Hiring therapists for your private practice is a huge step. It’s exciting, but let’s be real—it’s also a little nerve-wracking. One of the biggest questions we hear from practice owners is, “How much should I pay my therapists?”
There’s no one-size-fits-all answer, but there are strategies to make sure you’re paying fairly, staying profitable, and leaving room to grow. Let’s break it down.
Employee vs. Contractor
First, a quick refresher: are you hiring employees or contractors? This is a big decision, and the wrong choice can lead to financial headaches (or worse).
Here’s the gist:
Contractors: They’re independent. They set their own hours, use their own tools, and often work for multiple clients. While hiring contractors can feel simpler, laws are getting stricter, and it’s harder to justify hiring therapists as contractors in 2024.
Employees: They give you more control—over schedules, how work is done, and team culture. Yes, there are more costs, but employees tend to be more loyal and integrated into your practice’s success.
If you’re not sure which makes sense for your practice, check out our full guide on employee vs. contractor classifications.
The Three Most Common Compensation Models
When it comes to paying your therapists, there are a few ways to structure it. These are the three most common models in private practices today:
1. Commission or Fee-for-Service
Therapists earn a percentage of the revenue they bring in.
Example: If a therapist generates $100 from a session, they might take home 50% (or $50).
This is a popular model because it’s straightforward and ties pay directly to productivity.
2. Flat Fee Per Session
Therapists are paid a set dollar amount for each session. This amount usually covers everything related to the session, like notes, scheduling, or client coordination.
Example: A therapist earns $85 per session, no matter what the client pays.
3. Hourly Rate
Therapists are paid by the hour, with separate rates for clinical and administrative work.
Example: $50/hour for therapy sessions and $20/hour for admin tasks like notes and meetings.
These models each have pros and cons, but they’re the go-to options for most practices. Pick the one that works best for your budget, team, and long-term goals.
How Much Should You Pay?
Now, the million-dollar question: what’s the right percentage or rate? Here’s what we recommend:
Fully Licensed Clinicians
Pay fully licensed clinicians 45–60% of the revenue they generate.
Why this range? It ensures you can cover all the other costs of running your practice—like software, office space, and admin support—while still leaving room for profit. And yes, you must have profit built into every session. Without it, you’ll end up in a financial hole that’s tough to climb out of.
Pre-Licensed Clinicians
Pre-licensed clinicians should be paid no more than 35–45% of the revenue they generate.
Here’s why:
They have less experience and often need more support and supervision from you (or someone on your team).
They tend to churn through clients faster, which means you’ll spend more time and money filling their schedules.
It’s not just about fairness—it’s about making sure their compensation reflects the additional resources they require.
A Common Mistake
One of the biggest mistakes we see in group practices is paying the first few clinicians way too much.
Here’s how it usually plays out:
You hire your first clinician. You’re still doing all the intake calls, billing, marketing, and admin work yourself, so your costs feel low. You want to be generous, so you offer them a really high percentage. It works great—for a while.
But then your team grows.
Suddenly, you’ve got five, six, or even ten clinicians. Now, you can’t handle all the intake calls or admin work yourself. You need help—maybe a biller, admin, or intake coordinator—but you can’t afford it because you’ve left no margin in your budget.
What started as kindness turns into a scalability problem. If your pay structure isn’t sustainable for 10 clinicians, it’s not sustainable at all.
💡 Want to take the guesswork out of hiring for your group practice?
Join me for a free webinar where I break down:
✔️ The 5 most common hiring mistakes group practice owners make (and how to avoid them!)
✔️ My proven compensation framework for hiring profitably—every time.
Don’t let costly mistakes hold your practice back. Whether you’re hiring your first therapist or scaling your team, this webinar will give you the tools you need to succeed.
Leave Room for Growth
When setting pay, don’t max out your budget. Even if it feels like you have plenty of room now, think about the future:
Therapists will expect raises.
You might want to offer benefits like health insurance or retirement contributions.
Unexpected costs will pop up—it’s inevitable.
If you start too high, you’ll have no wiggle room for any of that, and your practice could struggle to grow.
Profit isn’t just “extra” money—it’s what allows your practice to grow, invest in new opportunities, and weather unexpected challenges. Without it, you’re just breaking even (or worse).
Final Thoughts
Hiring therapists and setting pay isn’t just about being fair—it’s about creating a sustainable, scalable practice. Pay your team well, but leave room for growth and profit. That balance is what will set your practice up for long-term success.
Want more insights on hiring and compensation? Check out our article on employee vs. contractor classifications or schedule a consultation with GreenOak Accounting. Helping practices like yours scale profitably is what we do best!
This article is designed to provide information only and should not be considered legal or tax advice. Because of the complexity of the law and the variables in your own personal tax situation, you can’t rely on our advice specifically related to your unique circumstances. In order to get the best tax savings and legal advice available to you, you should consult with your own accountant, attorney, or advisor regarding your particular facts and circumstances.
GreenOak Accounting specializes in working with counselors and therapists in private practice. For more information on our services, visit our website.
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