But we’re probably going to be around 200 people. So, a good-sized conference, everything is included in it: your food, your lodging, the conference, and the regular ticket prices are $750. And those bounce up to $900 for that night owl pricing, which is right before we really kind of get things going. If you’re planning to come, now’s the time and your airline tickets are going to go up in price, too. You’re going to want to get those as well.

We’re going to be walking through how do you kill it in private practice, we have some great speakers, we have some great surprises for you. And I’m going to be there the whole time, my wife and I are staying right there on site. Our kids are staying home so we can be fully focused on helping to serve you and serve your practice. So again, that’s we’d love for you to bounce over there.
Let’s talk a little bit about setting your rates. A lot of people don’t really even think through this when I asked them when we do pre-consulting calls, or they’re in the Mastermind Group or Next Level Practice. They don’t even really think through how did I set my rates when I first started. I’m going to give you seven different tips of things that you want to do when you’re setting your rates. And then after I give you those tips, I’m going to tell you exactly how I have raised my rates, whether it’s in my consulting, or my counseling, every single year since I started my practice. I went from $70 per session, to now I’m charging $300 for intake and $250 per session. And actually, by the time of this recording, I’ll be done doing all the clinical work, because fingers crossed, at the time this recording is done, the sale of my practice will hopefully have gone through. We’re dealing with all the stress of working with a bank for the buyer, and man and they need a lot of stuff. And well we’ll walk through all those different things and what I maybe could have done differently over the last three years in the lead up to the sale. But you know, luckily, we were able to get everything to them. It’s just kind of the waiting game now.

So, raising your prices, the first thing you want to do is you want to evaluate your market. So how do you evaluate your market? Well, there are a few different ways you can do it. And most of its pretty manual, it’s not like there’s any sort of report that says here’s the average private pay rate. And I should clarify that we’re talking private pay counseling, insurance rates, it’s very hard to negotiate up too much higher than what it is unless you’re in a specialty area or a rural area.

I was talking to someone in Oregon recently, and their Medicaid was paying like $150 per hour, I was blown away. I never heard of rates that high, which is awesome that The State of Oregon is doing that. But in most cases, your insurance rates are pretty locked in. And so, we’re really talking about your private pay rates and how do you set those? We’re not going to be talking as much about the marketing side of it, just kind of the nuts and bolts of raising your rates and setting your rates.

We’re going to evaluate the market, I want you to also be 20 – 30% higher than the market, we’re going to work backward based on your goals rather than just set it based on the market, we’re going to remind you about insurance pulling down the average, when you’re 80% full you’re going to want to raise your prices. We’re going to want to be evaluating all the time, and having a higher intake rate. And then we’re going to raise your prices every year and I’m going to show you how.

All right, evaluating the market, this is going to be more manual and it’s not going to be a perfect science, but you’re going to have a pretty decent sense of the private pay rate. First, you want to go on Psychology Today, Good Therapy, any of those online counseling, any of those types of rates, or kind of directory sites to look at the average rates that are going on there. And we also might want to go to some of these clinicians’ websites just look and see what they’re putting on their websites, trying to get a decent idea of how much people are charging. My guess is it’s going to be somewhere between $90 and $120 a session in most markets. In some kind of larger markets like LA, San Francisco, New York, I’m definitely going to see higher rates in some of those larger cities or larger markets. But that’s kind of typical, is somewhere around that $100 mark, which is crazy, because when you think about inflation, it’s been there since I opened my practice 15 years ago. And if we look at inflation alone, every year, people are losing money, your rental costs are going up, your internet costs are going up, your liability insurance is going up. But people are still often charging the same amount they did 10 years ago. You want to get a basic idea.

So, let’s just for the sake of math, say $100 a session is an average for your market. After you’ve evaluated the market, you’re going to want to charge about 20 to 30% higher than the market. Now when I did this research, when I first opened Mental Wellness Counseling and I was private pay, not paneled with anyone. The average was $80 per session for private pay, so I started at $70, because I just wanted to fill up, which is fine. But when you actually run the numbers, you want to be 20 – 30% higher, because you can see fewer people then, and it sets you up to be able to grow faster. So why 20 – 30%? Well, when it’s just $5, more $10, more, 5 – 10% more, that doesn’t feel like enough to really make you feel like an expert, that just means that you’re a little bit higher priced. But if you’re at $120, and the average market is at $100, or you’re at $130, that’s a pretty pronounced decision, and that’s going to get you your ideal client. It’s going to get people that are willing to pay, they’re going to be willing to show up, they’re going to have less no show, because they are going to make a conscientious decision to work with you, despite your price being higher.

Imagine me and Christina were out on a date, and we decided we really want to have a nice evening. We’re not just going out with the family; we want to have a nice evening. And you know, someone says, we’ve got this one steak, it’s going to be $17 but we had this other steak that was $45. And it’s amazing, it’s going to be the steak you talk about the rest of your life. What are you going to choose at that moment? And, you know, counseling isn’t just an everyday choice. Counseling isn’t the same as hiring a plumber, you know, the plumber, if they fix it, it’s good. It doesn’t really matter as much as to whether or not you get along with your plumber, it doesn’t matter as much as to whether they worked 40 years or they worked 20 years. If they can do the job and fix it then that’s really good and that’s the bottom line. Therapy has a little bit of difference there, people are going to make different assumptions if your price is more than the market. And you’re probably going to attract the kind of clients that are easier to work with and allow you to grow, refer and all that. That’s what I’ve seen in my experience with my consulting clients.

Number 3, we want to work backward. A lot of people say okay, the markets $80, I’m going to charge $110 and there we go, Well, that doesn’t take into account your life and your lifestyle at all. Maybe you’re a stay at home parent, and you’ve stayed home for the last five years or so, your kids are finally off to kindergarten full time, or even part-time and you’re saying that you want to bring in a little bit of extra money into the family. Thinking through, what are your goals for private practice? So, imagine a stay at home parent that says you know what if they could just bring an extra $30,000 a year that’d be really awesome. We’re going to want to take that number and multiply it by 1.5. Why 1.5? Well, that’s going to give you enough for taxes and typically enough for the business expenses. So, subleasing an office, if you’re just going to do a part-time, maybe setting up a website, getting some of that basic infrastructure setup. It’s going to give you some wiggle room, and also some savings.

So we multiply that $30,000 by 1.5 for our taxes and expenses, which gives us $45,000 that needs to come in. Then we want to say how many weeks a year would we take off. Say this parent knows that four weeks a year between maybe Christmas or Hanukkah or Thanksgiving or other things, maybe a summer vacation, they want at least four weeks off a year. We’re going to divide that $45,000 by 48 weeks. Of course, your numbers can shift and change based on whatever your goals are. That’s going to give us $937.50 per week that needs to come in to reach that goal. Now then we want to say well, how many sessions a week seems reasonable? Well, how many sessions a week do we really want to do? Well, let’s see, I have about seven hours a week that I could put into the practice. And if I did five clinical sessions, and then 2 hours of blogging, or networking or things like that, maybe that would be enough. Divide that by 5 sessions, that gives us one at $187.50 per session average. Maybe that’s more pronounced than what the market is at right now, so then you’ve got to have a specialty, you’ve got to kind of niche in, you’ve got to figure out how do you have your worth be worth that went at $187.50?

So how do you do that? Well, I mean, you have specialties, you partner and make sure that people understand the value of you. Now maybe you say, there’s no way my town could do $187 per session, well, then we have to look at which of our numbers we can wiggle. Maybe it’s 48 weeks a year, I’m going to take off four weeks a year, I just want to be able to do that. But you know, maybe I’m willing to work more than 5 sessions a week, maybe I’m willing to do 7 sessions, well, then that would pull that down. Maybe $30,000 isn’t exactly what I need to bring in. So, then you kind of start to run the numbers and say, well, let’s say I was averaging $150 per session, and then ran those numbers, how much could I take home. And then you can kind of wiggle those numbers around a bit. But you also want to take into account that if you’re seeing sliding fee people or if you’re seeing insurance, that’s going to pull your overall average down. You want to make sure that you’re averaging that amount based on your lifestyle. So, evaluate the market to be 20 – 30% higher, work backward.

Number 4, just a reminder, the insurance pulls down that average. A lot of times people say well, I’m making $175 per session and I’m like’ well what percentage of your clients are paying that?’ If you only have two or three that are paying that the rest are sliding fee at $75. And then you’re on insurance, it pays $91. Okay, so your average is actually a little closer to $90 a session rather than $175. You really want to think through many full paying clients you need to reach these goals. Just because you have one or two, that doesn’t mean that’s going to be your average, you’ve got to run the numbers.

Number 5 – when you are 80% full. If you want to see 10 clients a week and you are at eight, that’s when you want to start raising your rates for your new clients. So, if someone comes into work with you, you want to keep the rate the same throughout the year. If they come in in January or June and they come in at $135 a session and you feel like you’re too busy, you want to have a waitlist, you don’t want to waitlist, no don’t have a waitlist. What you want to do is you want to make sure that you just keep raising your rates to make it worth it for yourself. When you feel like you want a waitlist, just raise your rates, when you’re 80% full that’s what we want to start raising your rates. And I have done this with so many pre-consulting clients. When people go to they apply to work with me or with Alison or one of the Mastermind Groups. My point of view when doing those pre-consulting calls with people is to give them good quality information, whether or not we will work together, we have enough people applying to work with us that I don’t have to convince anyone to work with me, I can just give them good quality information and just say, here’s where I think the best return on investment would be for you. So, I bet in the last month, I’ve had this conversation 10 times with people about raising their rates. And I have yet to have someone come back and say ‘Oh my gosh, that didn’t work.’

And so the way it works is throughout the year you keep people at their rate, and then every year you raise it for everyone in January. But throughout the year, when you’re 80% full you want to do a pronounced jump in your rates. If you’re at $130 you don’t go to $135. Because for you that emotional impact of well, at $135, you’re going to second guess that. You’re going to say well maybe the market could bear that, maybe that doesn’t feel like that big of a jump. But when you go up by $20 or $30 per session, when you go from $130 to $150, or $130 to $175… If people say yes to that, holy cow, emotionally it’s like ‘I’ve been leaving money on the table, I need to really work on these things more, I need to know what I’m doing.’ It really does a jolt to your system when you do that.

Number 6, we’re then going to be evaluating all of your time as part of the equation. Oftentimes I’ll say to people, how much are you making? And they say, well, let’s see, I’m getting $175 per session doing 20 clinical hours a week. Okay, and then how much time are you putting into the practice outside of 20? Oh, probably 30 hours? Well, that just split your, your hourly, more than in half, where are you wasting your time on that much if your clinical hours are there. You want to make sure you are as lean as possible outside of what you’re getting paid for. So many people don’t realize that they are the most overpaid assistant in the world. You know, if they’re answering their own email, if they’re answering their own phones, doing their own scheduling, you can outsource that for $15 – $30 an hour depending on whether you’re training them yourself or going through a company. It’s amazing how people don’t really think through if you’re working 20 hours a week, clinically, and then you do another 20 in regards to your admin, that is 20 hours of lost income. Do you know how many people you could have hired if you were just doing clinical sessions? And I’m not saying 40 sessions a week is a good amount. That’s a terrible amount of sessions to do in a week. But even if you did 10 sessions, you were at 30 sessions a week, and then you hired someone else to do that at $20 – $25 an hour, you would be so much farther ahead. The math almost always works, I can’t think of a situation. Unless like the practice just tanks and you can’t fill it up, then you have you know, other issues.

Number 7, you’re going to raise your prices every year. Why every year? Well, you want to raise your prices every single year because your costs are always going up. Everybody these costs go up. Health insurance, our costs went up and they decided they weren’t going to cover my insulin anymore. After I have this stupid little vial of insulin with 100 needles, rather than have it just in a little pen. I’m so frustrated about it, I’m going to get my insulin from Canada now, which I don’t know why I didn’t do that before. We have these things that we pay more for and we get less every single year in every area of our life. Your costs will continue to go up, your experience will go up, your specialty will go up, your reputation will go up. All of those things allow you to raise your rates. So how do you raise your rates every single year?

Well, like I said, throughout the year, what you’re going to be doing is you’re going to keep having those substantial jumps in your hourly every time you’re 80% full. You’re going to keep doing that throughout the year, and then in October, if you’re in the United States, other countries may have a different kind of time of year that makes more sense. But open enrolment for most people is going to be in November. I send an email to all of my clients. That’s how I communicate with them. Communicate in whatever way you’ve communicated in the past, so maybe you hand them a letter, maybe mail a letter, maybe email them, however, you use it, put it into their portal. So then you send an email, that’s just entitled open enrolment, and it goes something like this:

Dear Jane,
It’s been awesome working with you in the counseling sessions, we’ve made such progress throughout this year. I look forward to continuing working with you and helping you work on your therapeutic goals. As you might not know, current clients are coming in at the rate of $195 per session and when you started in January of this year, you came in at $150 per session. It didn’t seem fair to raise your rates when new people came in, but in an effort to realign everyone, on January 1st I’m going to be raising everyone’s rates to that $195 per session. I know that you’re probably looking for your health insurance right now, and even though we’re out of network I wanted to let you know that in case you were going to be contributing to a flexible spending account or an HSA. If this in any way gets in the way of your counseling and your ability to come, please let me know, we can change our schedule and we can discuss this as well. Thank you, I look forward to hearing from you.

So, when you do that, you’re saying I went into this business to help people but also, I have very real costs that go up. And so, on January 1, those costs are changing. I’ve never had a client say nope, I’m done doing counseling. They might say I’m going to go to every other week, they might say I want to go once a month, they might say, hey, I want you to give me more homework and more books to read. Great, then people are putting in that extra effort outside of the therapy session, which is what we want anyway, right. And so, when you do that, it allows you to realign everybody. And then you continue to going to push the envelope with the finances. Also, I’d recommend that your intake session, because it usually takes longer to schedule, people are more likely to no show, there’s a lot that goes into that intake session, even if it’s not longer, have that be $25 – $30 higher than whatever your hourly rate is.

If you have any questions about this, we have a ton of resources over at We have e-books, we have checklists, all sorts of downloads to help you start to grow and scale your private practice. Go ahead and also head on over to www.killingitcampcom. We’ve got those regular price tickets going on. I think last I checked at the time of this recording we had about 90 of those left. They are a limited amount, so if you are ready to do that, make sure you get it before those tickets end in mid-August.
And lastly, I couldn’t put the amount of time and effort that I put into these podcasts, to interview people to get the editing done to pay Sam and Sam to do the show notes and the images. I could not do all of that for free for you without people and companies like Therapy Notes. Therapy Notes is the best electronic health records if you are looking for a new electronic health records if you’re ready to be more organized, if you want your scheduling to be all HIPAA compliant, and you want that customer service support, you’ve got to check them out. Go over to, use promo code ‘Joe’, you get two months for free. You can test it out, no obligation, you’re going to just be able to see how awesome of a platform it is and we could not do this without sponsors like that.
Thank you so much for letting me into your ears and into your brain. We’re going to be talking about slowing down in the next podcast and I can’t wait to help you continue to grow your practice.

Have a great day.

This podcast is designed to provide accurate authoritative information in regard to the subject matter covered. It’s given with the understanding that neither the hosts, the publisher or the guests are entering legal, accounting, clinical or other professional information. If you need a professional you should find one. Thanks to the band Silence Is Sexy for your intro music. We love it.

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