Should I raise my rates for therapy?
Perhaps the hardest question you’ll ever ask yourself while running a private therapy practice is, “What should I charge for my services?” If you were working for someone else, such as in a hospital, small clinic, or group practice, this would be taken care of for you, and you would be making a set salary regardless of how many clients you treated. Operating a therapy practice as the owner of a private business works much differently. There are many factors that must be considered when deciding where to set your rates or if it might be time to adjust them higher.
How to set appropriate therapy rates.
Many therapists would love to find a way to give their services away for free and still make a living, but unfortunately it doesn’t work that way. Especially when owning a private practice, you need to run it like a business. You have to place some level of importance on profitability. However, set your rates too high and you might deter some patients who just can’t afford it, which is unfortunate when your services could’ve been a good fit for their needs. If you set your rates too low, it can give the impression of offering a lower quality service and even discredit your expertise as a therapist. Let’s talk about how to find a middle ground when it comes to setting your rates.
How does overhead fit into my therapy rate structure?
Your therapy rates need to accommodate overhead costs for the business. These are all of the operating costs not associated with the actual therapy service such as rent, utility bills, business insurance, support staff salaries, and office supplies. You also have to think about costs related to maintaining your professional certification credentials or pursuing continuing education relevant to your specialty. Once all of those overhead expenses are accounted for, then you can factor in what your salary is. Think about your current salary and how it supports your lifestyle and whether or not it’s where you would like to be. Do your current rates and client load accommodate all of those expenses and then some? If not, it could be time to raise your service rates.
Does raising my therapy rate impact my long-term practice vision?
It’s one thing to consider where your current salary sits in relation to your life here and now, but what about your future goals? If some of your future goals for your family or your lifestyle involve bringing in more money, you need to ask yourself if your current rates would allow for that. Additionally, you could have future goals for your practice such as facility or equipment upgrades. You might even be hoping for enough financial wiggle room to partner with another practitioner or hire more staff down the road. Whether it’s for personal or professional purposes, you can raise your therapy rates if your current prices don’t make room for the future.
What to avoid when setting your therapy rates.
There are a few things you will want to avoid when setting your therapy rates:
- While it can bring some clarification to compare your rates to other practices, it can also be a mistake to set your rates similar to your competitors. Their rates are likely relevant to their overhead and their business goals which won’t look exactly the same as yours. Setting a similar rate because that’s what your competitors are charging could end up selling your business short if that rate doesn’t account for the business expenses relevant to your practice.
- Another mistake when setting your therapy rates would be to base them off what insurance providers reimburse. The exact reimbursement rates can be difficult to find unless you are on the insurance panel for a given provider, and even then, the rates can fluctuate throughout the year. These rates would be known as the “maximum billable amount,” or the maximum amount an insurance plan will cover for a given service, and it does not equate to how much you should charge as a provider.
- A third rate-setting mistake would be to gradually raise your rates over time. This would look like raising fees for any new clients throughout the year while your old clients are grandfathered in to continue paying their initial, lower fees. The problem with this model is that it creates inconsistency in the eyes of your clients, in addition to leaving money on the table through continuing to charge your original clients’ lower rates.
Code of ethics rules for raising therapy rates.
You will want to reference the code of ethics for your field for specific rules regarding raising your service rates. In general, the etiquette involves transparency and open communication with your clients. The greater the percentage of a price increase you’re implementing, the more notice your clients should be given, but a good starting point is four to six weeks prior to when the price increase should take effect. It’s also wise to communicate these changes in some form of writing, even if you have a verbal conversation about it with your clients, so that you can document exactly when your clients were notified if it needs to be referenced later.
Adjusting your therapy rates to a changing market.
Most people have come to expect price increases to happen at some point for all goods and services they purchase, so when your clients are notified of a rate increase in your therapy practice, it shouldn’t come as too much of a shock to them. If your current rates aren’t lining up with your current business or salary needs or your future goals for either of those things, then you should feel confident that raising your rates is the right move. While it might be an adjustment, it will inevitably allow you to provide better therapy services through increasing the financial resources of your practice.
