How to Set your Rates.
It’s more than just a number.
One of the biggest mistakes I hear from people about setting rates is that they choose a number based on what other clinicians are offering in their area. Now, it may be the number that you end up going with, but that is because of coincidence, not because there is some sort of “right” rate to offer. There are several key factors that you need to take into consideration before setting your rate. It requires a piece of paper, a pen, and…dum dum dum a calculator. Yes, yes, I know most of us because therapists because we hate math, but you still need to do it. Or hell, call me and I’ll do it for you-I’ll charge you my rate but I’ll do it for you if you hate it that much.
First, you need to add how much it costs you to work. Include the following: insurance, rent, gas, travel time, childcare, utilities, internet, technology (ie your laptop, software, ehr, etc.), marketing, professional organizations and memberships. It might be easier to look at your total number of expenses for taxes last year. Add it up for the year, round for simplicity, write that down. This is number A.
Next, how much do you want to make? Think of a yearly number. Write that down. This is number B.
How much time do you want to take off in weeks? Subtract that number from 52 for a total number of weeks. Write that down. This is number C.
Last, think of how many sessions you want to work per week. Average full time in private practice is 20 sessions. This is number D.
Now for the math:
A divided by C= the amount you pay to work per week, this number is E
E divided by D= the amount you pay to work per session, this number is F
B divided by C= the amount of money you want to make per week, this number is G
G divided by D= the amount of money you want to make per session, this number is H
F plus H= your rate
Here is a peak behind the curtain with my own numbers (all rounded to make things more simple):
17,000 (A, the amount of money it costs me to work)
100,000 (B how much money I want to make per year)
48 (C, the number of weeks I want to work-includes illness time as well)
15 (D, the number of sessions I want to work per week, this is my sweet spot but I can do more or less depending on how I feel- I also manage chronic pain and illness, if you do too check out this resource)
A divided by C= 355 (E, cost per week to work)
E divided by D= 24 (F, cost per session to work)
B divided by C= 2084 (G, profit per week)
G divided by D = 139 (H, profit per session)
H plus F = 163, my rate which I round up to 165 for simplicity per hour because 163 is just weird
Don’t forget to pay your taxes-a common number to save is 30% of your profit. I also make sure to reevaluate my rate at least every two years after licensure renewal which means I am two years more experienced and two years more educated thanks to CEs. If you want help raising your rates check out this how to. If you don’t like the number you got for your rate, you can modify numbers B, C, or D slightly but beware working too much or too little leads to burnout (see link to blog on burnout list). If you’re still having trouble, schedule a strategy session with me and we can figure out where the hang up is and get you to the next right step.
