September 24, 2025 • 24 mins
Setting the right price for therapy services requires understanding your costs, market position, and value—while most practice owners undercharge and struggle to scale as a result.
• Breaking down all business costs (rent, utilities, subscriptions, staff wages) to understand your baseline expenses
• Dividing monthly expenses by number of sessions to calculate your per-session cost
• Researching competitive rates in your area while considering specializations and geographic factors
• Recognizing that undervaluing services can attract less committed clients and make scaling impossible
• Implementing limited sliding scales or scholarship funds as alternatives to across-the-board low pricing
• Using the percentage increase exercise to determine optimal rate increases
• Setting prices high enough to support future growth including hiring clinicians and admin staff
• Understanding that most clients won't leave over modest price increases ($5-10)
• Giving clients 30-60 days notice when implementing rate increases
If your practice needs help getting organized with its finances or just growing your practice, head to therapybusinesspod.com to learn how we can help.
Our Profit Coaching program is enrolling new practices now.
We specialize in helping therapy practices like yours achieve financial clarity, so you can focus on what you do best—helping your clients and managing your team- while we help handle all the businessy stuff they didn’t teach you in grad school.
To see if your practice might be a good fit, schedule a free consultation at therapybusinesspod.com.
Meet with one of our coaches
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
How do you feel about your pricing?
Do you feel like you arehitting the mark, that you're
charging what you and your teamare worth?
Do you feel like you'reundervaluing yourself?
Or do you often worry thatmaybe you're overcharging and
that could be the cause ofpeople not signing up as much as
you would like them to?
Well, today I'm gonna guide youthrough a process for pricing
(00:20):
your services that you can sellit confidently and know that you
are right in the wheelhouse ofwhat you can charge.
That is providing value to boththe clients and to your company
.
My name is Craig and I'm theowner of Daisy Financial
Coaching.
Our team is on a mission tomake your therapy practice
permanently profitable.
If you own a solo or grouppractice, we're here to help you
(00:42):
build a business that createsmore time, makes more money and
serves more people.
This is the Therapy BusinessPodcast.
If you offer private paytherapy or physical therapy,
then you have the luxury ofgetting to set your own pricing.
Now, if you are takinginsurance, then obviously you
(01:05):
are at the mercy of whateverthey choose to charge.
We do have a full episode onhow to try to get your
reimbursement rates increased,so be sure to go back and check
that one out.
If you are primarily takinginsurance but even if you are
majority insurance and just asmall part of your business is
private pay then what I'm goingto go through today is going to
(01:25):
be incredibly valuable.
Or if you have the goal of oneday shifting to a larger
percentage of private payclients than insurance, then
this is going to be reallyimportant to hone in on and just
see where do you land as far asyour pricing goes.
Now, for those of you who arefull private pay, you know what
I'm talking about.
That.
Coming down to pricing yourservices, there's a lot of
(01:46):
uncertainty.
We may look around and seeother therapists charging
differently.
We may hit a price point thatcauses people to turn away or
people to not sign up with us,and we're wondering okay, am I
charging way too much?
Then we have the invert, whichis we're trying to scale the
business and it just feels likeit's going going so slow and
we're struggling to hire andwe're struggling to make ends
(02:06):
meet.
We're going am I just notcharging enough?
What is going on?
So let's talk through some ofthe ways to really hone in and
see am I pricing my servicescorrectly and if not, what can
we do about it?
So the first thing we need to dois understand our costs.
We're going to break down ourcosts.
We're going to go through ourexpenses.
Now, if you're using QuickBooks, you can export in reports.
(02:27):
There's something called avendor list that you can pull
and that's going to show prettymuch everything you're spending
money on Everything else besidesemployees that you're spending
money on, whether it'ssubscriptions, whether it's rent
, whether it's Amazon.
Whatever you're sending moneyto is going to be in that list.
We want to look at both fixedand variable costs.
So those are things like rentand utilities.
(02:48):
We're going to be looking atstaff wages.
So if you have an admin on yourteam, if you're paying a
clinician to do the work to workwith the client, or if you're
paying a PT to do the work withthe client, we need to take that
into account.
We want to find what is ourbaseline expense.
So for my solo practice owners,it's just you.
So you are looking at do I havean office space?
(03:08):
What is my rent?
What does it cost every monthfor me to do business?
Then we're going to take againyour team members.
So there's a difference betweenme.
Let's say I'm meeting with aclient and one of my team
members meeting with a client.
The main difference is I'mpaying that team member to work
with that client, so that meansthe profitability on that is
going to be different.
Does that mean that we need toprice it differently?
(03:30):
Probably not.
In fact, I'm going to wager tosay that, as the business owner,
I could probably charge morethan what my team members are,
and the same is true for you.
So, but it's just something tobear in mind as we are looking
at the scope of our business.
Are you in a place where youare trying to offload yourself
and say I want other peopledoing the client-facing work so
(03:50):
I have more freedom and moretime to do other things?
Then we want to take thatemployee cost into account.
What would I pay a clinician ora PT to do this work so that I
don't have to?
That needs to come into intothe equation Now.
Once we have a good baseline ofwhat that looks like, then we
can see what are we spending.
(04:10):
And now let's just say we wereto take and say I'm just going
to use very simple numbers.
Depending on your business it'sgoing to vary, but let's just
say that it's your solotherapist and you're seeing a
hundred clients, a hundredsessions a month, 25 a week.
Okay, so what we can do is wecan say you know, maybe you're
charging $200 for for thosesessions.
(04:34):
So 100 sessions at $200.
Then we're going to take ourcosts and we're going to divide
it across each of those sessions.
Now let's just say you have$10,000 a month in overhead
expenses.
So it's just you.
You have these overheadexpenses that equal about
$10,000 a month.
So if we were to divide thatacross the 100 sessions, that's
about $100 per session, right?
So you're charging 200, youhave $100 in expenses, which
(04:57):
leaves 100 for to go to you asthe business owner.
Now we also have to remembertaxes and all those pieces too.
But just for simplicity sake,half is going to expenses, half
is going to you.
This is a pretty good marginand a pretty good breakdown.
I mean, getting to keep 50% ofyour sessions is not too bad at
that price point.
Now where that can becomesticky is if you're only
(05:20):
charging $100 per session, andnow you're, even if you're
paying $50, half going out, thatjust means you're only charging
$100 per session, and nowyou're, even if you're paying
$50, half going out.
That just means you're notmaking nearly as much as you
would.
So you can see, finding thatfine line of where how much is
left over after I pay myexpenses.
With this nature of work, it'snot as simple as saying a
percentage point is going to beideal Because, again, just
(05:43):
depending on what you'recharging can affect what the
amount is left over.
Now, when we get to the pointof wanting to hire people and
this is kind of where somepeople can get stuck is, let's
just say that you don't have awhole lot of money left over and
then you want to go hiresomebody and you got to make
sure that they're compensated.
So we're charging $200 persession.
100 is going to overhead costs.
(06:04):
Now we need to pay thisclinician something that is fair
and reasonable to them Industrystandards.
There's a lot of different waysthat clinicians are paid.
We have a full episode breakingthat down as well.
But let's just say you're doinga percentage split, right?
So let's say you're giving them50% of what comes in.
Now we're giving them 50% offthe top.
(06:25):
Then we have our overhead costs.
As you can see, if they get ahundred dollars of the session
fee and you add in the overheadcosts on top of that, there's
nothing left for you.
So this is where it becomes astruggle.
It becomes really frustratingfor practice owners.
Now again, these are examples.
The likelihood that youroverhead costs are going to be
half of what you're charging isnot.
(06:46):
It's not very likely.
But even if it was 25%, even ifit was $50 per session was
going out to your overhead, andthen you pay a clinician half,
which is a hundred.
Still there's not a whole.
It just squishes down what isactually left over for you to
run the business, to payyourself, to do all these things
.
So pricing ourselves is very,very, very important, and
(07:08):
understanding what our costs areto do that.
It's not unusual that we justkind of fall backwards into this
.
We maybe you were providingtherapy with another practice,
you were working for somebodyelse, you were charging a
certain amount, and so when youstarted your own thing, you're
like I'm just gonna keepcharging that same amount, and
then you didn't have all theexpenses and all those different
things mixed in.
(07:28):
And then here we are just kindof trying to figure it out as we
go.
No one really explains thesethings when we actually start
our practice.
So that's step one is figuringout your pricing, what you're
spending, where your money'sgoing, what is your expenses
(08:17):
no-transcript, but we do want toknow you know what's we don't.
Depending on where you live, alot of different factors can
come into play on what peoplecan afford.
So you know, for example, atherapist in New York City might
(08:38):
be able to charge more thansomebody in rural Iowa.
So just depending on what thecost of living is, what the
average income is in those areas, it's going to weigh
drastically, very drastically,on what can actually be charged.
So if you don't know, then dosome market research.
Look around your area to seewhat other therapists are
charging.
Once again, don't use this aswhat you have to be charging or
what you have to beat or any ofthose things.
(08:59):
It's just approaching it withthe mode of curiosity.
I'm going to be curious aboutwhat's the range that people are
charging.
Where do I think I could fallIf you have certain areas of
expertise?
Look at that too.
What could I really be If youhave certain areas of expertise?
Look at that too.
What?
What could I really be?
What are those people chargingand could I charge more?
Are there other people in thisarea who focus on this one
(09:21):
specific need or this onespecific demographic?
Do they have these certainlicenses or certifications?
If there aren't a lot, then youcould probably charge more.
If there are a bunch, you canlook and see what are they
charging.
And is that in the realm ofwhere I'm at right now?
Do I need to raise my rates?
If you find that you areundercharging you're charging
less than the people, as you'rebeing curious and looking at
(09:41):
this, you're going, wow, I'm thecheapest person then that is a
sign that you probably need toraise your rates.
If you find that you are themost expensive person, that does
not mean you need to drop yourrates necessarily, unless you
are just not closing anybody.
You're just struggling to getclients, period, and you're
worried that you're going to beshutting the doors soon.
That might be an indicationthat maybe we roll our prices
(10:01):
down a little bit.
There's also times that maybeyou're just not selling
confidently because there'sthere's this mental breakdown
when it comes to valuingourselves and pricing ourselves.
Sometimes, when we're trying tosell and we don't believe in
what we're charging, we thinkit's too much, we're worried
it's too much.
The client can kind of pick upon that the prospect can pick up
on it and they might think it'stoo much.
(10:23):
And then all of a suddenthey're not signing up and it's
a cycle of we're not gettinganybody to close.
So sometimes, if that's thecase, we might temporarily roll
your prices back.
I don't not necessarilyrecommending that.
In fact, if you're unsure,that's stuff we can help you
with.
So, as always, in thedescription below is a link to
talk to one of our coaches.
We're happy to help, ask somequestions and see are you
(10:43):
overpricing yourself?
Should you roll your pricesback, or is it just?
We need to do some work onunderstanding that you are worth
what you're charging, and maybeit's just in how you're
articulating it to prospects.
It's not coming across and soit's making them wonder, even
just subconsciously, whether youare worth the price or not too.
All right, so we're gonna belooking at the competitive
(11:03):
rating, then we're gonna look atyour undervaluing yourself.
So, like we've been talkingabout, there's a lot of danger
to setting your prices too low.
One is it's really hard toscale.
It is very, very challenging toscale.
If your prices are too low.
It's going to just drasticallyslow things down.
It's with the nature of thisindustry.
(11:24):
For the most part, I knowthere's group therapy and
there's intense and differentthings you can do with more than
one person at a time, but forthe most part, whether you're a
physical therapist or a mentalhealth therapist, it's a
one-on-one interaction most ofthe time.
Now again, pts I know physicaltherapists.
Sometimes you might be workingwith two clients at once, two or
three, but pretty much it's a.
(11:45):
You are limited on this hour.
I can earn this much, andthere's only so many hours in a
day, only so many clients I cansee, and that's going to cap,
put a ceiling on what I can earn.
And as a practice owner, that'swhere you're left saying, okay,
now I need to get some othertherapists under me, but they're
also going to be capped when wedon't charge enough.
It's going to take longer andlonger your hours are going to
(12:08):
get filled before you can dothat.
And what we find is solotherapists might be
undercharging.
They get to their capacity,their max, and they can't afford
to bring somebody on becausethey're barely charging enough
to run the business with justthemselves.
So we need to be chargingenough, thinking future in mind,
not only so that I can hirepeople, but also with the idea
(12:29):
of once kind of going back towhat we talked about with our
costs.
When I do start hiring people,that's going to be an added
expense.
I need to be pricing in a waythat I can pay a clinician or a
PT to work with clients.
I need to be charging in a waythat we could add an admin on
board down the road so that theycan help with billing and they
can help with scheduling andthey can help with all the other
pieces so that my clinicianscan focus on what they do best.
(12:51):
They can help with all theother pieces so that my
clinicians can focus on whatthey do best.
So, thinking end in mind, Ialways say when you're making
decisions it's easy to getbogged down in this month, next
month, this year.
Think ahead.
What does it look like fiveyears from now?
What would I need to be whenI'm a $5 million company or $1
(13:12):
million company, when I havefive employees?
What would need to be true forour pricing, for our margins,
for our expenses?
What kind of expenses?
So, even just kind offorecasting and thinking ahead
what does that look like?
And then working backward andmaking sure that we're pricing
in a way that can easily get usfrom here to there.
So undervaluing is the mostcommon common thing we see when
it comes to pricing.
(13:32):
Odds are you got into thisbecause you care about people,
you want to help people, youwant to serve people.
Almost every therapist andphysical therapist I meet has a
huge heart for people andwanting to serve and wanting to
help, and so that in turncreates this stigma that we
shouldn't be charging a certainamount because that's not
(13:52):
helping people.
And what about those people whocan't afford it or who are
already in a situation wheremaybe just life has got them
down and things are not goingtheir way?
And then here we are, we'regoing to come in and just start
charging them a bunch of moneyto get the help they need.
But undervaluing it hurts notonly your business, it can
(14:12):
affect a lot of different things.
It can bring in the wrongclientele.
I'm not saying that people whocan't afford therapy or who
struggle to afford therapy arebad clients, but sometimes and
there's just a difference inengagement depending on what
we're paying, and so that can betrue.
I'm not saying always.
I've worked with a lot ofclients who we've either done
(14:33):
pro bono work with or somebodyhas sponsored them by paying
their coaching fee and they'vebeen amazing and they've gotten
amazing results.
Them and they ended up beingterrible clients.
They didn't have enough skin inthe game, they didn't show up,
they didn't do the work, theydidn't, they didn't really care
or put the effort in.
(14:54):
And what I found is in thatsituation again, it's not a
blanket rule, it's not acrossthe board but in that situation
when you're paying money, whenyou are paying money, a premium
so let's just say $200 to meetwith this person, this mental
health therapist you're going toprobably show up ready to do
the work because that moneyprobably stings a little bit.
(15:16):
It's not like you just havethat laying around.
Most people don't Now, some do,but most don't.
And so by them investing thatin you and if it's weekly or
twice a month, that's a goodchunk of change, that they are
investing in themselves and inworking with you, and that means
they're going to show up.
Most likely, they're going toshow up ready to do the work,
ready to engage, ready to putforth the effort.
(15:39):
If it comes across too cheap, ifit is just like a, if it feels
like the Netflix subscriptionthat you forget about, that you
just don't.
Or the gym membership that youforget about.
You have it, it's not worthcanceling, but you don't go to
the gym, right?
That's what we want to avoid,and so sometimes that can happen
by undervaluing ourselves andnot charging enough, and I found
(16:04):
this in the music industry.
This chain reaction cansometimes happen.
So I'm a musician and a coverband.
We charge a premium for what wedo because we put on a pretty
good production.
We're putting a lot of work inwhat we do with our show, our
performance, our music, so wecharge a lot.
But what we found is there's alot of bands who don't charge
(16:26):
nearly enough and that can havethis trickle effect that can
start making it to where venuesdon't want to pay a premium for
music because they can find justsomebody to play some music.
And these bands are actuallyreally good and could be
charging a lot more.
I've talked to a lot of themand told them as much.
I'm like you could probablytriple what you're charging, and
in fact, by charging not enough, it's hurting the industry, and
(16:47):
so that can sometimes be thecase too.
If we're not charging enough,we're undervaluing not only what
you do, but what you as aprofessional do.
We're setting the expectationthat this is what it costs and
all of a sudden it can startputting this stigma across.
So we want to charge what weare worth.
Now there are different ways.
If you truly want to supportpeople who can't fully afford a
(17:10):
premium so if $200 is out oftheir realm then maybe you do
still take some insuranceclients to help support that
Maybe you have what we wouldcall a sliding scale, which is
depending on their income range.
Maybe it drops down, and so ifthey're making X dollars per
year, they pay less.
You know what I mean.
(17:31):
So what I would just recommendwith that is we cap it, so don't
make it a blanket.
Hey, if you make less than$50,000, now you're only paying
$100 a month or $100 a session.
If that's the case, we need toput some kind of restriction,
because otherwise you're goingto turn around and one of your
clinicians is going to have afull caseload of of reduced rate
(17:51):
clients and we're back to thatwhole problem of undervaluing,
undercharging and now it'seating up our costs.
So maybe capping it to, eachclinician gets three, three
sessions a week that are on thesliding scale, and so, and if
they hit their max.
Then you create a waiting listfor those.
It's either you can come in nowand get some help at this rate
(18:12):
we can refer you out or we canput you on a waiting list until
one of the reduced rate slotsopens up.
I've also using the profitfirst system.
We've had clients open up ascholarship account and that's
where we put x percent of everydollar you earn goes into this
account, and so that whensomebody comes that you feel
like you know what we want to.
We want to give them some helpand they don't have the funds,
(18:34):
then you have cash on hand topay the clinician to work with
them.
So maybe the clinician isthey're only charging them a
hundred dollars per session.
Then you're taking a hundredout of that scholarship fund to
cover the cost.
So the clinician's getting paidtheir full amount, the
company's getting taken care of,and then this person, for a few
months, is going to get somesupport at a at a rate they can
(18:55):
afford and you're leaning in andhelping them out too.
So there's a few different waysyou can go about it Now when it
comes to raising your rates.
So, again, most people this isone of the last point I'm going
to talk about, because I thinkthis is going to help reverse
the problem that a lot of peopleare facing, which is I'm not
charging enough.
I doubt, most likely.
Hopefully.
Maybe you did do this exerciseand you find I'm charging more
(19:17):
and I'm overcharging, and I'mcharging exactly the right
amount.
Most people find that they'reundercharging.
I would say 99.9% of the timeit's we're not charging enough.
So what can we do?
Here's a very quick, easyexercise.
I just learned this at aconference I went to this past
week and it really resonated.
(19:37):
I think it's a great idea and agreat simple way to go about it
.
I want you to think through yourclients, just think about them.
And then I want to thinkthrough a price increase.
Who would leave if I raised myrates by 1%?
1%, so if you're charging $150,that's $1.50.
(19:58):
Who would leave if I raised myrates by $1.50?
Nobody right.
And if they did, they probablyweren't good clients.
No one's going to bat an eye at$1.50.
Okay, what about 3%?
Okay, that's 450.
So instead of 150 a session,it's now 154, we could say 155.
Would people leave at a $5 rateincrease?
(20:19):
Okay, what about 5%?
And you start moving thatpercentage up and you can do it
with dollar amounts too, if it'seasier.
If percentages is, you're likeCraig, that's a lot of math, you
can do dollar amounts.
What would if they?
If I raised a dollar $3, $5,$10, would people leave.
When you reach the point thatyou're like, okay, $10, maybe
(20:41):
some people would leave, okay,that's what we're going to raise
our rates to, because maybe youhave one or two people out of
the hundred that you're workingwith, one or two people say I
can't do that, I can't affordthe five or $10 raise.
And then you have a choice youcan either let them go and open
space for somebody who can, oryou can, if you want to honor
the rate they're on for X periodof time, you can.
(21:02):
But we're going to say, out ofthe hundred of one or two, leave
, you still have 98.
And they all just raise therates by $10.
So there's an extra $980 permonth that you just recouped and
you lost two clients who werepaying you what, whatever it was
(21:22):
.
So depending on how oftenthey're coming to see you, let's
say they were seeing you once aweek and were paying 150.
So you know that's what $600 amonth.
So you can see it offsets, youwill likely be pretty close to
the same place you were before,if not ahead anyway, even if
people would jump ship.
And also, they're not going to$10.
(21:44):
We all know the process offinding a new therapist is a
pain.
It's so much easier to say okay, 150 to 160.
Great, yeah, that's no big deal.
So do that exercise and then goraise your rates.
So think through what can Iraise my rate to?
When do I reach that pointwhere maybe some people will
leave and start there and sendout that letter?
(22:06):
Give them a 30, 60 day notice,effective this date, your rate
will be increasing to this muchper session and then go for it.
Talk to your team about doingthe exact same thing and then,
right there, that's going togive you a little bit more
headroom immediately.
Again, if nobody leaves, yougot an extra thousand dollars a
month in our example, andwithout having to do change
(22:28):
anything.
All we did was we're continuingto provide exceptional service
and now we're just getting alittle bit more wiggle room to
afford to be able to do more ofthe things that we want to do.
Thanks for joining us on theTherapy Business Podcast.
Be sure to subscribe, leave areview and share it with a
practice owner that you may know.
If your practice needs helpgetting organized with its
(22:49):
finances or just growing yourpractice, head to
therapybusinesspodcom to learnhow we can help.
How do you feel about your pricing?
Do you feel like you arehitting the mark, that you're
charging what you and your teamare worth?
Do you feel like you'reundervaluing yourself?
Or do you often worry thatmaybe you're overcharging and
that could be the cause ofpeople not signing up as much as
you would like them to?
Well, today I'm gonna guide youthrough a process for pricing
(00:20):
your services that you can sellit confidently and know that you
are right in the wheelhouse ofwhat you can charge.
That is providing value to boththe clients and to your company
.
My name is Craig and I'm theowner of Daisy Financial
Coaching.
Our team is on a mission tomake your therapy practice
permanently profitable.
If you own a solo or grouppractice, we're here to help you
(00:42):
build a business that createsmore time, makes more money and
serves more people.
This is the Therapy BusinessPodcast.
If you offer private paytherapy or physical therapy,
then you have the luxury ofgetting to set your own pricing.
Now, if you are takinginsurance, then obviously you
(01:05):
are at the mercy of whateverthey choose to charge.
We do have a full episode onhow to try to get your
reimbursement rates increased,so be sure to go back and check
that one out.
If you are primarily takinginsurance but even if you are
majority insurance and just asmall part of your business is
private pay then what I'm goingto go through today is going to
(01:25):
be incredibly valuable.
Or if you have the goal of oneday shifting to a larger
percentage of private payclients than insurance, then
this is going to be reallyimportant to hone in on and just
see where do you land as far asyour pricing goes.
Now, for those of you who arefull private pay, you know what
I'm talking about.
That.
Coming down to pricing yourservices, there's a lot of
(01:46):
uncertainty.
We may look around and seeother therapists charging
differently.
We may hit a price point thatcauses people to turn away or
people to not sign up with us,and we're wondering okay, am I
charging way too much?
Then we have the invert, whichis we're trying to scale the
business and it just feels likeit's going going so slow and
we're struggling to hire andwe're struggling to make ends
(02:06):
meet.
We're going am I just notcharging enough?
What is going on?
So let's talk through some ofthe ways to really hone in and
see am I pricing my servicescorrectly and if not, what can
we do about it?
So the first thing we need to dois understand our costs.
We're going to break down ourcosts.
We're going to go through ourexpenses.
Now, if you're using QuickBooks, you can export in reports.
(02:27):
There's something called avendor list that you can pull
and that's going to show prettymuch everything you're spending
money on Everything else besidesemployees that you're spending
money on, whether it'ssubscriptions, whether it's rent
, whether it's Amazon.
Whatever you're sending moneyto is going to be in that list.
We want to look at both fixedand variable costs.
So those are things like rentand utilities.
(02:48):
We're going to be looking atstaff wages.
So if you have an admin on yourteam, if you're paying a
clinician to do the work to workwith the client, or if you're
paying a PT to do the work withthe client, we need to take that
into account.
We want to find what is ourbaseline expense.
So for my solo practice owners,it's just you.
So you are looking at do I havean office space?
(03:08):
What is my rent?
What does it cost every monthfor me to do business?
Then we're going to take againyour team members.
So there's a difference betweenme.
Let's say I'm meeting with aclient and one of my team
members meeting with a client.
The main difference is I'mpaying that team member to work
with that client, so that meansthe profitability on that is
going to be different.
Does that mean that we need toprice it differently?
(03:30):
Probably not.
In fact, I'm going to wager tosay that, as the business owner,
I could probably charge morethan what my team members are,
and the same is true for you.
So, but it's just something tobear in mind as we are looking
at the scope of our business.
Are you in a place where youare trying to offload yourself
and say I want other peopledoing the client-facing work so
(03:50):
I have more freedom and moretime to do other things?
Then we want to take thatemployee cost into account.
What would I pay a clinician ora PT to do this work so that I
don't have to?
That needs to come into intothe equation Now.
Once we have a good baseline ofwhat that looks like, then we
can see what are we spending.
(04:10):
And now let's just say we wereto take and say I'm just going
to use very simple numbers.
Depending on your business it'sgoing to vary, but let's just
say that it's your solotherapist and you're seeing a
hundred clients, a hundredsessions a month, 25 a week.
Okay, so what we can do is wecan say you know, maybe you're
charging $200 for for thosesessions.
(04:34):
So 100 sessions at $200.
Then we're going to take ourcosts and we're going to divide
it across each of those sessions.
Now let's just say you have$10,000 a month in overhead
expenses.
So it's just you.
You have these overheadexpenses that equal about
$10,000 a month.
So if we were to divide thatacross the 100 sessions, that's
about $100 per session, right?
So you're charging 200, youhave $100 in expenses, which
(04:57):
leaves 100 for to go to you asthe business owner.
Now we also have to remembertaxes and all those pieces too.
But just for simplicity sake,half is going to expenses, half
is going to you.
This is a pretty good marginand a pretty good breakdown.
I mean, getting to keep 50% ofyour sessions is not too bad at
that price point.
Now where that can becomesticky is if you're only
(05:20):
charging $100 per session, andnow you're, even if you're
paying $50, half going out, thatjust means you're only charging
$100 per session, and nowyou're, even if you're paying
$50, half going out.
That just means you're notmaking nearly as much as you
would.
So you can see, finding thatfine line of where how much is
left over after I pay myexpenses.
With this nature of work, it'snot as simple as saying a
percentage point is going to beideal Because, again, just
(05:43):
depending on what you'recharging can affect what the
amount is left over.
Now, when we get to the pointof wanting to hire people and
this is kind of where somepeople can get stuck is, let's
just say that you don't have awhole lot of money left over and
then you want to go hiresomebody and you got to make
sure that they're compensated.
So we're charging $200 persession.
100 is going to overhead costs.
(06:04):
Now we need to pay thisclinician something that is fair
and reasonable to them Industrystandards.
There's a lot of different waysthat clinicians are paid.
We have a full episode breakingthat down as well.
But let's just say you're doinga percentage split, right?
So let's say you're giving them50% of what comes in.
Now we're giving them 50% offthe top.
(06:25):
Then we have our overhead costs.
As you can see, if they get ahundred dollars of the session
fee and you add in the overheadcosts on top of that, there's
nothing left for you.
So this is where it becomes astruggle.
It becomes really frustratingfor practice owners.
Now again, these are examples.
The likelihood that youroverhead costs are going to be
half of what you're charging isnot.
(06:46):
It's not very likely.
But even if it was 25%, even ifit was $50 per session was
going out to your overhead, andthen you pay a clinician half,
which is a hundred.
Still there's not a whole.
It just squishes down what isactually left over for you to
run the business, to payyourself, to do all these things
.
So pricing ourselves is very,very, very important, and
(07:08):
understanding what our costs areto do that.
It's not unusual that we justkind of fall backwards into this
.
We maybe you were providingtherapy with another practice,
you were working for somebodyelse, you were charging a
certain amount, and so when youstarted your own thing, you're
like I'm just gonna keepcharging that same amount, and
then you didn't have all theexpenses and all those different
things mixed in.
(07:28):
And then here we are just kindof trying to figure it out as we
go.
No one really explains thesethings when we actually start
our practice.
So that's step one is figuringout your pricing, what you're
spending, where your money'sgoing, what is your expenses
(08:17):
no-transcript, but we do want toknow you know what's we don't.
Depending on where you live, alot of different factors can
come into play on what peoplecan afford.
So you know, for example, atherapist in New York City might
(08:38):
be able to charge more thansomebody in rural Iowa.
So just depending on what thecost of living is, what the
average income is in those areas, it's going to weigh
drastically, very drastically,on what can actually be charged.
So if you don't know, then dosome market research.
Look around your area to seewhat other therapists are
charging.
Once again, don't use this aswhat you have to be charging or
what you have to beat or any ofthose things.
(08:59):
It's just approaching it withthe mode of curiosity.
I'm going to be curious aboutwhat's the range that people are
charging.
Where do I think I could fallIf you have certain areas of
expertise?
Look at that too.
What could I really be If youhave certain areas of expertise?
Look at that too.
What?
What could I really be?
What are those people chargingand could I charge more?
Are there other people in thisarea who focus on this one
(09:21):
specific need or this onespecific demographic?
Do they have these certainlicenses or certifications?
If there aren't a lot, then youcould probably charge more.
If there are a bunch, you canlook and see what are they
charging.
And is that in the realm ofwhere I'm at right now?
Do I need to raise my rates?
If you find that you areundercharging you're charging
less than the people, as you'rebeing curious and looking at
(09:41):
this, you're going, wow, I'm thecheapest person then that is a
sign that you probably need toraise your rates.
If you find that you are themost expensive person, that does
not mean you need to drop yourrates necessarily, unless you
are just not closing anybody.
You're just struggling to getclients, period, and you're
worried that you're going to beshutting the doors soon.
That might be an indicationthat maybe we roll our prices
(10:01):
down a little bit.
There's also times that maybeyou're just not selling
confidently because there'sthere's this mental breakdown
when it comes to valuingourselves and pricing ourselves.
Sometimes, when we're trying tosell and we don't believe in
what we're charging, we thinkit's too much, we're worried
it's too much.
The client can kind of pick upon that the prospect can pick up
on it and they might think it'stoo much.
(10:23):
And then all of a suddenthey're not signing up and it's
a cycle of we're not gettinganybody to close.
So sometimes, if that's thecase, we might temporarily roll
your prices back.
I don't not necessarilyrecommending that.
In fact, if you're unsure,that's stuff we can help you
with.
So, as always, in thedescription below is a link to
talk to one of our coaches.
We're happy to help, ask somequestions and see are you
(10:43):
overpricing yourself?
Should you roll your pricesback, or is it just?
We need to do some work onunderstanding that you are worth
what you're charging, and maybeit's just in how you're
articulating it to prospects.
It's not coming across and soit's making them wonder, even
just subconsciously, whether youare worth the price or not too.
All right, so we're gonna belooking at the competitive
(11:03):
rating, then we're gonna look atyour undervaluing yourself.
So, like we've been talkingabout, there's a lot of danger
to setting your prices too low.
One is it's really hard toscale.
It is very, very challenging toscale.
If your prices are too low.
It's going to just drasticallyslow things down.
It's with the nature of thisindustry.
(11:24):
For the most part, I knowthere's group therapy and
there's intense and differentthings you can do with more than
one person at a time, but forthe most part, whether you're a
physical therapist or a mentalhealth therapist, it's a
one-on-one interaction most ofthe time.
Now again, pts I know physicaltherapists.
Sometimes you might be workingwith two clients at once, two or
three, but pretty much it's a.
(11:45):
You are limited on this hour.
I can earn this much, andthere's only so many hours in a
day, only so many clients I cansee, and that's going to cap,
put a ceiling on what I can earn.
And as a practice owner, that'swhere you're left saying, okay,
now I need to get some othertherapists under me, but they're
also going to be capped when wedon't charge enough.
It's going to take longer andlonger your hours are going to
(12:08):
get filled before you can dothat.
And what we find is solotherapists might be
undercharging.
They get to their capacity,their max, and they can't afford
to bring somebody on becausethey're barely charging enough
to run the business with justthemselves.
So we need to be chargingenough, thinking future in mind,
not only so that I can hirepeople, but also with the idea
(12:29):
of once kind of going back towhat we talked about with our
costs.
When I do start hiring people,that's going to be an added
expense.
I need to be pricing in a waythat I can pay a clinician or a
PT to work with clients.
I need to be charging in a waythat we could add an admin on
board down the road so that theycan help with billing and they
can help with scheduling andthey can help with all the other
pieces so that my clinicianscan focus on what they do best.
(12:51):
They can help with all theother pieces so that my
clinicians can focus on whatthey do best.
So, thinking end in mind, Ialways say when you're making
decisions it's easy to getbogged down in this month, next
month, this year.
Think ahead.
What does it look like fiveyears from now?
What would I need to be whenI'm a $5 million company or $1
(13:12):
million company, when I havefive employees?
What would need to be true forour pricing, for our margins,
for our expenses?
What kind of expenses?
So, even just kind offorecasting and thinking ahead
what does that look like?
And then working backward andmaking sure that we're pricing
in a way that can easily get usfrom here to there.
So undervaluing is the mostcommon common thing we see when
it comes to pricing.
(13:32):
Odds are you got into thisbecause you care about people,
you want to help people, youwant to serve people.
Almost every therapist andphysical therapist I meet has a
huge heart for people andwanting to serve and wanting to
help, and so that in turncreates this stigma that we
shouldn't be charging a certainamount because that's not
(13:52):
helping people.
And what about those people whocan't afford it or who are
already in a situation wheremaybe just life has got them
down and things are not goingtheir way?
And then here we are, we'regoing to come in and just start
charging them a bunch of moneyto get the help they need.
But undervaluing it hurts notonly your business, it can
(14:12):
affect a lot of different things.
It can bring in the wrongclientele.
I'm not saying that people whocan't afford therapy or who
struggle to afford therapy arebad clients, but sometimes and
there's just a difference inengagement depending on what
we're paying, and so that can betrue.
I'm not saying always.
I've worked with a lot ofclients who we've either done
(14:33):
pro bono work with or somebodyhas sponsored them by paying
their coaching fee and they'vebeen amazing and they've gotten
amazing results.
Them and they ended up beingterrible clients.
They didn't have enough skin inthe game, they didn't show up,
they didn't do the work, theydidn't, they didn't really care
or put the effort in.
(14:54):
And what I found is in thatsituation again, it's not a
blanket rule, it's not acrossthe board but in that situation
when you're paying money, whenyou are paying money, a premium
so let's just say $200 to meetwith this person, this mental
health therapist you're going toprobably show up ready to do
the work because that moneyprobably stings a little bit.
(15:16):
It's not like you just havethat laying around.
Most people don't Now, some do,but most don't.
And so by them investing thatin you and if it's weekly or
twice a month, that's a goodchunk of change, that they are
investing in themselves and inworking with you, and that means
they're going to show up.
Most likely, they're going toshow up ready to do the work,
ready to engage, ready to putforth the effort.
(15:39):
If it comes across too cheap, ifit is just like a, if it feels
like the Netflix subscriptionthat you forget about, that you
just don't.
Or the gym membership that youforget about.
You have it, it's not worthcanceling, but you don't go to
the gym, right?
That's what we want to avoid,and so sometimes that can happen
by undervaluing ourselves andnot charging enough, and I found
(16:04):
this in the music industry.
This chain reaction cansometimes happen.
So I'm a musician and a coverband.
We charge a premium for what wedo because we put on a pretty
good production.
We're putting a lot of work inwhat we do with our show, our
performance, our music, so wecharge a lot.
But what we found is there's alot of bands who don't charge
(16:26):
nearly enough and that can havethis trickle effect that can
start making it to where venuesdon't want to pay a premium for
music because they can find justsomebody to play some music.
And these bands are actuallyreally good and could be
charging a lot more.
I've talked to a lot of themand told them as much.
I'm like you could probablytriple what you're charging, and
in fact, by charging not enough, it's hurting the industry, and
(16:47):
so that can sometimes be thecase too.
If we're not charging enough,we're undervaluing not only what
you do, but what you as aprofessional do.
We're setting the expectationthat this is what it costs and
all of a sudden it can startputting this stigma across.
So we want to charge what weare worth.
Now there are different ways.
If you truly want to supportpeople who can't fully afford a
(17:10):
premium so if $200 is out oftheir realm then maybe you do
still take some insuranceclients to help support that
Maybe you have what we wouldcall a sliding scale, which is
depending on their income range.
Maybe it drops down, and so ifthey're making X dollars per
year, they pay less.
You know what I mean.
(17:31):
So what I would just recommendwith that is we cap it, so don't
make it a blanket.
Hey, if you make less than$50,000, now you're only paying
$100 a month or $100 a session.
If that's the case, we need toput some kind of restriction,
because otherwise you're goingto turn around and one of your
clinicians is going to have afull caseload of of reduced rate
(17:51):
clients and we're back to thatwhole problem of undervaluing,
undercharging and now it'seating up our costs.
So maybe capping it to, eachclinician gets three, three
sessions a week that are on thesliding scale, and so, and if
they hit their max.
Then you create a waiting listfor those.
It's either you can come in nowand get some help at this rate
(18:12):
we can refer you out or we canput you on a waiting list until
one of the reduced rate slotsopens up.
I've also using the profitfirst system.
We've had clients open up ascholarship account and that's
where we put x percent of everydollar you earn goes into this
account, and so that whensomebody comes that you feel
like you know what we want to.
We want to give them some helpand they don't have the funds,
(18:34):
then you have cash on hand topay the clinician to work with
them.
So maybe the clinician isthey're only charging them a
hundred dollars per session.
Then you're taking a hundredout of that scholarship fund to
cover the cost.
So the clinician's getting paidtheir full amount, the
company's getting taken care of,and then this person, for a few
months, is going to get somesupport at a at a rate they can
(18:55):
afford and you're leaning in andhelping them out too.
So there's a few different waysyou can go about it Now when it
comes to raising your rates.
So, again, most people this isone of the last point I'm going
to talk about, because I thinkthis is going to help reverse
the problem that a lot of peopleare facing, which is I'm not
charging enough.
I doubt, most likely.
Hopefully.
Maybe you did do this exerciseand you find I'm charging more
(19:17):
and I'm overcharging, and I'mcharging exactly the right
amount.
Most people find that they'reundercharging.
I would say 99.9% of the timeit's we're not charging enough.
So what can we do?
Here's a very quick, easyexercise.
I just learned this at aconference I went to this past
week and it really resonated.
(19:37):
I think it's a great idea and agreat simple way to go about it
.
I want you to think through yourclients, just think about them.
And then I want to thinkthrough a price increase.
Who would leave if I raised myrates by 1%?
1%, so if you're charging $150,that's $1.50.
(19:58):
Who would leave if I raised myrates by $1.50?
Nobody right.
And if they did, they probablyweren't good clients.
No one's going to bat an eye at$1.50.
Okay, what about 3%?
Okay, that's 450.
So instead of 150 a session,it's now 154, we could say 155.
Would people leave at a $5 rateincrease?
(20:19):
Okay, what about 5%?
And you start moving thatpercentage up and you can do it
with dollar amounts too, if it'seasier.
If percentages is, you're likeCraig, that's a lot of math, you
can do dollar amounts.
What would if they?
If I raised a dollar $3, $5,$10, would people leave.
When you reach the point thatyou're like, okay, $10, maybe
(20:41):
some people would leave, okay,that's what we're going to raise
our rates to, because maybe youhave one or two people out of
the hundred that you're workingwith, one or two people say I
can't do that, I can't affordthe five or $10 raise.
And then you have a choice youcan either let them go and open
space for somebody who can, oryou can, if you want to honor
the rate they're on for X periodof time, you can.
(21:02):
But we're going to say, out ofthe hundred of one or two, leave
, you still have 98.
And they all just raise therates by $10.
So there's an extra $980 permonth that you just recouped and
you lost two clients who werepaying you what, whatever it was
(21:22):
.
So depending on how oftenthey're coming to see you, let's
say they were seeing you once aweek and were paying 150.
So you know that's what $600 amonth.
So you can see it offsets, youwill likely be pretty close to
the same place you were before,if not ahead anyway, even if
people would jump ship.
And also, they're not going to$10.
(21:44):
We all know the process offinding a new therapist is a
pain.
It's so much easier to say okay, 150 to 160.
Great, yeah, that's no big deal.
So do that exercise and then goraise your rates.
So think through what can Iraise my rate to?
When do I reach that pointwhere maybe some people will
leave and start there and sendout that letter?
(22:06):
Give them a 30, 60 day notice,effective this date, your rate
will be increasing to this muchper session and then go for it.
Talk to your team about doingthe exact same thing and then,
right there, that's going togive you a little bit more
headroom immediately.
Again, if nobody leaves, yougot an extra thousand dollars a
month in our example, andwithout having to do change
(22:28):
anything.
All we did was we're continuingto provide exceptional service
and now we're just getting alittle bit more wiggle room to
afford to be able to do more ofthe things that we want to do.
Thanks for joining us on theTherapy Business Podcast.
Be sure to subscribe, leave areview and share it with a
practice owner that you may know.
If your practice needs helpgetting organized with its
(22:49):
finances or just growing yourpractice, head to
therapybusinesspodcom to learnhow we can help.
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