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The Beanstalk of Fee-Setting IssuesJanuary is the month when I annually raise my fees. I have done so every year for the past 24, with the exception of 2009 when the recession hit. I raise them $5/session across my clientele.

And I have to admit, even now, after all of this time and my work on abundance, there is still a momentary hesitation. Am I really worth that much? Will my clients get angry at me for doing this? The good news is that hesitation is “momentary.” But if that hesitation is still there for me, I know that many therapists struggle a lot longer with that fee-raising concept – or worse yet, just ignore it all together. And the latter group will sometimes wait years to raise their fees.

Is there a right way or a wrong way when it comes to raising fees?

I don’t think about this issue in terms of right or wrong, but rather what is healthiest for you – and your clients. We each have an obligation to take care of ourselves – or else the presumption is that someone else will, or is even supposed to. Children have a right to that presumption. Adults don’t. That’s the responsibility side of adulthood.

And taking care of ourselves has an economic factor – making sure that we have the funds/means to be fed, housed, healthy, and enjoy life’s many pleasures.

Most therapists I know would agree that they hope to see their clients be self-responsible, happy, and contributing adults. Yet those same therapists hesitate when it comes to doing the same for themselves in the area of economic responsibility. Fee setting is where the abundance rubber seems to hit the road. Which is why I want to address this issue – from the perspective of the therapist, and in Part II, from the perspective of the client. I want to look at why it’s an important issue, and one that can be ignored temporarily – but not without “cost.”

The Backstory

From the time that you thought about, and then decided to become a psychotherapist, you dealt with money issues. The cost of your education, the income you would forgo while in school, and what you might expect to make as an intern, and then as a licensed clinician. You factored in the risks and the rewards.

Before you became licensed, you had already dealt with more money issues. Typically, these were at an agency, where you set and collected fees, either directly or indirectly.

If you work in private practice as a licensed clinician, as I do, then you deal with the financial aspects of running a business – office rent, supplies, phone and internet services, voice mail, insurance (malpractice, disability, liability), professional organization dues, advertising and marketing costs, continuing education costs. And all of this is before a client even walks through your door.

And, hopefully, before that client does walk through your door, you have confronted him or her with the first financial interaction between you – your fee.

“Free” Therapy

There is no such thing. In situations where the patient pays less than what the marketplace would suggest, somewhere there is a subsidy. If people seem to get “free” services, someone is paying the salaries of the providers. When insurance is used, the patient’s work has contributed to having the insurance, so although it is a step removed from direct payment, it is the patient’s payment nonetheless. One of the “benefits” of his or her employment.

In agencies, as William Herron and Sheila Welt discuss in Money Matters: The Fee in Psychotherapy and Psychoanalysis, “Patient fees are often NOT collected by the therapist, and whether or not they are paid, the therapist’s salary is not directly affected. Yet the patient’s responsibility to pay is no different than if the therapist were paid directly by the patient, and if this did not happen, the therapist would not have an income.”

Thus, a therapist working for Kaiser Permanente, for example, sees clients who are paying their insurance premiums.

Even in pro bono work, therapists gain something – learning about a particular disorder, being thought well of by peers for doing that work, feeling good that they can help someone who might not otherwise be able to get therapy. But it is still a transaction, only the “currency” has changed. A “fee” is still being charged, such as patient gratitude, recognition by peers, or obtaining special knowledge or experience, or the awareness of making a contribution.

The fee is part of therapy. When therapists act as if this is not the case, they distort reality. And isn’t living in the real world a sign of mental health? We tell our patients that there are no taboo topics in therapy. Nor should money be one.

Climbing that Beanstalk

Why is fee setting, or the issue of money in general, then such a bugaboo topic for so many therapists?

Some of this baggage can originate in our family backgrounds. How comfortable or not were our parents, grandparents with discussing the issue of money openly – or at least openly in the family? And by openly, I of course don’t mean being yelled at for overspending! I find it fascinating that as a society, we seem to have become more comfortable first with talking about sex openly than we have about money. Even now.

Research done in 1981 found therapists in a mental health center to be resistant to billing and collecting fees directly from patients. Why? The respondents said that such procedures “would contaminate the therapy.”

Fees are often seen as unpleasant, even “dirty business.” It is analogous to enjoying being a teacher, but hating to grade students.

It’s as though we have a belief that if we do well, someone else has to suffer – and we sure don’t want our clients to do that. Not at our hands! After all, they are suffering enough.

Using an Elevator Instead

Is there another way to think about this? Absolutely.

As I’ve said many times and will repeat as needed – this is not a win-lose decision. But it is a win-win choice. My benefiting means the client does too. I’m offering my clients something that they want and are willing to give up something of theirs to obtain. The former being my training and expertise; the latter being their money. It is a direct exchange – a trade, if you will. The kind we make all of the time. I’ll trade my $4 for a Starbucks pumpkin spice latte any day.

And once we recognize that there is no foul going on here, we can begin to let go of that noose and learn a lot about our clients. From the moment you tell a client what your fee is, you will be getting information about that prospective client. But if you shun the topic of money, aren’t consciously aware of its importance, you will miss out on this information.

For me, that happens in my first phone contact with a prospective client. How do they respond when I say that my regular fee is $170/session, and I do not sound hesitant to say it? Do they see me as “expensive” or a “bargain?” Do they run over the issue of the fee and make no comment at all or do they ask questions about a sliding scale or the forms of payment that are accepted – check, cash, credit card?

In other words, do they have a healthy relationship with money or one of avoidance? I’m collecting this data actively because I know that this tells me about other relationships in their life, about the way that they deal directly, or don’t, with important topics.

When I first began my practice of psychotherapy, clients would come into my office and comment about the nice furnishings and ask if they were mine. I knew they were at least partly testing to see if I was comfortable with having such abundance. And if, therefore, I would also be comfortable talking about their similar issues. This may have been an “unconscious test” on their part, but no less meaningful – in fact, probably more meaningful.

It’s interesting – but not surprising – that this happened early in my career as a clinician when, of course, I wasn’t yet as comfortable with the concept of abundance as I am now. It’s been years since that has occurred.

Some therapists may need to examine their own feelings of envy, and then of resultant guilt about that envy, when working with very wealthy patients, particularly in reaction to the narcissism and grandiosity that can be connected to the accumulation of money.

I will look at more examples of what we learn from clients around fees and money issues in Part II of this article when I focus more on clients’ fee and money issues.

Please don’t expect that if you deal with fee issues at the beginning of therapy with a particular client that you’re done. Lives change and as the work deepens, more issues around money often surface. A client getting laid off for example – a not uncommon occurrence – will affect the therapy. How do you deal with this? How do we set or reset fees? What is our truth around doing that? Meaning, what are we comfortable with or not?

I will negotiate a temporary fee in this situation with the understanding that when the client is re-employed, we will return to my full fee. In that way, we are both still taken care of and the work isn’t interrupted – in fact, the client gets an experience of how a healthy relationship works.

These kinds of questions are embedded in a larger issue for therapists: in order to help clients learn to take better care of themselves, we need to have learned this ourselves. This is not “selfishness,” but self-interest – being interested in our well-being and not feeling any guilt about this. As I said earlier, if we’re not taking care of ourselves, we presume someone else will. How selfish is that?

Number Crunching

So is there a relatively painless way to set your fee? You bet!

One of the easiest ways that I learned was described at a seminar I attended for self-employed professionals years ago.

The speaker told us to decide what we wanted to make annually. Then add to that figure the annual costs of doing business – rent, insurance, marketing, etc. Divide by 12 (months), then divide again by four – this is the amount per week that you want as income. And then divide that amount by the number of client hours per week that you want to work.

For example, if you want to make a gross income of $100,000 per year, and your costs are $20,000 per year, then you need to bring in $120,000 annually. Divide that by 12, which equals $10,000 – or the amount you want as a monthly income. Dividing again by 4 = $2,500 per week. If you see 25 clients, you need to charge them $100/session.

If you decide that you want to double this to $240,000 a year, then of course you need to charge $200 per session, in which case you may have charged yourself out of an income. But this depends on what the market will bear.

Obviously, one other factor to take into account is what your market will bear. When new products are introduced, we all know that we will pay a premium for their immediate ownership, because we get the distinction of being “the first on the block” … Later, the manufacturer can no longer charge these high prices because the novelty factor has worn off, and competitors have moved into that niche. The original manufacturer takes into consideration what the market will bear.

Do you know what your market will bear? I work in Silicon Valley, CA, and outside of New York City (where therapy usually runs between $200 and $300/session), it is probably the most expensive area in the U.S. to live. That means its residents are used to paying a higher tab for most things. The market bears that. So my fee for individual clients at $170 is not unusual. I recently visited a city in the Southern U.S. and the typical fee there is $100, but overall living costs are naturally much less.

Another factor to consider is what you are selling – your expertise, years of experience, particular certifications. If you’ve been doing this work for awhile, then those are worth more than they are for someone just starting out in the profession. If you have done this work for more than a decade, or two, you know that in most cases you can diagnose and get to the heart of a patient’s problems quickly, and help them work through them more efficiently. You’re better at observing your counter-transference issues and getting help fast to deal with them.

Just as important, if not much more so, is the market you’re targeting. High-net-worth individuals can obviously afford much higher fees than low income workers. Remember, there are Hyatt customers and Holiday Inn customers, and both hotel chains are extremely successful.

Your target market and your expertise are important factors to consider when fee setting, and should also be used to remind yourself of the reasons you can and need to be raising fees. If you’re paying attention, you are constantly getting better at what you do.

Another Thought or Three

Remember that the formula to decide your fee can also result in an average of what you charge. Your fee may be $115, and you may then see some patients for $85, giving you an average fee of $100. I decide how many patients I will see for a reduced fee and/or pro bono and keep those boundaries. And limiting my sliding scale clients also allows me to do the pro bono work more comfortably.

I’ve talked a lot about fees and of course there are other monetary issues that therapists deal with – such as late payments, returned checks. These are grist for that proverbial mill we all know about.

Just like every other monetary or non-monetary piece of information, the client is telling you something about him or her. Explore that. I set a boundary of not carrying more than two sessions of late payments, and if I have a client who repeatedly asks for this privilege, we talk about that. What is this about? Are they trying to learn about how to set good boundaries and need me to role model that? Are they angry at me for something and want to make me wait? Who treated them this way?

I can’t remember the last time I got a returned check, but I know I did a lot when I was new in this field. I think that it had a lot to do with working through my own issues about being able to hold onto money. If my belief was that it came fast, and went just as fast, then my clients were trying to help me see that by bouncing checks!

Next month in Part II of this article on fee setting, I’ll explore more about what clients are really looking for when it comes to fee setting and how you can help them get those needs met.

So when was the last time you raised your fees? Do you do so regularly? If not, why not? TMI members would love to have your input. Be sure to share your questions, thoughts, and fee experiences below. We look forward to hearing from you!

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