(1) List all your household and personal bills.
For example: rent/mortgage; phones, internet, and utilities; food; credit cards; transportation; health care; all the insurances/warranties; taxes; child expenses; pet expenses; and so on. Total your monthly recurring expenses. Add 15-25% to your monthly recurring expenses to cover the unexpected expenses.
(2) Determine an average number of sessions that you can do during a one month period.
Remember that you will need free time for the following: administrative work; time with family, friends, pets, and hobbies; continuing education, reading, and research; holidays and vacations; exercise; and rest.
(3) Assuming you charge by the session, take your expense total and divide it by the monthly number of sessions.
For example, if your monthly expenses are $6,000 and you can do on average 40 sessions per month, you will need to net $150 per client, after merchant fees and taxes, to continue to pay the bills that you currently pay.
(4) List your estimated startup costs and your estimated recurring business expenses.
RECURRING. For example: office rent, the highest speed internet you can get, and utilities, unless you will work from home; marketing; legal support; accounting support; printing, software such as appointment scheduling and client relationship management; website support; professional association membership fees; administrative support/consultants; and so on.
STARTUP. For example: website and graphics design; legal fees and government fees for establishing your business; consultation with a small business accountant; installation of internet or upgrading to a higher speed; last month’s rent, security deposit, deposits for utilities if you are opening an office; and so on.
—Total your estimated startup costs and add 15% to cover unexpected business startup costs. Save this amount, in addition to the 8-12 months of savings, from your current job to cover startup costs.
—Total your estimated monthly recurring business expenses and add 15% to cover unexpected business expenses.
(5) Take your estimated monthly business expense total and divide it by the monthly number of sessions.
For example, if your monthly business expenses are $3,000 and you can work with 40 clients per month, you will need to net $75 per client, to pay the estimated monthly business expenses.
Using the examples above, you will need to net $225 per session — $150 to cover monthly household bills and $75 to cover monthly business expenses — after merchant fees (credit card processing fees) and income taxes. This amount will increase when you add U.S. and State payroll taxes and unemployment taxes. Your corporate structure is a factor as well.
Bear in mind that all of the above is intended to help you get a basic idea of what it takes to break even. Please consult the appropriate legal and financial advisors including, in the USA, a certified public accountant (CPA) and a small business attorney.