How do you set your private practice fee?

Setting your private practice fee can be one of the hardest part in starting a practice. There are many aspects to consider:
  1. Will this be your only means of supporting yourself?
  2. Where will the majority of your referrals come from?
  3. What populations do you want to work with?
  4. What will your overhead expenses be?
  5. If you’re pre-licensed, will your supervisor let you set your fee?
  6. Will your fee be the same for all patients, or will you offer a sliding scale?
  7. What are other’s charging? This last point is tricky as due to laws about monopolies psychologists cannot advertise their price. Here in the San Francisco Bay Area fees range widely based on services provided, location, experience, degree, etc.
  8. What is your relationship to money? How will you feel asking for $50 or $100 or $300 per session? A lot of us in this profession have a very problematic view of money, feeling that we cannot charge for what we do. This leads to resentments, burn-out, and ironically difficulty helping others as we are not taking care of ourselves.
Money
Money (Photo credit: Thomas Hawk)

Five practical steps to setting your private practice fee:

  1. Ask around. Find out what other clinician’s are charging for their services. You don’t want a fee that is far higher or lower than the others in the area. Lower fees can carry negative (sometimes unconscious) stereotypes about the quality of your work. Excessively high fees will narrow your market, and perhaps come across as grandiose.
  2. What sets you apart? How do you compare? Do you have more experience, more flexible hours, or speak a different language? This adds value and should be reflected in your fee. If you offer something unique, a high fee is not grandiose.
  3. What is your culture of money? What were the messages about money that your grew up with? What prejudices do you have about money? Just like other cultural values we carry a lot of unexamined messages about money that we learned from our families and communities. Issues about politeness often interfere with frank discussions about money and make it hard to approach your fee clinically.
  4. Practice. With a friend rehearse stating your fee as you might during an intake. Ask your friend to watch for any sign of discomfort. Statements like “My fee is X, but…” or “What can you pay?” are clear signs that you are uncomfortable.
  5. Calculate your business expenses and desired income, then work backwards. To make it simple, let’s say annual business expenses total $12000 ($1000/month) and your desired income is $100,000. This would mean you need to earn $9333 per month ($100,000/12 + $1000) to cover expenses and meet your goal. Break it down further. If you work 40 (!!) billable hours per week, that would be $58.33 per session ($9333 divided by 160 hours per month).

Secret sixth step: repeat, revise, and revisit.

Every year look at your private practice fee and ask if it is still suitable. Have you gained specialized training over the last year? Do you provide a new service? Have you increased or decreased your operating expenses? Are you having trouble finding patients who can afford your rates? Adjust your fee to meet the demands of the area that you are in and the skills and services that you provide.

Setting your private practice fee
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