Greetings readers, it’s been 7 years since I first wrote on this issue, and to date it remains still one of the most asked about topics. This month I present to you a re-visitation, and update!
According to Salary.com, a Licensed Professional Counselor (or ‘Family Counselor’) working in Cambridge, MA makes a median average of $43,144 per year. A Substance Abuse Counselor (or ‘Chemical Dependency Counselor’) makes an average of $57,411.
In a city where the average cost of a 1500 square foot home exceeds a million dollars ($747 per foot, and expected to grow 3.6% this year, according to Zillow), working as a fulltime therapist is financially untenable. And while Cambridge (where I lived when I went into private practice) is expensive, the math isn’t too dissimilar in other cities across the country. For example:
- A 1500 square foot home in Bethesda, MD will run $685,500. Average Counselor Salary: $41,817
- A 1500 square foot home in Denver, CO will run $511,500. Average Counselor Salary: $38,329
- A 1500 square foot home in Austin, TX is a bargain at $310,500. Average Counselor Salary: $37,343
Nobody chooses the profession of counseling for the high pay. But is financial struggle our collective fate? Is the practice of counseling relegated to people who don’t need to make a living, or as a side passion one must pursue separately from a full-time job? I hope not, and I don’t believe so. I’ve found that with hard work and good planning, earning an income of $100,000 per year in private practice is an obtainable goal.
Money in Private Practice
As counselors, we loathe to discuss money–we want to focus on patient care. However, money is a necessary part of keeping the practice doors open. The fact is, you can’t help anyone if you’re out of business, and a counseling practice is precisely that—a business. Hence, in this column we’re going to look at the financial aspects of running a viable counseling business/practice.
Note: the following numbers are estimates for a solo-practitioner in private practice. You’ll need to adjust expenses, client fees, and volumes based on your practice goals and the costs of your area. I’ve tried to be conservative when referencing revenues, and liberal when listing expenses.
Client Fees
Client fees vary depending on the location of your practice, and the payer(s) you work with. For example, in Oregon a masters-level clinician accepting 3rd party insurance payments (for example, a combination of Anthem, United Healthcare, and Cigna) might earn $99 for a diagnostic evaluation (90791). Ongoing appointments for individual or family psychotherapy (90834/90837/90847) might pay around $70.
For now, let’s estimate that all your clients pay for services with insurance, and your average fee for a 45-minute session is $75.
Fulltime Caseload
The number of sessions that constitutes a fulltime caseload is hotly debated. Some professionals feel that 30 sessions per week is too heavy of a caseload, while others find that they can comfortably serve 40+ clients per week (I say ‘hotly’ debated because providers who opt for fewer clients have been known to accuse those with heavier caseloads of being unethical.
Contrarily, providers who manage heavier caseloads have criticized others as being unorganized, or ‘not cutout’ for fulltime private practice). I wish not to contribute to this contentious debate, but instead split the difference!
I find 35 sessions per week to be a sustainable number for a full-time clinician. With this number, if you’re providing 45-minute sessions, that’s 26.25 hours of face-to-face work with clients each week. With schedule gaps and practice management duties, you’re looking at a 45-hour workweek. It’s a full-time job to be sure, but not unendurable. In addition, let’s say that you give yourself a modest 4-week vacation each year.
Calculations:
35 (sessions per week) x 48 (weeks per year) = 1,680 (sessions per year)
1,680 (sessions per year) x $75 (fee per session) = $126,000 (yearly revenue)
Practice Expenses
Now that revenues are calculated, we need to subtract any/all practice expenses. There are large, small, and hidden costs to running a practice: from patient parking, to coffee, to organic tissues, to printer ink. Below is a sample (broad category) expense list.
- Rent (one office): $550 per month = $6,600 per year
- Office supplies (computer, software, phone, furniture, printer, coffee, etc.) = $3,000 per year
Furniture, if not financed, will be an initial outlay of several thousand dollars.
- Professional dues, CEUs, & liability insurance = $800 per year
This number is often contested as it applies to the costs of professional CEUs. Note that $800 won’t get you to a national conference, but it will cover the basics. There are quality low cost CEU options, one just needs to look.
- Accounting & Legal fees = $500 per year
- Advertising and Marketing = $6300 per year
There’s no ‘correct’ amount to spend on marketing or advertising. In fact, many counselors spend almost nothing. However, for the sake of this exercise, let’s earmark 5 percent of your gross yearly revenue for the marketing and advertising your practice (5% of $126,000 (yearly revenue) = $6,300).
- Medical Billing = $6930 per year
While some counselors prefer to do their own medical billing, you may wish to hire a company to handle it for you. A customary cost is 8 percent of what the billing company collects, which comes out to around 5.5 percent of your gross revenue. Note that it’s 5.5 percent because medical billing companies don’t customarily take a share of client deductibles, or co-pays (5.5% of $126,000 (yearly revenue) = $6,930).
- Other Miscellaneous = $1000 per year
Calculations:
$126,000 (revenue) – $25,310 (expenses) = $100,870 (net)
And there you have it! A 6-figure private practice.
Variables
While the above provides a theoretical outline of private practice financials, no counseling practice will perfectly mirror the example. To help you determine with greater accurately your finances, here’s a list of variables that could potentially detract from, or enhance, your practice’s earnings.
Possible Detractors:
- The estimates above assume that one will be able to maintain a caseload of 35 client sessions per week. Low new client volume, or high client attrition, can reduce one’s weekly session count.
- To expedite the building of a caseload, more money could be invested into advertising (or time spent in professional networking, which could detract from your available client hours).
- Client cancellations and/or client no-shows could lower income, depending on how one manages their practice schedule.
- The estimates above do not account for unpaid session fees (subtract up to 4 percent).
- If you accept credit cards, subtract 2-3 percent revenue from whatever percentage of session fees you expect to process with plastic.
- The “net” above doesn’t include the cost of health insurance, retirement planning, or taxes, which are often partially covered by an employer. While not truly a cost of business, these items will detract from your expendable income.
Possible Enhancements:
- After building a strong reputation, and establishing active referral sources, you may be able to eliminate advertising and marketing (reclaim up to 5 percent).
- Owning a business might have legitimate tax advantages. For example, your mobile phone might qualify as a business expense (meaning it’s paid for with pre-tax money).
- If you see some (or all) cash-pay clients, you can reduce or eliminate medical billing expenses (reclaim up to 5.5 percent).
- If demand for your services outweighs supply (that’s you), you could raise your cash-pay rates to $99 (add $40,320 revenue).
- If you provide 40 sessions per week on average (that’s 30 face-to-face hours with clients), add $18,000 revenue.
- If you reduce your time off from 4 weeks to 3 weeks per year, add $2,625 revenue (not worth it!).
As a rule, counselors aren’t motivated by money, or excited by numbers (who enjoyed psych-stats?), but understanding the financial aspects of your practice can help you to have a successful career doing what you love, and helping others. As always, I welcome your questions, and comments @anthonycentore.
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Anthony Centore
I have an office building and the credentials to began my private practice. How and where do I get the patients.
Hi I found this thread recently and am little worried. I am currently an undergraduate applying to graduate school for mental health counseling in the counselor education program at my school.I eventually want to become a private practice councilor/therapist The salary of a mental health councilor is what is worrying me. I like to plan ahead so I can support my family in the future with no problems. Can anyone (that is in this field) confirm to me that this article is legit? I really appreciate it. Also are there any final tips you can offer to a prospective councilor? Thanks again
I have been in private practice for 8 years. I am always shocked by the salary.com estimate of income. I just read this article and I think it is dead on. The only thing that did not really mirror my practice in some way was the money on marketing. I spend very little on marketing and found his numbers to be a bit high. Just an FYI I am in a group practice but if you take our expenses and break them out per counselor it is still it is just about the same as discussed here. I make well above the national average working only 24 hours per week I hope that helps, from my perspective you can totally support a family on this work.
Hi Franky,
Yes this is absolutely realistic. I have a private practie for the past 4yrs and 6months ago I began doing it full time. My income has increased and I should be at the 100K by the end of next year if not sooner. The one thing I want to point out about the numbers are the amount of clients you have to see during a week. I am currently seeing 10/15 clients per week and I feel good about that. 30-40 clients per week can be very draining and for me, the trade off is not worth the money. I am incorpating a lot of group work/workshops so that I have variety of service and can more quickly get to the salary range I desire without being burnt out.
Oh thank you for replying. I am currently aiming to get a Dual Master’s and Specialist degrees (M.Ed./Ed.S.) in mental health counseling. Did you also get a degree similar to this? Do you have any suggestions on what I should be doing while I am working to get my degree. Thanks you have been a big help!
The BEST thing you can do is invest in consultations with someone who is effective and thriving in a private practice, someone who matches your theoretical persuasion and can enhance and deepen your ability to season your work over time. It is worth every penny. Those who do not do this are at a serious disadvantage in helping others.
Hi, For most state’s Department of Health (to legally provide counseling services), you cannot have a graduate degree in education. Those degrees are specifically to be school counselors. To legally provide therapy, you needs a Master’s in Counseling (LPC), a Master’s in Social Work (with clinical hours to be an LCSW), a Master’s in Marriage and Family Therapy(LMFT), or a Doctorate in Psychology (Psy.D/PhD). There are also only a small amount of limited states that allow people with a Master’s in Psychology to practice under supervision of an LCSW, LMFT, LPC, PsyD, or PhD- because the psychology field is too broad and not specific to counseling. Those are the degrees your can use for private practice.
I am 52 years old, have bachelors in psychology I have never used as I make great money in the mortgage industry. But my love & calling is counseling. However, I’m nervious about seeking a master so late in life with the cost of education. In advice? Did I eait too late in life to pursue my passion? Are their grants or internships I can pursue? I live in the Dallas area. Thaoks
Hello Wanda,
No it is not too late. When I was pursuing my Master’s degree 5 years ago, most of my colleagues where beginning a second career. A couple of people were 65+, but were in school to fulfill their calling. The time does not feel as long as it may look. Not sure about funding in your area, but if you can amass this amount of income, you can easily pay off any student loans you acquire. Good luck!
Wanda, Congrats for listening to your calling. At first sounds scary to venture into somethin news especially if you were making good money and had a career before but as someone who left a successful public relations and media career for clinical social work, I can tell you the switch is worth it. While grad school is expensive, doing this work is gratifying and every time I am with a client I realize how worth while the investment in education was. Some graduate schools give you a scholarship based on merit or GRE scores, I highly consider you taking them. Research your counseling professional organizations for the program you want-either national or locally as they may have scholarships. And if funds or scholarships are scarce don’t be afraid of loans. I know that may be a huge financial undertaking but think about it as an investment to yourself and your community. eventually loans will get paid off and there are lots of payment plans. Best of luck!
Hi Wanda,
I quit a very high paying job at 40 to return to school. I am now 48 and have my licensing credentials. You can go as fast or slow as you want regarding the number of classes you take. This may help you keep your expenses down. Also you can go part time so you may not have to quit your current job. Research scholarship opportunities through your school and via the internet. There are several opportunities for people over 50 to receive financial aid, especially women. Lastly, try to volunteer for an organization that will pay a stipend towards your tuition. For example, you can volunteer with Ameri Corp and they will provide you a stipend for up to two years. Good Luck and never let someone or something hold you back from something you love.
Adams state University
Online masters program for mental health counselor, about 30s a year. I’m 53yr and just got mine. Seen men in women in thier 70s and can still sit in a chair and listen with empathetic ears and a caring heart
I graduated recently… at 56 …. I just completed my 3,000 hours and as my Dear Mother would say… “The time goes by no matter what you do.”
I am SO happy!!!!!!!!!! I can see the light here.. I recently passed my NCE and glad to be taking my ABSOLUTELY…..EARNED PLACE at the Finish Line.
Go into social work or computer science. I make 48,000 and have been in the field 28 years. I am an excellent therapist. Booked 36 hours a week. But I work for a private company
I can not even afford to go on a vacation
Good luck!
Hey all,
So glad I found this thread! Although I know it’s a couple years old at this point. Two questions: counselors, has your financial experience changed under ObamaCare? And, for one’s undergrad, is psychology the best path to a master’s in counseling? I’m still in college and wavering between education and psychology as my major.
Thanks!
Julia
I have found psychology is the best avenue for undergrad major if your hopes are to become a therapist. As far as ACA (Obamacare) I have noticed a difference as more individuals are insured which has increased my client numbers :-).
Interesting. Since obamacare began, and has since failed, crushing the middle class not only with high premiums (See Congressional Budget Office figures) and the biggest tax on Americans in history, obamacare has offered nothing positive to either practicing clinicians or the public in general.
Enrollment numbers are very, very low (see Department of Labors latest figures) and small businesses have had to close up shop because of this horrible program. Please do your research.
Your defensiveness is palpable. He is simply telling you about HIS experience. One where he benefited from the change in government insurance. He does not need research to let you know of HIS experience in HIS practice. Obviously, he is happy about the change. Should he instead not acknowledge his increase in business and pretend Obamacare sucks?? WOW, you’re ridiculous.
I love your response. Well done.
Actually Social Work is the way to go. Medicare does not reimburse anyone one for counseling unless they have a independent license in Social Work. Several medical options are going in that direction. Another group that doesn’t pay counselors other than Social Workers is the Federal Govt. To obtain employment, you must be independently licensed as a Social Worker or have a PH d in counseling. In addition, medicaid is getting to the point they will only reimburse Social Workers.
I am not a current practitioner, so I cannot speak to your question on ObamaCare. However, I am a current counseling graduate student, and I had my background in English.
Though I LOVED my undergrad learning experiences, and do appreciate the foundation that English has given me, one thing that I did not (know to) consider was graduate-level scholarships.
There were many scholarships and financial aid opportunities for psych undergrads pursuing their masters in psychology, but I didn’t find any (through my program at least) that offered assistance for those who did not receive a background in psychology.
That’s just a little food for thought. Otherwise, I do admit that my writing has gotten many compliments from several teachers, and I came from a more unique background that 90% of the students who all studied psychology.
I think Psychology is not the best path, consider SW or LPC, both great degrees to end up in counseling. SW opens many more doors besides counseling than the LPC, but…LPC gives a better counseling foundation in the program