Why You’re Not Making Enough Money in Private Practice (And How to Fix It)

I remember when I first started fantasizing about private practice. No more agency work, no more micromanaging supervisors, no more 50-client caseloads. Just me, my 15 clients, and a decent income.

I had it all planned out. It was 2012 and I wanted to make $100k a year and take four weeks off. The math seemed simple: if I charged $140 per session, saw 15 clients per week for 48 weeks a year, I’d hit my income goals easily. I let myself dream—maybe I could afford a gym membership, attend a workshop I actually wanted to go to, or treat myself to dinner with friends without calculating how much it would drain my bank account.

Reality check? I didn’t come close.

Not because clients weren’t showing up. The problem was that private practice income isn’t just about simple math. It’s about systems, policies, boundaries, and running your practice like a business—because that’s exactly what it is.

If you’re feeling stuck, frustrated, or like you’re working harder than ever but seeing little payoff, chances are you’re making the same mistakes I was. Let’s break them down and, more importantly, talk about how to fix them.

1. Client Absences Are Costing You More Than You Think

Cancellations happen—clients have emergencies, life gets in the way, or they just forget. But here’s the kicker: most therapists either have cancellation policies that do nothing to protect their income, or they’re too inconsistent in enforcing the policies they do have.

Every time you let a late cancellation slide without charging, you’re eating into your own paycheck. And the worst part? The more you let it happen, the guiltier you’ll feel enforcing it next time. That cycle is keeping you stuck.

I’d like to give you a little perspective. If you charge $160 per session and have just two unpaid client absences per week, you will lose over $16,000 a year.

Solution:

First, if your cancellation policy isn’t working for you, fix it. I use a No-Cancellation policy, which has protected my income consistently for years. You don’t have to copy my method, but you do need a policy that makes financial sense for your practice.

Second, enforce it. Every. Single. Time. Skipping it once opens the door for exceptions and lost income down the road. And while you’re at it, build some wiggle room into your fees—factor in a small percentage of expected absences so you’re not caught off guard when life happens (for you or your clients).

2. You’re Not Accounting for Your Own Time Off

Let’s be honest: you’re not a robot. You’ll need time off for vacations, sick days, family emergencies, or just plain burnout prevention. But if you’re not planning for those days financially, your income is going to take a hit.

Solution:

Start by factoring both planned and unplanned time off into your rates. I set aside room in my budget for at least two additional weeks off each year on top of my vacation time. That way, I don’t have to panic about money when I get a migraine or need a mental health day. You shouldn’t either.

3. Gaps in Your Schedule Are Draining Your Revenue

Clients grow, change, and eventually move on—and that’s great. It means you’re doing your job. But every time a client finishes their journey, takes a break, or drops out unexpectedly, you’re left with gaps that hurt your bottom line.

Solution 1: Stop attracting clients who ghost.

Look at who you’re bringing into your practice. Are you attracting uncommitted clients who bail halfway through? If so, take a hard look at how you’re marketing yourself, how flexible your scheduling is (being too flexible invites chaos), and how you onboard clients. Set clear expectations upfront—both in writing and in conversation—about attendance, commitment, and accountability. If you don’t, clients will come and go, and you’ll be left holding the financial bag.

Solution 2: Set up a waitlist.

Create a system to fill open appointment slots as soon as they arise. I request waitlisted clients email me weekly for updates on availability. This allows me to identify those who are still searching for a therapist and are eager to begin.

Solution 3: Don’t let clients take breaks.

When a client takes a break and you promise them a future appointment, you face the challenge of an empty slot without payment or the need to adjust your schedule. To avoid this, discuss the importance of consistency and commitment to their growth and goals. Emphasize dedication over impulsive scheduling, as too much flexibility can jeopardize your finances and suggest a lack of commitment.

Consider the fear of a client deteriorating during a break and facing legal consequences for keeping their file open. This scenario highlights significant ethical and professional dilemmas. By consistently working with your clients or properly closing their files, you protect yourself from legal issues while ensuring your practice's financial health. Unforeseen client losses can impact your income, making clear communication and appropriate closure processes vital for both client well-being and your stability.

Solution 4: Market Consistently

And finally, keep your marketing efforts consistent—whether it’s SEO, networking, or referrals, maintaining visibility means fewer empty slots.

4. You’re Too Scared to Raise Rates for Existing Clients

Here’s a classic trap: You raise rates for new clients but leave your long-term clients paying the same old rates. You’re scared they’ll leave if you raise their fees. Spoiler: They won’t. Or at least not all of them.

Solution:

If you don’t want to drop a sudden, massive fee increase on clients overnight, ease into it over time. Tell your clients ahead of time that you’ll be raising their rates incrementally—maybe a portion of the increase in three months, then again three months after that, until everyone is paying your current rate. Clients appreciate the heads-up and gradual change, and you’ll stop losing money on clients who should’ve been paying your new rate months ago.

5. You’re Not Raising Rates Annually

Inflation doesn’t take a year off—why should your rates stay the same? Avoiding rate increases because you feel awkward about asking for more money is a fast track to burnout and financial frustration.

Solution:

Set a clear, predictable procedure for annual rate increases. Mine happens every January. Six weeks before the increase, clients get a short, straightforward letter informing them of the new rate. I combine that with my end-of-year communication—things like holiday out-of-office dates and a genuine note of gratitude for the work we’ve done together. It feels natural and professional because it is.

6. Taxes Are Eating Your Profits Alive

Taxes are inevitable, but too many therapists don’t plan for how much Uncle Sam will take—and end up scrambling when quarterly payments come due.

Solution:

Work with a tax professional who knows the ins and outs of service-based businesses. Then, adjust your rates to cover not just your take-home pay but also your tax liabilities. Regularly set aside a percentage of your income (I recommend 25-30%) so you’re never caught off guard.

7. Insurance Contracts Are Selling You Short

I get it—insurance contracts seem like an easy way to fill your schedule. They promise a steady stream of clients and offer a sense of financial security. But let’s think about whether the trade-offs are worth it in the long run.

First, those lower reimbursement rates don’t just shrink your paycheck—they force you to raise rates for your private-pay clients if you want to meet your income goals. If your financial targets are realistic and appropriate for the level of care you provide, someone has to cover that gap. If it’s not the insurance companies, it ends up being your other clients. Does that sit well with you?

And then there’s the hidden cost of time. Contracting with insurance companies often means unpaid hours spent on administrative work: completing claims, making phone calls, dealing with clawbacks, tracking nonpayment, and navigating confusing policies. Suddenly, a 15-session week can balloon into 25 or more hours of work once you factor in the insurance management.

Now ask yourself this: What if you used that time to market a cash-pay practice instead? Every client would pay the same rate, your time wouldn’t be wasted on administrative headaches, and your income wouldn’t depend on someone else’s reimbursement policies. That extra time could go toward networking, improving your website, refining your SEO, or simply taking on more full-fee clients—work that directly grows your business instead of draining it.

Solution:

If you’re going to accept insurance, make sure the trade-offs align with your financial goals and personal boundaries. You might be able to negotiate higher reimbursement rates. You can also limit how many insurance clients you accept to prevent those contracts from dragging down your overall income.

Ultimately, the decision is yours. Just be sure you’re choosing what’s best for your long-term goals—not just what feels convenient in the moment.

8. You’re Offering Too Many Discounts and Sliding Scales

You’re compassionate. You want to help everyone who walks through your door—and that’s admirable. But offering too many reduced-rate sessions or sliding scale options drains not just your income but also your energy and capacity to run a sustainable practice.

The problem? You’re likely giving away more money than you realize.

Solution:

First, calculate how much income you’re losing by offering discounted rates across one full year. Take a hard look at the difference between what you could be charging and what you are charging across all clients on reduced rates. Now ask yourself: If I had this money in hand, would I feel comfortable donating this amount, given my current financial situation?

Chances are, the number is astronomically higher than what you’d consciously choose to donate. Instead of turning your private practice into an unofficial nonprofit—without any of the tax benefits—you could take the dollar amount you actually want to donate and give it to a mental health organization that supports access to care. This way, you’re making a meaningful contribution, supporting causes that align with your values, and getting the tax write-off you’re entitled to—just like any other business owner.

If you still want to offer reduced-rate spots, set clear limits around how many clients you’ll accept at a lower rate and for how long. Stick to those boundaries and ensure the rest of your caseload is paying full fee to support your financial stability. This lets you balance compassion with responsibility—helping others without sabotaging your own livelihood.

9. You’re Not Monitoring Your Overhead

Private practice typically has low overhead, but as you take on more clients, you'll need better systems and support, which can increase costs. For instance, your practice management software may rise from $40 to $79 per month, your upgraded phone may lead to a higher bill, and office rent could increase. Additionally, if your internet promotion ends, you might see a $20 monthly hike. These expenses can accumulate quickly.

Solution:

As your business expands, some costs will naturally rise, and you'll need to invest in resources to maintain efficiency. Monitor your subscriptions, services, and purchases for unnecessary expenses or potential savings with alternative providers. Remember to regularly adjust your fees to account for any increases in overhead. If costs rise and you can't find easy reductions, your fees should reflect those changes.

10. You’re Not Treating Your Practice Like a Business

Here’s the harsh truth: Your practice is a business, whether you like it or not. If you’re setting fees based on client needs instead of what you need to sustain your practice, you’re setting yourself up for financial struggle.

Solution:

Your fees should reflect your skills and the cost of running your practice. That means factoring in overhead, time off, cancellations, and taxes. If you’re running a business that doesn’t meet your income needs, you’re not just undercharging—you’re setting yourself up for burnout.

Feeling Defeated? You’re Not Failing—Your Systems Are

If you’re thinking about quitting private practice because you’re not making enough money, don’t throw in the towel just yet. The problem isn’t you—it’s your systems.

Solution:

Audit your income and expenses. Where’s the money leaking out? Address one or two major issues (like inconsistent cancellations or outdated rates) and track your income over the next six months. You’ll probably be shocked at how much you’re leaving on the table.

Final Thoughts

You’re providing life-changing care. You deserve to be compensated fairly for it.

Set your fees to cover your needs—not just your clients’ comfort. You’re running a business, and businesses aren’t sustainable when they lose money. If you’re offering quality care, you have every right to charge rates that reflect your skill, experience, and the realities of running a practice.

This isn’t about greed. It’s about making sure you’re supported enough to keep doing the work you’re passionate about—for the long haul.

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