Running a private practice means wearing a lot of hats—therapist, business owner, and, sometimes, accidental accountant.
One of the trickiest parts? Figuring out if your expenses are reasonable.
Think of it as checking your vital signs. If you don’t know what’s “normal,” how do you know if something’s off? That’s where benchmarks come in. Let’s break down typical expense categories and see the benchmark guide for therapists so you can see if you’re overspending, underinvesting, or right on track.
Payroll: Your Biggest Expense (and Biggest Investment)
For most therapy practices, payroll is the biggest expense—typically making up 50% to 70% of total revenue. If you have a team of W-2 employees, you’ll likely be on the higher end of that range. If you primarily work with contractors or run a solo practice, your percentage will be lower.
If payroll is eating up too much of your revenue, take a closer look at your team structure.
Are therapists seeing enough clients to justify their salaries?
Could schedules be adjusted to increase efficiency?
Is your admin team the right size, or could certain tasks be streamlined or outsourced?
Sometimes small tweaks—like improving scheduling or adjusting work hours to better match client demand—can reduce payroll strain without cutting essential staff.
On the flip side, if payroll costs seem unusually low, it’s worth asking whether you’re paying competitively. The mental health field is experiencing higher demand than ever, and top therapists have options. If your practice is struggling with retention, offering better pay or benefits could prevent costly turnover.
Office Supplies: Keeping It Reasonable
For most mental health practices, office and therapy-related supplies account for 1% to 3% of revenue. Since therapy doesn’t require a ton of medical equipment, these costs are generally lower than in other healthcare settings.
Most of your spending here will go toward everyday office essentials—printer paper, intake forms, notebooks, pens, and materials for therapy sessions. If you offer play therapy or art therapy, your supply costs may be higher due to the need for additional tools and materials.
If you’re spending way more than 3%, take a step back and evaluate whether everything you’re buying is actually necessary.
Are certain materials going unused?
Are you over-ordering items that just sit in storage?
While bulk ordering can save money in the long run, overstocking can tie up cash flow that could be better spent elsewhere.
If you’re spending less than 1%, that’s not necessarily a good thing. Ask yourself if cutting corners is affecting your workflow or the client experience. If you frequently run out of essential items or hesitate to invest in better materials, a small budget increase might actually improve efficiency and outcomes.
Overhead: Creating a Welcoming Space
As a therapist, the environment you create in your office plays a huge role in client retention. A cold, uncomfortable space can make it harder for clients to open up, while a warm and welcoming office sets the tone for healing.
Most therapy practices spend 1% to 3% of revenue on client comfort. This includes things like comfortable seating, calming decor, good lighting, and small but meaningful touches—maybe a cozy waiting area, refreshments, or white noise machines to ensure privacy.
If your spending is above this range, take a moment to assess whether the extra costs are making a noticeable difference. A thoughtfully designed office is important, but spending thousands on trendy furniture or high-end decor won’t necessarily improve client outcomes. Focus on upgrades that genuinely enhance comfort and the therapeutic experience.
If you’re on the lower end of the range, consider whether a few simple changes could make your office feel more inviting.
Is your seating comfortable enough?
Do clients have a pleasant space to wait before sessions?
Small, cost-effective improvements—like better lighting, a clean and organized layout, or offering water or tea—can go a long way.
Therapy Tools and Equipment: How Much Is Too Much?
Depending on the type of therapy you offer, equipment costs should take up 4% to 10% of revenue. If you primarily offer talk therapy, you’ll likely be closer to 4%.
But if you use specialized tools—such as biofeedback devices, sensory integration equipment, or neurotherapy systems—expect to be near the higher end.
If your expenses are creeping above 10%, take a hard look at whether every purchase is truly adding value. Leasing expensive equipment instead of buying can be a smart way to lower upfront costs. If new equipment isn’t in the budget, high-quality refurbished tools can be a cost-effective alternative.
If your spending is too low, ask whether an investment in better equipment could improve your services. Are there digital tools that could streamline your workflow or enhance the client experience? Would upgrading certain therapy aids help you offer more effective treatment? The key is spending strategically—invest in what helps, but don’t feel pressured to buy every new tool on the market.
Struggling To Keep Costs at a Healthy Level?
Knowing how much to spend is just one part of the equation. The bigger challenge is making sure your expenses don’t spiral out of control while still investing in the things that matter.
If you’re not sure where your numbers should be—or how to adjust your spending without sacrificing quality—we can help.
At Traktion, we specialize in helping therapists take control of their finances so they can focus on what they do best: helping clients.
In search of a better accounting partner? Let’s chat and get your practice running smoothly. Simply head over to our Getting Started page to book your introductory call.
We look forward to seeing you.