Setting your therapy session fees isn’t just about picking a number that feels right—it’s about making sure your practice is financially sustainable. A break-even analysis helps you determine the minimum rate you need to charge just to cover your expenses. Once you have that number, you can adjust your pricing to ensure profitability, long-term sustainability, and growth.

Let’s break it down step by step.

What is a Break-Even Point, and Why Does It Matter?

Your break-even point is the amount of revenue you need to cover all your business expenses—without making a profit or taking a loss. If you price below this number, you’re operating at a loss. If you price at this number, you’re just getting by.

To thrive, you need to go beyond the break-even point and factor in income goals, time off, and professional growth.

Benefits of Knowing Your Break-Even Point:

• Ensures you’re not undercharging and losing money.
• Helps you plan for taxes, savings, and unexpected costs.
• Gives you a clear foundation for setting profitable rates.

Step 1: Identify Your Expenses

Start by calculating all the costs associated with running your therapy practice. These include both fixed (consistent) and variable (fluctuating) expenses.

Fixed Expenses (Monthly or Annual Costs):

• Office rent (if applicable)
• Practice management software (e.g., SimplePractice, TherapyNotes)
• Professional liability insurance
• Licensing fees and association dues
• Continuing education courses (e.g., from Agents of Change Continuing Education)
• Marketing costs (website hosting, ads, business cards)

Variable Expenses (Fluctuating Costs):

• Credit card processing fees
• Utilities (if you have a physical office)
• Office supplies (paper, printer ink, furniture)
• Supervision or consultation fees
• Networking or professional events

Add up all these expenses to find your total monthly business costs.

Step 2: Set Your Income Goal

Now that you know what it costs to run your practice, it’s time to determine how much you need (or want) to earn to live comfortably.

Consider These Factors When Setting Your Income Goal:

• Your desired annual salary (before taxes).
• How much you need to cover personal expenses (rent, groceries, savings).
• How many weeks per year you plan to take off (for vacations, sick leave, professional development).

For example, if you want to earn $80,000 per year and take 4 weeks off, that means your income must be generated over 48 working weeks.

Step 3: Determine Your Billable Hours

Therapists don’t spend 40+ hours a week in sessions. You also need time for admin work, documentation, marketing, and professional development.

A realistic caseload for full-time private practice is typically 15–25 client sessions per week. If you overbook, you risk burnout. If you underbook, you may struggle financially.

Estimating Your Billable Hours:

• Full-time therapists: 15–25 sessions per week
• Part-time therapists: 8–12 sessions per week
• Hybrid (agency + private practice): 5–10 sessions per week

Once you decide how many sessions you can realistically handle, you can calculate what you need to charge per session.

Step 4: Do the Math – Your Minimum Rate

Now, let’s put it all together with this formula:

(Annual Expenses + Desired Salary) ÷ Billable Sessions = Minimum Hourly Rate

Example Calculation:

Let’s say you:

• Have $24,000 in annual business expenses
• Want to take home $80,000 per year
• Plan to work 48 weeks per year
• Expect to see 20 clients per week

Step 1: Find total revenue needed:
👉 $24,000 (expenses) + $80,000 (salary) = $104,000 total revenue

Step 2: Find total yearly sessions:
👉 20 clients per week × 48 weeks = 960 sessions per year

Step 3: Divide to find your minimum rate:
👉 $104,000 ÷ 960 sessions = $108 per session (minimum rate)

If you charge less than $108 per session, you won’t meet your financial goals.

Step 5: Adjust for Profitability and Growth

Your break-even rate is just the starting point. To ensure sustainability and growth, you should price above this rate.

Ways to Increase Your Earnings Without Overloading Yourself:

✅ Charge above the break-even rate – Aim for $120–$150 if your break-even is $108.
✅ Offer premium services – Extended sessions, group therapy, workshops.
✅ Consider adding passive income streams – Online courses, speaking engagements, consulting.
✅ Gradually raise your rates – If you’re consistently full, it’s time to increase fees.

If you price too close to your break-even rate, you’ll struggle with financial instability, unexpected costs, and burnout.

Final Thoughts on Pricing for Sustainability

Your therapy practice isn’t just a passion—it’s a business. By understanding your expenses, setting a clear income goal, and adjusting your rates beyond the break-even point, you create a practice that’s both financially sustainable and personally fulfilling.

Don’t just survive in private practice—thrive. Charge what you need to make your career sustainable and fulfilling!

One of the biggest decisions you’ll make in private practice is whether to accept insurance or stick to private pay. There’s no one-size-fits-all answer—both options have pros and cons that impact your income, workload, and client accessibility.

Some therapists prefer the stability of insurance reimbursement, while others enjoy the flexibility and higher rates of private pay. Understanding both models will help you make an informed choice that aligns with your goals and values.

The Case for Accepting Insurance

Taking insurance can provide a steady stream of clients and make therapy more accessible, but it comes with administrative burdens and lower reimbursement rates.

Pros of Accepting Insurance:

✅ More potential clients – Many clients can only afford therapy if their insurance covers it.
✅ Steady referrals – Insurance panels can drive consistent business to your practice.
✅ Increased credibility – Being on insurance panels can boost your visibility and reputation.
✅ Reliable payments – Insurance companies provide a structured payment system.

Cons of Accepting Insurance:

❌ Lower reimbursement rates – Insurance companies dictate how much you get paid per session.
❌ Billing headaches – Processing claims, dealing with denials, and waiting for payments can be frustrating.
❌ Less control over your practice – Insurance may limit session lengths or require specific diagnoses for coverage.
❌ Risk of audits – Insurance companies can audit your records, requiring detailed documentation.

If you choose to accept insurance, it’s important to understand reimbursement rates in your area. Make sure the fees are sustainable before joining a panel.

The Case for Private Pay

Private pay offers more control over your rates, caseload, and overall practice management. However, it requires strong marketing and a client base willing to pay out-of-pocket.

Pros of Private Pay:

✅ Higher income potential – You set your own rates instead of accepting lower insurance reimbursements.
✅ Less paperwork – No claim submissions, pre-authorizations, or insurance audits.
✅ More clinical freedom – You can focus on treatment rather than insurance requirements.
✅ Stronger therapist-client commitment – Clients who invest financially in therapy often take it more seriously.

Cons of Private Pay:

❌ Smaller client pool – Some potential clients may not be able to afford full rates.
❌ More marketing effort – You’ll need a strong online presence and referral network.
❌ No automatic referrals – Unlike insurance, private pay requires consistent outreach to attract clients.

Many therapists who choose private pay build their practice by working with niche markets—high-income professionals, couples therapy, or specialized trauma treatment.

Hybrid Model: Can You Do Both?

Some therapists take a hybrid approach, accepting insurance for some clients while maintaining private pay options.

When a Hybrid Model Works Well:

• You want insurance clients for stability but also want private pay flexibility.
• You’re transitioning from an insurance-based practice to private pay over time.
• You offer premium services (e.g., extended sessions, coaching) for private pay clients.

One strategy is to only accept a few select insurance panels—those with higher reimbursement rates—while maintaining a separate private pay client base.

How to Make the Right Decision for Your Practice

When deciding between insurance and private pay, consider these key questions:

1. What Are Your Financial Goals?

• Do you need a predictable income, or are you comfortable with fluctuations?
• Can you afford to wait for private pay clients to find you, or do you need immediate referrals?

2. How Much Admin Work Are You Willing to Do?

• Do you want to handle claim submissions, insurance denials, and audits?
• Would you rather focus solely on therapy and not deal with insurance bureaucracy?

3. Who Is Your Ideal Client?

• Are you targeting populations that primarily use insurance?
• Are you marketing to clients willing and able to pay out-of-pocket?

If you’re not sure which path to take, starting with insurance and gradually transitioning to private pay can be a practical approach.

Final Thoughts on Choosing Insurance vs. Private Pay

Both models have their advantages, and the best choice depends on your goals, lifestyle, and ideal clientele. If you want stability and client accessibility, insurance might be a good fit. If you prefer flexibility, control, and higher earnings, private pay may be better.

Looking for guidance on private practice financial planning? Agents of Change Continuing Education offers expert-led courses on business strategies, ethical pricing, and private practice management for Social Workers, Counselors, and Mental Health Professionals.

Ultimately, your pricing structure should align with your values, income needs, and the type of practice you want to build. Choose the path that allows you to thrive, not just survive.

Offering a sliding scale can make therapy more accessible, but it’s not a decision to take lightly. While lower-cost sessions can help clients in need, too many discounted rates can leave you overworked and underpaid. Striking the right balance ensures you help clients while maintaining a sustainable practice.

Let’s explore the pros, cons, and best practices for using a sliding scale effectively.

What is a Sliding Scale, and How Does It Work?

A sliding scale is a flexible pricing structure where clients pay different rates based on their financial situation. Instead of charging a fixed fee, you set a range of fees and adjust based on the client’s ability to pay.

Common Sliding Scale Models:

• Income-Based Discounts – Clients provide proof of income to qualify for a reduced rate.
• Tiered Pricing – You set a few pricing tiers (e.g., $150 for high-income clients, $100 for mid-range, $75 for low-income).
• Limited Discounted Spots – You offer a certain number of sliding-scale slots at any given time.

By structuring your sliding scale strategically, you prevent financial strain on your practice while still helping those in need.

The Pros and Cons of Sliding Scale Pricing

Pros of Offering a Sliding Scale:

✅ Increases accessibility – Helps clients who couldn’t otherwise afford therapy.
✅ Supports community mental health – Makes therapy available to diverse income levels.
✅ Fills open slots – Can help maintain a steady caseload if you have unbooked sessions.
✅ Builds goodwill and reputation – Shows commitment to affordability and inclusivity.

Cons of Offering a Sliding Scale:

❌ Reduces income potential – Too many discounted sessions can lower overall revenue.
❌ Administrative challenges – Requires a system for verifying financial need.
❌ Clients may undervalue therapy – Some clients may not fully commit if they pay significantly less.
❌ Burnout risk – Lower fees mean working more to meet income goals.

If a sliding scale isn’t managed properly, it can lead to financial instability and therapist exhaustion.

How to Offer a Sliding Scale Without Undermining Your Business

A well-structured sliding scale ensures you help clients without sacrificing your financial health.

Best Practices for a Sustainable Sliding Scale:

✅ Limit the number of sliding-scale clients – Set a cap (e.g., no more than 3-5 at a time).
✅ Require proof of financial need – Use pay stubs, tax returns, or self-reported income statements.
✅ Reassess periodically – Review financial situations every 6 months to adjust rates if needed.
✅ Make it part of your policy, not your emotions – Have clear, written guidelines to avoid negotiating fees on a case-by-case basis.
✅ Balance with full-pay clients – Ensure your standard-rate clients offset discounted sessions.

If you struggle to set limits, consider offering other affordable options like group therapy, workshops, or shorter sessions instead of reducing individual session rates.

Alternatives to Sliding Scale Discounts

If a sliding scale doesn’t fit your business model, there are other ways to support clients with financial barriers.

Alternative Ways to Offer Affordable Therapy:

• Shorter Sessions – Offer 30-minute sessions at a lower rate instead of full-length sessions.
• Group Therapy – More affordable for clients while maintaining profitability for you.
• Low-Cost Therapy Networks – Partner with organizations like Open Path Collective.
• Pro Bono Work (Within Limits) – Offer a few fully free sessions per year, but set strict boundaries.

These alternatives allow you to help clients while keeping your practice financially stable.

Final Thoughts: Should You Offer a Sliding Scale?

Sliding-scale pricing is a personal and business decision. If structured properly, it can increase accessibility without jeopardizing your income. But if not carefully managed, it can lead to financial and emotional burnout.

The key takeaway? You can help others without sacrificing your own well-being. Set clear policies, know your limits, and create a pricing strategy that aligns with your values and financial goals.

Raising your therapy rates can feel uncomfortable, but it’s a necessary part of running a sustainable practice. Inflation, increased experience, and rising business costs all justify periodic rate adjustments. The key is to raise your rates strategically, ensuring both fair compensation for you and continued value for your clients.

Many therapists delay increasing their rates out of fear of losing clients, but undercharging leads to burnout and financial instability. Let’s explore when it’s time to raise your rates and how to do it without unnecessary stress.

When Should You Raise Your Rates?

There’s no universal timeline for increasing your fees, but certain signs indicate it’s time for an adjustment.

Signs It’s Time to Raise Your Rates:

✅ You Haven’t Raised Prices in Over a Year – Inflation affects your expenses; your rates should keep up.
✅ Your Schedule is Consistently Full – If you have a waitlist or back-to-back bookings, you’re in demand.
✅ Your Experience and Credentials Have Grown – Additional training, certifications, or years of experience justify a higher rate.
✅ Your Expenses Have Increased – Office rent, software fees, insurance, and professional development all add up.
✅ You Feel Undervalued or Underpaid – If you’re working hard but struggling financially, something needs to change.

If one or more of these apply to you, it’s time to raise your rates confidently.

How to Determine Your New Rate

When setting your new rate, consider both market standards and your financial needs.

Steps to Calculate Your New Rate:

1. Check Market Trends – Research what therapists in your area and specialty charge (see the Understanding the Market section).
2. Factor in Your Increased Value – Have you completed new certifications? Do you have more experience than before?
3. Account for Inflation and Business Costs – Adjust for increased expenses so you don’t lose money over time.
4. Set a Sustainable Number – Your new rate should be profitable and competitive, not just “affordable.”

If you’re unsure, a 10-20% increase is generally reasonable. For example, if you currently charge $125 per session, increasing to $140–$150 is a natural step.

How to Announce a Rate Increase Without Losing Clients

Telling clients about a rate increase can feel nerve-wracking, but clear, professional communication makes all the difference.

Best Practices for Informing Clients About a Rate Increase:

✅ Give Plenty of Notice – At least 30-60 days’ notice allows clients time to adjust.
✅ Use Clear, Confident Language – Avoid apologizing or over-explaining; state the facts professionally.
✅ Acknowledge Client Loyalty – If applicable, offer current clients a gradual transition to the new rate.
✅ Be Open to Questions – Some clients may want to discuss the change—be prepared to reinforce the value of your services.

Sample Scripts for Announcing a Rate Increase

Here are two examples of how you can professionally communicate a rate adjustment to clients.

1. Email Announcement

Subject: Important Update Regarding Therapy Rates

Dear [Client’s Name],

I appreciate the opportunity to work with you and support your journey. As part of maintaining a sustainable and high-quality practice, I periodically review my session rates. Due to increasing business expenses and ongoing professional development, I will be adjusting my session fee from [$X] to [$Y] starting [Date].

This change ensures I can continue providing the highest level of care while covering necessary costs such as continuing education, supervision, and practice resources.

If you have any questions about this adjustment, I’m happy to discuss it with you in our next session. Thank you for your understanding and for allowing me to be part of your growth.

Warmly,
[Your Name]

2. In-Person Conversation

“I wanted to let you know about an upcoming change to my session fee. Starting [Date], my rate will be increasing from [$X] to [$Y]. This adjustment reflects rising business costs and my continued commitment to providing you with the highest quality care. I completely understand if you have any questions, and I’m happy to discuss any concerns you may have.”

How to Retain Clients After a Price Increase

While some clients may hesitate at a rate increase, most will stay if they value your work. Here’s how to retain clients during the transition:

Retention Strategies:

✅ Offer a Gradual Increase – Instead of an immediate jump, raise rates over 2-3 months.
✅ Provide a Limited-Time Discount for Long-Term Clients – Example: “For existing clients, I’ll honor the old rate for two more months.”
✅ Remind Clients of the Value of Therapy – Reinforce the progress they’ve made and the importance of consistency.
✅ Offer Alternative Solutions – If clients truly can’t afford the new rate, suggest biweekly sessions, group therapy, or sliding-scale slots (if available).

Most clients understand that therapy is an investment, and as long as you handle the change professionally, they’re likely to continue working with you.

Final Thoughts: Raising Your Rates with Confidence

Raising your rates is a normal and necessary part of running a private practice. If you’ve put it off out of fear, remember: you deserve to be compensated fairly for your expertise and dedication.

Your skills and time are valuable—charge accordingly and build a practice that supports both you and your clients.