How to set your fees
Let’s break this down with a simple equation. Then you’ll check inside to figure out what fee resonates for you.
Watch the video or use the instructions below it.
Step 1: Find your bottom line income need
Find these numbers:
- business expenses
- business savings
- personal expenses
- personal savings
(add them all up)
That sum is your bottom line income need (calculate per month).
Take a deep breath.
You’re doing great.
You’ve already arrived at your bottom line income need.
Step 2: Figure out how many sessions you'll have per week.
You'll need these numbers:
- number of sessions you can have in your practice each week
- number of weeks of vacation and/or sick time you need in a year
- number of sessions (roughly) you lose due to unpaid cancellations and attrition
Consider your energy level and having enough time for networking, marketing, continuing education, and a lovely personal life. How many sessions can you have in a week and be at your best?
Now how many weeks of vacation and sick time do you need?
Roughly how many sessions do you lose due to unpaid cancellations and attrition?
Subtract your vacation and sick time from 52, multiply that number by your number of sessions and divide that number by 12.
Now subtract your estimate of sessions lost to cancellations and attrition each month. That gives you a realistic estimate of your true number of sessions per month.
For example, Pam can happily do 14 sessions per week. She needs 4 weeks of vacation or sick time. She loses about 5 sessions per month due to cancellations and attrition. Here’s her equation:
52-4=48 weeks of work per year.
14 sessions x 48 weeks= 672 sessions per year
672 sessions / 12 months = 56 sessions per month
56 sessions - 5 sessions lost =
51 sessions per month
Step 3: Figure out your minimum average fee:
Bottom line income divided by # of sessions = minimum average fee
Your AVERAGE fee must equal at minimum your bottom line income need divided by your true number of sessions.
That means if you have a sliding scale, you’ve got to have a higher “full fee” so that your average fee stays at that level.
Track your average fee so that you know what it actually is. Don’t just estimate.
Therapists almost ALWAYS overestimate their current average fee. They also almost always under-estimate how many sessions they lose due to cancellations and attrition.
Now what if you have to raise your fees?
First choose your new, higher fee for clients who enter your practice from now on.
Next start talking to each of your new clients about when you’ll be raising their fees in the future.
Then decide what to do about the fees of each of your previously existing clients.
For each of your previously existing clients, ask yourself 3 things:
1. Will this new fee cause them financial harm?
2. What will you do if they say they can’t afford it?
3. How much notice will you give?
Step into those conversations with your clients only after you've answered those questions for yourself. That way you can be totally available to them in the sessions knowing how you're going to take care of you.
Congratulations! You've found a fee that's based on the reality of your practice and your life. You're one step closer to creating the practice you want.