How Much Does It Cost to Run a Therapy Practice? (2026 Data)

1The headline numbers

Heard publishes an annual Financial State of Private Practice report that gives the clearest picture of what private practice actually looks like financially. The 2025 numbers:

That 28% overhead gap between gross and take-home is what we are talking about when we say "the cost of running a practice." On $127,631 in revenue, that is roughly $40,000 per year in operating costs, or about $3,300 per month.

A few caveats before we go further:

• These are averages. A therapist in a rural area with a home office has a completely different cost structure than one renting in a downtown Toronto or Manhattan high-rise.
• Take-home is before personal income taxes. After self-employment tax and income tax, the actual net figure is lower, typically $55,000 to $70,000 for a therapist at this revenue level.
• Therapists who elect S-Corp status show slightly lower margins (64.4%) due to payroll administration costs, but typically save on self-employment taxes overall.
• These numbers skew toward established practices. A therapist in their first year will likely show higher overhead as a percentage of revenue because fixed costs eat up a larger share of a smaller caseload.

With that context, here is what the actual line items look like.

2What it actually costs to launch

Startup costs are one-time or first-year expenses that do not recur. Most therapists can launch for $3,000 to $10,000. Here is what that breaks down to:

The lowest-cost launch path: subletting an office from an established therapist (no deposit, pay by the session), using a free-tier EHR, building your own website on Squarespace, and forgoing a dedicated business phone. Many therapists launch this way and are profitable by month three or four.

The higher-cost path is often over-built for the early stage. A custom website for a therapist with a caseload of five is hard to justify. Defer the expensive version until you have the caseload to pay for it.

3Monthly operating costs

Once you are running, the cost structure settles into a predictable set of recurring expenses. These are the items you pay every month regardless of how many clients you see.

Office rent is the single biggest variable. A therapist working from home or subletting a room two days a week can run a full caseload at $170 to $500 per month in fixed overhead. Someone renting a dedicated suite in a professional building will be at $1,500 to $2,500+ before any other costs.

4The software stack problem

Software is the fastest-growing cost category for private practice therapists, and most therapists underestimate it badly.

The average private practice now uses 5 to 7 paid software tools. You add them one at a time, each solves a real problem, and six months later you are paying $350 to $500 per month for software you may not be fully using.

Here is a realistic software stack audit for a solo practice:

The discipline here is consolidation. If your EHR includes telehealth and scheduling, you do not need separate tools for those. Some platforms (like Jane App) include telehealth, scheduling, billing, and a basic client portal in one subscription. Running parallel tools for the same function is where costs compound unnecessarily.

Do a quarterly software audit. Pull your bank and credit card statements, list every subscription, and ask whether you used each tool meaningfully in the last 30 days. Most therapists find at least one or two subscriptions they forgot about or could consolidate.

5Insurance vs. private pay: The income math

This deserves its own section because the income gap is larger than most therapists expect before they run the numbers.

At 20 sessions per week, that gap adds up to $19,200 per year in gross revenue. Before you factor in the administrative cost of billing insurance.

Insurance billing adds costs that private pay does not have:

• Time spent on prior authorizations (avg 2-4 hours per week at busy insurance practices)
• Billing staff or outsourced billing service ($50-$150/month for a solo practice)
• Denied claims management and appeals
• Slower cash flow (insurance typically pays 30-90 days after service)
• Diagnosis exposure (insurance creates a permanent record of diagnoses)

The argument for staying on panels despite the income gap: a full caseload is easier to build when you accept insurance. Clients paying out of pocket are a smaller pool. Some therapists start on panels to build caseload, then slowly transition to private pay or out-of-network as their reputation grows.

For cost purposes, the key point is that the insurance model is not free. It trades lower per-session income for a more accessible client pool, and adds administrative overhead that reduces the effective hourly rate further. The full decision framework is a longer conversation, but the numbers above are what you are working with.

6Revenue benchmarks by practice stage

Practice economics look different depending on where you are. Here are realistic benchmarks for each stage:

The jump from building phase to established practice is where private practice becomes genuinely more lucrative than agency work. Below 15 clients per week, the comparison is less clear-cut because benefits from agency employment have real value.

7Where therapists waste money (and where to invest)

The data from Heard and from therapist communities shows predictable patterns in both directions. Some costs therapists routinely overspend on. Others are chronically underfunded.

Common money drains

• Psychology Today at full price, too long

  PT costs about $360/year. In a healthy market, that pays for itself easily. But PT referrals dropped 77-94% for many therapists between 2023 and 2025. If you have not gotten a new client from PT in 90 days, the ROI is negative. Reassess annually.

• Premium EHR features you do not use

  SimplePractice's top tier adds telehealth, payroll, and other features that a solo practice rarely needs. The base tier at $39/month handles most solo practitioners. Audit what you are actually using before upgrading.

• Overlapping documentation tools

  Many therapists pay for both a documentation AI tool and a notes feature inside their EHR. Pick one workflow and stick with it. Paying for two documentation systems that do the same job is a common drift cost.

• Website rebuilds before building traffic

  A $5,000 website for a practice with no SEO strategy is a decoration, not a business asset. Invest in traffic first. A functional $500 site with good SEO will outperform a beautiful $5,000 site that no one finds.

• Rates set too low at launch

  This is not a cost you can see on a spreadsheet, but it is the most expensive mistake. Every month you bill at $120 when you should be at $150 costs you $240-$600/week in lost revenue. Set your rate based on your costs and the market, not on what you think clients can afford.

Worth the investment

• Your website (once you have traffic strategy)

  A therapist website with solid local SEO will outperform any directory in the long run. The initial investment pays back in reduced directory fees and higher-quality client inquiries.

• Documentation tools that save clinical time

  If a $29/month tool genuinely cuts your note-writing from 15 minutes to 3 minutes per session, and you see 20 clients a week, that is 4 hours per week back. At $150/hour in billable time, that tool pays for itself in under a day each month.

• Consultation and supervision (even post-registration)

  Peer consultation makes you a better clinician and a more referrable one. The ROI is indirect but real. A therapist who participates in consultation groups gets referrals from those networks.

• Specialty training in high-demand areas

  EMDR certification, somatic training, or perinatal mental health specialization typically commands a $20-$40/session premium. The CE cost is recovered in a few months at higher rates.

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