How Much Does a Private Practice Therapist Make?

Estimates of the salary for a private practice therapist are all over the internet. Some places report several hundred thousand dollars a year which is certainly not the average. You want to know how much money you can realistically expect to make when you’re considering starting a private therapy practice.

Many factors go into a private practice therapist’s salary, such as how many hours they can work, whether they run a group or solo practice, and how much they charge per client. Whether you take insurance or use private pay will also impact your earnings. Many therapists opt to take on additional roles aside from direct patient care that nets them extra income, such as online courses, public speaking, or book writing.

So, if you’re looking for a realistic idea of how much you can earn as a private practice therapist, keep reading. We’ll give you the factual information about therapist salaries and give you ideas for additional income streams should you want to explore them.

Where Does the Salary for a Private Practice Therapist Come From?

How much a private practice therapist makes depends on whether they work for themselves or an agency and how much they make per session. If you choose not to take insurance, you set your hourly rate. The insurance providers set the maximum amount for services if you accept insurance. You can read more about private pay Vs. Insurance paneling here.

In this way, therapists don’t typically make a salary. Instead, they make a certain percentage of the total revenue collected from seeing clients. So, the more clients you see, the more money you can make. This pay system is standard in most healthcare fields. The problem with this is you also need time for administrative tasks and want to have a personal life. So, increasing income isn’t as simple as taking on more clients.

How Much Do Private Practice Therapists Make?

If you’re working for an agency, you can expect to make 30-60% of the total collections from your clients. You can also expect a delay when starting up because you don’t get paid until your clients or the insurance company pays the bill. The lag in payments is due to the administrative needs of the insurance company.

We looked at the US Department of Labor’s May 2020 National Occupational Employment and Wage Estimates for an overview of what average salary you can expect as a private practice therapist. Not surprisingly, psychologists make more than master’s degree level therapists and social workers. Here are the average annual salaries of mental health professionals:

  • Social Workers’ median salary is $52,000
  • Counselors’ median salary $50,000
  • Marriage and Family Therapists’ median salary $50,000
  • Psychologists’ median salary $82,000

These salary ranges are national averages and consider those in private and group practice and those working for agencies. When people decide to start a private practice, they often want more freedom, but wanting more money is also a common reason.

Private Practice Salary Breakdown

Many people come to me with a goal of a private practice salary of making $100,000 or more a year. If you want your take-home to be 110K, you’ll need to bring in about $140,000 because of overhead expenses.

Then, we divide $140,000 by the number of weeks you want to work a year (don’t forget to schedule a vacation).

For this example, let’s say you want to take five weeks of vacation a year.

So, $140,000 divided by 47 work weeks equals $2,978.72 each week.

We divide that by how many clients you want to see every week. For this example, let’s say you see 18 clients a week.

$2,978.72 / 18 = $165.48

So, your hourly rate must be $165.48 (or more) if you want to take home $100,000 per year.

If that hourly rate seems too high, consider adding group therapy sessions where each client pays a lower fee, but you make more in that hour. If you have five clients in a weekly group and charge $100 each, that’s $500 towards your weekly goal.

The trouble with being paid per client is that you can’t keep adding clients year after year to increase your income. Eventually, you’ll run out of time, and even with many years of experience, you won’t get a raise that even covers the cost of living.

How To Increase Income as a Private Practice Therapist

The obvious answer to increasing your earning potential in private practice is to reduce overhead and increase revenue. But, how can you do that in a way that doesn’t require you to take on additional clients? If your caseload is full, there are many ways to increase your income without burning yourself out.

Open a Larger Practice

First, consider opening a group practice rather than solo practice. Running a group practice means more administrative work for hiring clinicians, insurance paneling, liability insurance, and scheduling. But it’s a great way to increase the number of clients your practice serves without increasing overhead. Your therapists can share office space if their schedules are different. Hiring an administrative assistant can help limit your administrative tasks and enable you to continue seeing clients. 

Specialization

Another way to increase your revenue is to become a local expert in a particular niche and market yourself. Specialization can lead to a more extensive client base, speaking opportunities, and more if you utilize effective marketing strategies. Maybe you have a particular interest in substance abuse, working with newly divorced people, or helping families navigate life changes – find out what certifications you’d need to position yourself as an expert in that area and then market it.

Be Selective About Insurance Paneling

The third way to increase your income in private practice is to be mindful of what insurance companies you panel with. Insurance companies have different reimbursement rates, so ensuring you panel with higher-paying companies can increase your income.

Policies, Procedures, and Systems

Having effective policies for handling no-shows and cancellations can reduce the number of sessions you waste. You can also schedule any regular clients in the same spot each week and improve retention by focusing on building relationships. If you instill a sense of hope in your patients, clue them in on the long-term plan for their growth and success, and follow up on any commitments you make, you’re more likely to keep them long-term. People who seek therapy long-term have better outcomes, so it’s best for you and the client to stay together!

Passive Income Streams

If you’re a private practice therapist looking to increase your income, you may consider setting up additional passive income streams. Therapists with a specific niche do well with online courses, ebooks, podcasts, and membership sites to help boost clients’ mental health and provide additional income.

Reach Your Income Goals Faster With Business Coaching

If you looked at the median salaries above and felt disheartened, do not become discouraged. Making six figures from a private therapy practice is possible. Achieving that success requires you to learn business strategies for marketing, setting up systems, and reducing overhead costs. The best way to learn those skills is by working with someone who’s done what you want to do.

Soribel Martinez, LCSW, is a psychotherapist with over 20 years of experience in the mental health field who built SMPsychotherpy and Counseling Services in 2018. She scaled the business to include over thirteen practitioners and covers clients in Connecticut and New York. Now, Soribel is bringing her knowledge of the mental health field and her business savvy to her coaching and consulting clients.

Soribel can guide you through setting up your practice, so it supports financial stability, has a solid marketing plan, and has a long-term business plan to carry you through. Her coaching programs will help you reach your six-figure income goals faster than starting a business without support. Reach out today to schedule your FREE Business Consultation Call to learn more about Soribel’s business coaching services. She’ll learn more about your current business, your goals for scaling your practice and provide her recommendations for your next steps. You can also download a Private Practice Checklist to help you organize your tasks.

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