Skip to Content

How Much Does It Cost to Start an ABA Therapy Business? [Sales Forecast and Breakeven Analysis Included]

How to Start an ABA Therapy Business

With as low as $100,000, you can successfully a small but standard ABA (Applied Behavior Analysis) therapy business. Note that if you are considering starting a medium to large standard ABA (Applied Behavior Analysis) therapy business, you should budget over $500,000 to get the business up and running.

The fact that there is no fixed amount required to start an ABA therapy business means that certain critical factors can influence the cost of starting the business, and that is what we will discuss in this article.

If you are considering starting an ABA (Applied Behavior Analysis) therapy business, you should be aware that you are about to start a critical business that requires not just financial commitment, but also several compliance criteria that must be met.

What is an ABA Therapy Business?

An ABA (Applied Behavior Analysis) therapy business is a type of service provider that offers therapy and interventions based on the principles of Applied Behavior Analysis.

ABA therapy is primarily used to help individuals with autism spectrum disorder (ASD) and other developmental disabilities to improve socially significant behaviors and skills.

Going by what an ABA therapy business is all about, it will be safe to say that anyone who wants to start an ABA (Applied Behavior Analysis) therapy business must be ready to spend several thousand dollars because an ABA therapy business will require a standard and approved clinic facility, related tools and equipment, and of course, people who will work with you.

Estimated Cost for Opening an ABA Therapy Business

1. Cost of Renting or Leasing a Facility: $50,000 – $150,000

You should work towards securing a location that’s accessible and comfortable for clients and staff. You can go for either a commercial space or a dedicated clinic.

2. Cost of Renovations and Facility Setup: $20,000 – $100,000

Finding a good space is only just the beginning. You will need to modify whatever facility you got to suit therapy needs, including private rooms, observation areas, and child-friendly spaces.

3. Cost of Furnishings and Equipment: $10,000 – $50,000

Purchasing necessary furniture, therapy materials, office equipment, and technology for therapy sessions and administrative tasks.

4. Cost of Licensing and Accreditation Fees: $1,000 – $10,000

This is cost associated with obtaining necessary business licenses, professional certifications, and accreditations specific to ABA therapy practice.

  • Insurance: $5,000 – $20,000
  • Initial Marketing and Advertising: $5,000 – $20,000
  • Training and Professional Development: $2,000 – $10,000
  • Legal and Professional Fees: $5,000 – $15,000
  • Initial Inventory of Therapy Materials: $2,000 – $10,000
  • Working Capital: $50,000 – $100,000

Based on the above, your cost estimate for opening an ABA therapy business is between $100,000 to $500,000 depending on the scale you want to operate. After initial setup, below is how your monthly expenses will look like in your ABA therapy business:

Ongoing Monthly Expenses of an ABA Therapy Business

  • Rent or Mortgage Payments: $3,000 – $10,000
  • Salaries and Wages: $20,000 – $100,000
  • Utilities and Internet: $500 – $2,000
  • Supplies and Materials: $500 – $2,000
  • Insurance: $500 – $5,000
  • Marketing and Client Acquisition: $1,000 – $5,000
  • Professional Development and Training: $500 – $3,000
  • Software Subscriptions: $100 – $1,000
  • Legal and Accounting Services: $500 – $3,000
  • Miscellaneous: $500 – $2,000

3-Year Sales Forecast Summary

Year 1

  • Billable Hours: 2,500
  • Revenue: $375,000
  • Net Profit: -$12,500

Year 2

  • Billable Hours: 5,000
  • Revenue: $750,000
  • Net Profit: $175,000

Year 3

  • Billable Hours: 7,500
  • Revenue: $1,125,000
  • Net Profit: $362,500

Breakeven Point: Approximately 2,667 billable hours

Sales Forecast Breakdown [Profit/Loss Statement]

Service Pricing and Costs

  • Average Revenue per Hour (ARPH) = $150. (Typical billing rates for ABA therapy services, which can vary by region and insurance contracts)
  • Cost per Hour (CPH): $75. This includes therapist wages, materials, and any direct service costs.

Operational Costs

  • Fixed Costs: $200,000 annually. This encompasses rent, administrative salaries, marketing, insurance, and other overheads that don’t change with the number of therapy hours provided.

Service Volume Growth:

  • Year 1: 2,500 billable hours
  • Year 2: 5,000 billable hours
  • Year 3: 7,500 billable hours

Variable Costs:

Not explicitly defined here but included in the cost per hour (CPH).

Total Revenue

  • Year 1: 2,500 hours x $150 = $375,000
  • Year 2: 5,000 hours x $150 = $750,000
  • Year 3: 7,500 hours x $150 = $1,125,000

Total Direct Service Costs (Variable Costs)

  • Year 1: 2,500 hours x $75 = $187,500
  • Year 2: 5,000 hours x $75 = $375,000
  • Year 3: 7,500 hours x $75 = $562,500

Gross Profit

Gross Profit = Total Revenue – Direct Service Costs:

  • Year 1: $375,000 – $187,500 = $187,500
  • Year 2: $750,000 – $375,000 = $375,000
  • Year 3: $1,125,000 – $562,500 = $562,500

Net Profit

Net Profit = Gross Profit – Fixed Cost

  • Year 1: $187,500 – $200,000 = -$12,500 (loss)
  • Year 2: $375,000 – $200,000 = $175,000 (profit)
  • Year 3: $562,500 – $200,000 = $362,500 (profit)

Breakeven Analysis

Breakeven Point (in hours) = Fixed Costs / (ARPH – CPH)

Breakeven Point = $200,000 / ($150 – $75)

Breakeven Point = 2,667 billable hours approximately

This means the your ABA therapy clinic business needs to provide around 2,667 billable hours of ABA therapy to cover all its costs. This forecast demonstrates your ABA therapy business can start turning a profit in its second year.

Factors That Influence the Cost of Opening an ABA Therapy Business

  1. The Cost of Licensing and Legal Compliance

The fact that the ABA (Applied Behavior Analysis) therapy business is a highly regulated industry means that compliance with international and local laws governing the industry is essential. Hence you should make budget provisions for a:

Business license, professional license for ABA Therapists, Facility License (if operating a clinic), Health Care Provider License, Medicaid Provider Enrollment, HIPAA Compliance Certification,

Accreditation from relevant professional organizations (e.g., Behavior Analyst Certification Board), fire department permit (for facility safety), and zoning permit.

Apart from the fee you are expected to pay to obtain the required licenses, you must comply with other legal requirements, and these fees can add to the overall cost.

  1. The Budget for Infrastructure and Equipment

The nature of the ABA (Applied Behavior Analysis) therapy business makes it impossible to run the business without having the required infrastructure and equipment in place.

As expected, ABA therapy businesses require suitable operational office space (clinic), assessment tools, data collection tools, therapy materials, ABA software, safety equipment, communication devices,

ABA therapy rooms, observation rooms, computers, and office equipment. Note that the amount you are required to spend on infrastructure and equipment will depend on the size of your clinic.

  1. The Cost of Recruitment and Training

The only reason why should not have a robust budget for recruiting and training is if you want to operate a very small ABA therapy business where you are the only professional in the clinic and you just have an administrative assistant, and a front desk officer.

But, if you choose to start a standard ABA (Applied Behavior Analysis) therapy business with a standard clinic facility, then you should be ready to recruit and train your staff to fit into your corporate culture.

You may have to recruit trained therapists, and people with relevant skills and experience needed in the ABA (Applied Behavior Analysis) therapy industry.

Note that the costs of recruitment and training include recruitment expenses, background checks, vetting, training facilities, and ongoing personnel development for your employees.

  1. The Cost of Insurance Policy Cover

As it is with any business, you cannot escape not having the appropriate insurance policy coverage for your ABA (Applied Behavior Analysis) therapy business.

It is to your advantage to have all the needed protection for your business, and that is where insurance policy coverage comes in.

As expected, you should make plans to purchase general liability insurance, workers’ compensation insurance, professional liability insurance, and medical insurance, amongst others.

Note that the amount you are supposed to pay for all the insurance policy coverage listed above, and the monthly premium will depend on the nature of your ABA business and the inherent risks the business is going to be exposed to.

  1. Operational Expenses

Operational expenses in an ABA (Applied Behavior Analysis) therapy business encompass various costs associated with the day-to-day running of the organization.

If you are planning to start your ABA (Applied Behavior Analysis) therapy business, then you should create a budget for operational expenses, and it will cover various ongoing expenses for equipment maintenance, repairs, and replacements, as well as the cost of supplies such as instruments, gloves, masks, and other consumables, including the salaries of your employees.

It is important to note that the specific operational expenses can vary depending on the size, scope, and geographical location of the ABA therapy business’s operation.

  1. The Cost of Marketing and Promoting the Business

When it comes to starting any business including an ABA (Applied Behavior Analysis) therapy business, it is important to note that there must be a provision (a budget) for marketing and promoting the business.

Come to think of it, people may not know that there is a new ABA therapy clinic in their neighborhood, and it is only when you engage in marketing and promoting the business that people will get to know about the business.

Interestingly, there are different options when it comes to marketing and promoting a business, and some options are cheap, while some are expensive.

Ways your ABA Therapy Business Can Cut Cost Without Negatively Affecting your Practice

It is possible to increase profit margins in your ABA (Applied Behavior Analysis) therapy business without compromising the quality of service you offer.

This will require you to optimizing operational efficiency and carefully manage your expenses. Here are several cost centers you can work on:

1. Streamline your Administrative Processes by the Use of Software

The result of this is that you achieve efficient scheduling and billing with less administrative time and costs. Implementing the use of software in your Aba therapy business will also reduce the need for extensive administrative staff.

2. Utilize Telehealth Services

You can use telehealth options over the internet for certain sessions or consultations. This can reduce facility costs and allow your ABA therapy business to serve more clients with less travel time or downtime.

3. Minimize Unnecessary Subscriptions and Services

Another good way to reduce cost and increase profit in your ABA therapy business is by regularly reviewing the necessity of all subscriptions, including software services, publications, and memberships.

Does your ABA therapy business really need a Netflix or cable tv subscription? You must keep only those that provide value relative to their cost.

4. You Can Implement Energy Efficiency Measures If You Rented a Building or Entire Floor

A good way to go about this is by using energy-efficient lighting and equipment, and minimizing energy waste. This will have zero negative impact on your ABA therapy business operations.

5. You Can Buy Therapy Materials in Bulk or Second-hand

The on reason you should purchase therapy materials, office supplies, and other consumables in bulk is to get discounts but you must make sure you don’t buy what you don’t need. You can also consider buying gently used items or sharing resources with other therapists or clinics to reduce costs.

Another cost reduction tip you can try out is to seek donations of materials from non-profit organizations and research companies dedicated to behavioral study.