Pricing Pitfalls to Avoid in Private Practice

 

‘How much should I charge for therapy?’ is an ever-present question in many of the conversations we’re having with therapists, both offline and online in our weekly Q&A sessions in Therapists Corner. It’s a topic I’ve touched on previously, discussing the delicate balance between valuing the service we provide and navigating our discomfort and mindset around monetary matters. In this post, I want to delve deeper, offering further clarity and guidance on setting fees that will honour your worth and sustain your practice.

The Pricing Puzzle

Setting the right fee for your services is a delicate balance. Undercharge, and you might not fully cover your worth and costs, leading to financial strain. Overcharge, and you risk alienating potential clients. Finding that sweet spot where your fees reflect the value of your service, cover your costs, and resonate with your clients is essential. It ensures your practice isn’t just surviving but thriving, with a pricing structure that supports both your financial health and your clients’ access to vital services. With this in mind, let’s explore some of the pricing pitfalls therapists in private practice should avoid.

  1. Don’t Underestimate Your Worth

One of the most prevalent issues among therapists is the tendency to undervalue their services. Remember, the price of therapy isn’t just about the time spent in session. It’s about the years of training, the ongoing education, the emotional labour, and the unique expertise you bring. If the fee you’re thinking about charging feels slightly uncomfortable, it’s probably a sign you’re valuing yourself appropriately. What you charge should reflect your significant impact on clients’ lives and ensure you’re compensated fairly for your extensive skills and dedication.

  1. Don’t Make Assumptions About What’s Affordable

Affordability is subjective. Unless you’ve done some in-depth market research, it’s an inadequate benchmark for setting prices. You simply cannot presume to know what people can or cannot afford.

When therapists work in poor economic areas, I find they are more likely to charge less rather than price themselves where they want to be. But you don’t need to let your location dictate your pricing. If you want to be as low cost as possible, that’s one thing. You can build your business around this model. But if you want to offer your services at a higher rate, this is ok too. There might be a smaller population to focus in on in your area, but if you get your marketing and messaging correct, this shouldn’t hold you back. The more you niche the better, so read Should I Niche My Private Practice? for more information.

  1. Don’t Compare Yourself to Others

It’s natural to look around and gauge what others are charging, but setting your rates based solely on this can lead to misguided pricing. Every practice is different — with varying costs, specialisations, and client bases. What works financially for one therapist might not work for another.

Instead, focus on understanding your costs, the value you provide, and the clientele you serve. This approach ensures your fees are tailored to your specific practice, not just a reflection of the market average. Pocket Site’s Therapist Hourly Rate Calculator can help you get to grips with the relevant numbers.

  1. Don’t Let Poor Money Mindset Be Your Downfall

Many therapists grapple with mindset issues around money. Working with clients who are struggling can lead to feelings of guilt for charging for their services. They may be dealing with other ‘money stories’ too – narratives rooted in notions of lack or abundance that shape financial perceptions and decisions.

It’s important to recognise and address these barriers. Remember, you can provide better quality care for your clients by ensuring your practice is financially healthy. A thriving therapist is a more effective therapist.

Be wary of letting emotions and deep-seated money stories cloud your judgment. Balance personal feelings with data-driven analysis to make sound financial decisions. By reconciling your money story with a practical and positive approach to finances, you create a stable foundation that supports both your well-being and your clients’ therapeutic journeys.

  1. Don’t Neglect Your Business Plan

A well-structured business plan is your roadmap to a successful practice. It helps you understand your financial needs, set realistic goals, and plan for the future. A business plan isn’t just about numbers. It’s about having a clear vision and strategy for your practice. It ensures you’re organised, prepared, and proactive in your business approach. If you don’t know where to start, take a look at Pocket Site’s Business Plan for Therapists.

  1. Don’t Underestimate the Importance of a Budget

It’s alarmingly easy to underestimate the importance of a budget, but doing so can leave you financially adrift. A well-crafted budget is about more than simply tracking pounds and pence. It exists to guide your practice’s financial journey, helping you understand where your money flows so you can set realistic financial targets and invest in areas that will fortify and enrich your practice. Without this vital navigational tool, you might find yourself veering off course, potentially into the realms of overspending or underinvesting.

  1. Don’t Skip Tracking Expenses

Regularly tracking expenses is the key to understanding the financial heartbeat of your practice. Knowing where every penny goes will give you invaluable insights into your spending habits, highlighting opportunities for smarter investments or necessary cutbacks. Neglecting this area can lead to a murky financial picture, where overspending goes unnoticed, and potential savings or growth opportunities slip by unseen.

  1. Don’t Forget to Review and Adjust

The market evolves, your costs may increase, and your experience is always growing. Your fees should reflect these changes. Regularly reviewing and adjusting your prices ensures they continue to align with your value, business overheads and the market. It’s a sign of a dynamic, responsive practice that respects its worth and adapts to the ever-changing landscape.

  1. Don’t Ignore Inflation

If you charged £100 per hour in 2023 and are considering an adjustment based on inflation, the new rate you charge in 2024 will depend on the specific inflation percentage you’re applying. For instance, if you’re adjusting your fees based on a general inflation rate of 6.3% (as per CPIH in September 2023), you’d calculate the increase as follows:

£100 (your current rate) x 0.063 (inflation rate) = £6.30

Adding this to your original rate:

£100 + £6.30 = £106.30

So, based on a 6.3% inflation rate, you might consider charging approximately £106.30 per hour to keep pace with inflation.

However, if you’re considering the higher actual inflation rate, around 11%, the calculation would be:

£100 x 0.11 = £11

Adding this to your original rate:

£100 + £11 = £111

So, at an 11% inflation rate, you might consider charging around £111 per hour in 2024.

It’s crucial to also consider other factors specific to your practice, such as increased costs, market rates, value of service, and client capacity to pay, before finalising any rate adjustments. Take a look at the Bank of England’s Inflation Calculator and consider consulting with a financial advisor for more personalised guidance.

You’re Worth It!

Avoiding these pricing pitfalls isn’t just about ensuring you’re paid fairly. It’s about respecting the profession, the value of therapy, and your role as a healthcare provider. As you reflect on your pricing strategy, remember your fees are a statement of your worth and a fundamental aspect of a sustainable, thriving practice. Approach setting your fees thoughtfully, and don’t hesitate to seek guidance or adjust as needed. Your practice, your clients, and you are worth it.

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