Setting the right fees for your private practice can feel like a difficult exercise for allied health practitioners. There is such a huge disparity between the value of the work you provide and the the value perceived by the general population. Even more complex, many private practice owners find themselves in an ethical dilemma where they feel obligated to make their services as affordable and accessible as possible to everyone, while still aspiring to live a comfortable lifestyle. Additionally, it always seems that the people that need your services the most are generally the people that most struggle to pay for your services.

The solution to this disparity is not something that can come about overnight. It requires changes at the societal level involving the general population’s and the government’s view of health care services and continued efforts from health care practitioners to raise awareness.

In the meantime, to put it bluntly, you still need to make money. This post is going to go through the steps required in setting the right fees for your private practice so that you can run a viable business as well as provide services to those that need them.


Step 1. Set your minimum (break-even) fee

The first step in setting the right fees for your private practice is knowing what your minimum fees are. Simply put, minimum fees represent the break-even revenue that leaves your business with zero profit after paying all your expenses.


Why do you need to know your minimum fee?

First of all, it’s generally good business practice to know what your minimum fees are. As a business owner you should know what session fees make your business viable or unviable.

Second, it helps you to understand your own value. Considering the years of education, ongoing training and development, hours of prep and admin work that go into each client, and the business expenses that allow you to keep the practice running, you’ll understand why your minimum fee is higher than expected.

Third, it lets you know why you must charge at least the specific amount that you set. Knowing why you have to charge the fee makes it easier for you to enforce the fee. For example, if you knew that you would struggle to pay your rent after applying discounts to several of your clients you wouldn’t be so open to allowing it frequently.

Lastly, it helps you to set boundaries. Even for your clients that really need the discount and concession, you will be able to set a limit to how much concession you can apply. For example, you could set boundaries so that you don’t go under X amount for any client, or you offer bulk billing or concession fees during certain days and times of the week.


How to find your minimum fee

Your minimum session fee takes into account all business expenses as well as your available and billable hours. Because your session fees are your practice’s main revenue source, they need to be set to sustain your business.

In a simplified way, your minimum fee can be found using the below formula:

Minimum revenue to sustain the business / Number of client-facing hours = Minimum fee per session


Calculate your minimum fee

Use our minimum fee calculator to find the minimum amount you should be charging per session in order to sustain your business. The calculator considers the following aspects:

  • Weekly expenses: Everything you need to pay for your practice based on the average number of clients you see in a given week. If you have contractors or employees, include their pay and related costs here.
  • Weekly wage: How much you pay yourself each week.
  • Tax: Company tax is set at 27.5% in this calculator.
  • Average number of available hours each week: Number of hours you’ve made available to work in your practice.
  • Average % of available hours that are billable: On average, what percentage of your available hours are filled with client sessions?
  • Client attendance (%): On average, what percentage of your billable hours are attended – i.e., paid?

The above information can easily be extracted from most practice management software, or just requires simple calculations. Simply put the information in the calculator and see what your minimum session fee has to be!

Note: If you don’t know this information off the top of your head, learn them now and make it become second nature to you. This is basic information about your practice that can be useful in doing quick estimates and projections.

I recommend changing the variables to see how different values affect your minimum fee. The calculator reiterates the point that the cheaper your fee, the more hours you need to do.

Go to the calculator


Step 2. Find out how much others are charging

After finding out your minimum fees, the next step is finding out how much is appropriate to charge in your area. One way to find that out is to research the private practices near you and the fees they’re charging.


How to find out private practice fees near you

There are plenty of simple ways to find out how much other private practices around you are charging.


#1. Start with a simple Google search.

Go to Google Maps and search for “[healthcare practitioners] near me” depending on your industry. Look at the areas you want to cover and simply visit every website that comes up and see if their fees are listed.


#2. Go to HealthEngine or similar websites.

Many referral search websites like HealthEngine and Avaana allow the providers to list their fees. While a lot of private practice owners opt out of showing fees, it’s a worthwhile exercise to take a look. Put in the postcode for the areas you want to research and explore their listings.


#3. Ask your network.

If you’re not able to get an idea of how much people are generally charging around you using the above methods, reach out to your network and ask them. If you haven’t introduced yourself to private practice owners near you yet, it’s a good opportunity to get to know them and build a referral relationship as well.


What to do with this information

Make notes on what you find, and at the end of your research, find the range of minimum to maximum fees being charged around you. Keep in mind that you’re looking at full fee appointments. Remove any bulk billing and concession rates so you can get a clearer idea of the range.

This range lets you know what fees are reasonable in your area. Put your minimum fee against the range and see where it sits. Take note of this before moving onto the next step.


Step 3. Find out how much the general population in your area can afford

The fee range you discovered in the previous step would generally go hand-in-hand with the socioeconomic status of the areas around you. Usually, the lower the average income, the lower the cost of living and services.


How to find out the average income in your area

Use the census data from the Australian Bureau of Statistics to get an idea of the median income in your surrounding areas. Type in your postcode in the QuickStats search field and carefully read through the results.

While the weekly median income can reveal a lot about the area, take into account the number of people per household and the percentage of families in the area as well.


What to do with this information

Knowing the median income in your surrounding areas can help you to set your own pricing strategy. Utilising your ideal client persona, your fixed and variable expenses and the number of hours you have available, how viable is the minimum fee you discovered in Step 1? Is it reasonable for the population to pay?

You could also use the fee range you discovered in the previous step in line with the census data. In a high-income area, you can reasonably put yourself at the higher end of the range, providing high-value service.

In a particularly low-income area, you can set your fees at the lower end of the range to allow most of the population to access your services. Alternatively, you can also explore other options such as becoming a service provider for insurance, in order to lower the cost of new client acquisition.

Additionally, this information helps you to figure out where the missing link is. For example, in the rare case that your minimum fee (as calculated in Step 1) exceeds the reasonable range of fees you can charge, you may be able to adjust your hours or minimise expenses in order to meet the needs of the areas you’re servicing.

Your pricing strategy doesn’t always have to be based on the census data of your surrounding areas. You may well find that a lot of your clients reside elsewhere but work in or commute through your area. Go through your client demographic information to see where your clients come from and start your census research there.


Step 4. Set your boundaries for concessions

No matter your area, you will always come across clients that need some additional help to access your services. Just because you’ve set the right fees for your private practice, doesn’t mean you can’t make some exceptions from time to time.

However, the important thing is to make those exceptions true exceptions. If half of your clients have some kind of concession, they’re not truly exceptions!

Set yourself some boundaries and clearly communicate everywhere (i.e. in person, online, GPs, on brochures, etc) the circumstances under which you offer concessions. For example, you could only offer concession rates between 10AM – 12PM on Mondays and Tuesdays.


Step 5. Stick to your fees

Now that you have set the right fees for your private practice and the concession rates, the only thing left to do is for you to stick to them. Having gone through the above steps, you have a clear idea of why you need to charge what you charge. Remember that the fee you charge is not your hourly rate. Your hourly rate is calculated like everyone else’s; It is your pay divided by the hours you spent working, which include your admin and business-related work. Remind yourself of this every time you find yourself thinking “maybe it’s a bit too much…”

If you need help with the above steps to set the right fees for your private practice, reach out to our private practice business coaches.