Knowing what your time is worth is essential if you want to achieve your professional and personal goals.
To be honest with you, most therapists I talk to are in the dark regarding a realistic hourly rate.
Most of us have a gut feeling that we are not paid enough for what we do. But unless you take action your gut feeling, it will turn into chronic indigestion–job resentment.
So, What Should You Be Paid?
I’ve talked to a lot of therapists about what they should be paid. Some adamantly insist they deserve a specific wage due to their doctorate, experience, sacrifice, education costs, long hours, so on and so on.
Others of you admit approaching the topic of fees and salary negotiation with a mixture of insecurity, and ignorance.
The insidious drain of documentation and meetings “on our own time” rob our time with those we love and wreaks havoc on our job satisfaction.
The truth is, as a profession, therapists tend to be underpaid for the level of education and expertise they possess.
However, 99% of the therapists who argue how much their time’s worth hasn’t faced the realities of market demand or done the math on what they need.
Two Steps To Discover What Your Time is Worth
Know What People Will Pay
Know What You Need
Know What People Will Pay
First, let’s get rid of the myth that therapy is somehow immune from the ugly realities of supply and demand. The therapy services we offer are just like any other paid service.
Neurosurgeons provide a service, therapists offer a service, and car mechanics do too. You might agree that the list is in order of relative value.
That is unless your vehicle breaks down and you desperately need it for work or to take the kids to school!
In economic terms, demand elasticity is the measure of price-sensitivity for a product or service. The demand for a neurosurgeon is relatively inelastic. The jump house for your daughter’s birthday not so much.
In other words, if you have a brain tumor, you’ll be willing to pay almost anything for the neurosurgeon’s expertise.
Most of us would like to believe that therapy treatment is at or near the same level of importance as a neurosurgeon. Rand Health Insurance Experiment, suggests outpatient physical or mental therapy is more elastic than that of a car mechanic or plumber!
This is not a statement about the importance of either but about what the consumer is willing to pay.
Economically, our professional time is only worth what someone is willing to pay for it.
Know What You Need
Whether you work for yourself or someone else, it’s wise to sit down with the numbers to see how much you need to take make ends meet and more. It’s called a budget.
But before you do the math, read my two previous blog posts about What’s Up With Therapists & Money? and Fees: Are You Focusing On The Right Thing?
If you don’t deal with your negative feelings about money, the internal struggle will sabotage your best efforts.
Do The Math
Your hourly income needs to cover your current and future financial needs (including student loans, healthcare, retirement, travel, etc.).
Be honest with yourself to determine what you need to cover your expenses and have a livable salary.
So far, so good.
Here’s the catch.
A therapy practice is an expensive business to operate. Let me say that again– the expenses to run therapy practice eat up a lot of the profit.
Whether you are going solo or part of a group, expenses will always be a substantial percentage of the gross income.
We cannot mass produce the number of one-on-one sessions we spend with patients. Our energy and time are limited–there are a fixed number of people we can help each week.
The Cost of Doing Business
Even the leanest therapy clinics’ overhead expenses will be 30% to 40% of gross charges. Many larger clinics would love to have ratios below the 50% mark, not including salaries.
There will always be downward pressure on therapists’ wages because of decreasing insurance reimbursements and rising fixed expenses.
Salary deflation is an economic reality regardless of what school we went to or the number of initials behind our names.
Control What You Can Control
You can’t control what is out of your control.
For most of us, that means maintaining tight control over what we spend. This includes the cost of your education, your operating expenses, and your personal spending.
To make long-term progress, we’ve got to have less going out than what’s coming in for each hour that we work. Working more hours will not solve the imbalance.
So before you spend your hard-earned money, calculate how many hours you had to work to have the cash available to spend.
Is the experience you’re about to buy worth that many hours of hard labor?
Is this product something that you really need or merely an impulse purchase?
The beauty of this approach is that you get to choose what your time is worth to you.
I’d love to hear your thoughts about therapists and money in the comments below. If you want to email me, I can reach me at heypaul@paulpotterptcom