One of the most common questions we get from therapists is:
“What should my private practice pricing be? Is it in line with others?”
And honestly, it’s a great question. Many of the profitability and margin issues we see with therapists come down to pricing that’s just too low.
That said, figuring out your private practice pricing isn’t always straightforward. It depends on several factors, like your location, what your competitors are charging, your personal and business goals, expenses, and more.
For a precise answer to this question, we always recommend working with an experienced private practice accountant. Why? Because you’ll need to look closely at your financials to set rates that make sense for your specific situation.
But if you want to give it a go on your own, we’ve created this quick step-by-step guide to help you get started. It’ll give you a clearer idea of where your private practice pricing should sit in 2025.
Here’s how we recommend going about it:
Step 1: Understand the Importance of Your Average Session Fee (ASF)
When it comes to private practice pricing, we need to first calculate a key number you’ll need to know: your Average Session Fee (ASF).
This is simply the average amount you earn per session across all the different ways clients pay you. It includes payments from clients who pay out-of-pocket, insurance reimbursements, and any reduced rates you offer through a sliding scale.
Think of it this way: instead of tracking every individual payment, your ASF gives you a clear picture of what you’re earning on average for each session.
Why It Matters:
- We’ll use your average session fee (ASF) to determine what your annual income needs to be in order to cover for things like personal goals (saving for retirement, taking a vacation) as well as business expenses.
- By tracking ASF, you can identify areas to adjust—whether that means raising rates, revisiting insurance reimbursements, or changing your sliding scale offerings.
Step 2: Calculate Your Average Session Fee
If you’re not sure what your Average Session Fee (ASF) is, don’t worry—it’s easy to figure out. Grab an Excel spreadsheet (or Google Docs) and follow these steps:
Count Your Weekly Sessions:
- Look at your schedule for the past six weeks and add up the total number of sessions. Then, divide that number by six to get your weekly average.
Example:
If you had 120 sessions in six weeks, divide 120 by 6. That gives you 20 sessions per week.
Break Down How Clients Pay:
- Separate your clients into categories: out-of-pocket payments, insurance reimbursements, and sliding scale rates.
- Note how much you earn from each type of session.
Example:
Out of 20 clients per week, 6 pay $150 each, 10 are insurance clients reimbursed at $100 per session, and 4 are sliding scale clients paying $80 each.
Calculate Weekly Income:
- Multiply the number of clients in each payment category by the fee you earn for that category.
- Add those numbers together to get your total weekly income.
Example:
(6 clients × $150 = $900) + (10 clients × $100 = $1,000) + (4 clients × $80 = $320) = $2,220 total weekly income.
Find Your ASF:
- Divide your total weekly income by the total number of sessions you conduct in a week.
Example:
$2,220 total income ÷ 20 sessions = $111 ASF.
Your ASF gives you a snapshot of what you’re earning on average per session, across all payment types.
Step 3: Evaluate and Adjust Your Pricing
Okay, now that you know your ASF, it’s time to figure out if your pricing is where it needs to be. This is where we get a little deeper into the weeds, so stick with us.
Start with Your Costs:
Take a look at your practice’s expenses. What do you need to cover every month? Think about things like:
- Rent or office space fees
- Utilities (internet, phone, electricity, etc.)
- Licensure, continuing education, or professional memberships
- Practice management software or other tools
- Marketing expenses
Add all of these up. This is your baseline—the minimum your practice needs to make just to break even.
Factor in Your Personal Goals:
Next, consider what you want to take home and any personal goals you have for yourself. Are you saving for a house? Hoping to put money aside for a big vacation? Maybe you’re planning for retirement or paying off student loans. Write down your financial goals for the year, and don’t forget to include taxes!
A good rule of thumb is to set aside around 25-30% of your income for taxes, depending on your state.
Compare ASF to Your Needs:
Now, take a look at your ASF and your session volume. Does your ASF cover your business costs and your personal goals? If not, it’s time to make some adjustments.
Step 4: Plan Your Pricing Adjustments
Changing your pricing might feel intimidating, but it doesn’t have to be.
Remember: you are worth a living and sustainable wage!
Here are some practical ways to tweak your pricing without scaring away clients:
Raise Fees for New Clients
The easiest way to start is by increasing rates for new clients only. This way, your current clients don’t feel blindsided, and over time, your ASF will naturally rise as new clients come in at the higher rate. For example, if you’ve been charging $125 per session, consider setting your new rate at $140 or $150 for new clients.
Small Annual Increases
For existing clients, consider implementing a small annual increase. A 3-5% bump each year is generally manageable for most clients. For instance, if your current rate is $125, a 5% increase means you’ll raise it to about $131.25. Communicate this clearly with your clients, emphasizing that it helps you keep up with rising costs and continue offering quality care.
Review Insurance Panels
If you accept insurance, take a hard look at the reimbursement rates. Are some plans paying significantly less than others? If so, it might be time to let go of the lowest-paying panels. Start by notifying new clients that you’re no longer in-network with those plans while continuing to see current clients under the old terms for a set period.
Sliding Scale Revisions
Sliding scales are a wonderful way to offer accessible care, but they shouldn’t put your practice in the red. Review your sliding scale policies and consider setting a minimum fee that still aligns with your financial needs.
Step 5: Plan for Annual Income
Now let’s bring it all together to figure out your yearly income.
Here’s the formula:
Number of Weeks You Work x Average Weekly Sessions x ASF = Annual Income
Example:
If you work 48 weeks a year, see 20 clients per week, and your ASF is $111, your annual income would look like this: 48 weeks × 20 sessions × $111 = $106,560
From there, subtract your business expenses and taxes to get a clearer picture of what you’ll actually take home. If the number doesn’t align with your financial goals, revisit your pricing strategy and make adjustments as needed.
Step 6: Regularly Review Your Private Practice Pricing and Adjust
Your private practice isn’t static, and neither should your pricing be. Make it a habit to review your ASF, expenses, and goals at least once a year. This ensures your pricing stays aligned with your needs and keeps your practice thriving.
If you’re feeling unsure or overwhelmed, don’t worry. At Traktion, we specialize in helping therapy practices like yours manage their finances, optimize pricing, and plan for a secure future.
Let’s work together to make sure your practice supports your dreams and your clients.
Ready to Take the Next Step?
Reach out to Traktion today to schedule a consultation. We’ll help you set pricing that works for you—and keeps your practice thriving in 2025 and beyond.