There are three major milestones that should be considered in your career, and when you reach them, it might be a good idea to re-evaluate your fees. However, there are also other considerations you should be aware of, including some options on how to raise rates and how to get comfortable with that new number.
The first milestone occurs when you realize that you set your fees without using math. Typically, this is when you learn that your fees shouldn't be based on the fees you see around you. This is, by far, the most common way people set their fees; they look at their colleagues and choose something that looks about average. They charge a bit more than insurance pays.
The problem here is that you are doing just what your colleagues did. Why is that a bad thing? Because it’s increasingly likely that neither you nor your colleagues actually considered your mortgage, or your retirement, or the vacation you want to take to keep yourself fresh. Insurance certainly never considers your life expenses; they're going to pay the least amount that they can get away with, without driving away their providers.
The amount you're currently charging may be enough to cover your expenses, but if you didn't do the math to make sure, I strongly suggest you consider it. Psychotherapist Tiffany McLain offers a fee calculator on her website. (It's free, so go for it.) Most people realize they need to raise their rates after using this tool. I always recommend that my Inner Circle folks do this exercise. Then, we spend some time working through the discomfort that often comes up with raising fees. More on that in a minute...
The second milestone happens when your schedule is full. Let's say you've already done the work to figure out what you need to get paid per session to maintain this career for the long haul. Once you're full, you have proven to yourself that the demand is there. Now it is time to re-assess your goals and any potential future life changes. For instance, maybe you just had a kid or want to have kids. Maybe you're taking care of an aging parent or a sick spouse. Maybe you're playing catch up with retirement like I am. Want to put some more in? Use Tiffany's calculator again. If you see 20 clients a week and raise your rate $10 per session, that's almost $10K more you can put in retirement per year. $10 increases aren't something clients are likely to balk at, and that's a lot more peace of mind for you, as it relates to your future. You may find your fees are just fine where they are, but you have to do the math to know for sure.
Lastly, as your third milestone, consider the fact that many jobs give annual raises—or so I've heard. Many of the other jobs I’ve held throughout my life would provide raises to keep up with cost of living standards. Consider the kind of employer you want to be. If you give yourself annual raises, I recommend that it always be the same month and that you put it in your financial agreement. Specifically detail just how you plan to increase your rates every January, or June, or whenever. And of course, be sure to pass this information on to your clients.
I want you to follow to the hilt the agreements and consents you have clients sign. You expect them to, so you should, too. This means you should avoid neglecting to put information about rate changes into your contract. I wouldn't include the specific amount that you plan to raise your rates by because that may change from year to year. It may be $5 one year, and $25 another, depending on your circumstances.
Some folks keep current clients at their initial fee and increase rates only for incoming clients. Some raise it for everybody at once. Some step longstanding clients up over time and raise it for new ones. It totally depends on your practice.
Regarding how to get comfortable with your new fee, just know that it takes time. Every time I have raised my rates, I'm squirmy about it for a while. Then I get to the place where I can say it out loud, but I always cringe a little internally the first few times. Then it's just what I charge…it feels normal.
