How much should you charge? Part 1: Surviving, fees

Published March 14, 2011

This is the first of three articles about the fees you charge your clients. What you will get here is the framework for thinking about how much you should charge; you won’t specifically be told the fees you need to charge.

The survival budget is a simple concept: what level of activity do you need to reach to make sure you can financially survive?

Probably most coaches and therapists are at this level or even below it!

I suggest that below your calculations you keep detailed notes; this is because it is likely the first time you do it you’re not going too be accurate in all figures and you will need to adjust later.

Firstly, let’s work out how much you get to keep of the fee the client pays to you. In some countries sales tax or VAT is charged on everything, so that is not your money, it has to be paid elsewhere, so take that off. If you are renting rooms as a percentage of your fee, again this has to come off. So what are you left with in your hand that is yours?

Next let’s find out how much money you need to have coming in each year to survive: accommodation, heat and power, food, family trips, maintenance of your home, etc. What are the essentials of your lifestyle? What are your practice expenditures? Remember to include professional insurance, professional memberships, training courses and other essential expenditure.

Now divide the total amount you need coming in by the amount you are left with from each client. This will give you an estimate of the total number of fee paying sessions you need to have each year.

Next, how many weeks of the year are you working? It’s not 52, I can assure you of that. After taking into account time away from work and time on training courses, how many weeks are you actually left with?

If you then divide the total number of fee paying sessions a year by the number of weeks, this will tell you how many paying clients a week you need to see.

We’re still not quite there, after all sometimes clients don’t show up, clients finish with you, or circumstances happen where you have to cancel an appointment. So how many times on average per week does this happen to you? Some weeks it may be a lot, whilst many weeks it may be none. Average out and add that number to the number of sessions a week calculated above.

Now look at your diary for next week, how many appointments? Are there enough? Do you need to find more clients?

Unfortunately, too many therapists are in the situation where they’re charging low fees, and still not getting the clients in sufficient numbers.

The next article will look at what fees you need to charge to make a living. As you can probably guess already, they will be higher than the survival level.

John Nolan