OBJECTIVES: Despite a growth in the total number of physicians in many industrialized countries, significant inequalities in their distribution exist between rural and urban areas. Therefore, decision-makers need detailed information about young physicians’ preferences in establishing a practice. The aim of the study was to quantify the preferences for different attributes relevant to practice establishment in Germany. METHODS: In the qualitative part of the study, in-depth interviews of 22 physicians were conducted to identify relevant practice attributes. Based on this information a questionnaire was developed containing a discrete choice experiment comprised of a “best-worst scaling” (BWS) task. It was mailed to a representative sample of 14,939 young physicians who were close to make a decision regarding practice establishment. Regression analysis was used to estimate utility weights quantifying physicians' preferences for practice attributes. RESULTS: From the qualitative part six attributes were identified relevant to practice establishment: “professional cooperation”, “income”, “career opportunities of the partner”, “availability of child care”, “leisure activities”, and “on-call duty”. For the BWS task, 5026 returned questionnaires were analyzed. The results indicated that a change in income is most important to physicians. It would result in the largest utility change compared with changes in the remaining attributes. Physicians’ preferences showed that the additional net income per month to compensate the disutility of a practice in a rural area was €9044 (US$11,938). Yet, non-monetary attributes as on-site availability of childcare and few on-call duty would decrease the additional income required to compensate the disutility of a rural practice. CONCLUSIONS: The results offer detailed and quantifiable information to health policy makers to develop tailored incentive-based interventions to diminish urban-rural inequalities in physician coverage. Only a substantial rise in income increases the probability that young physicians establish a practice in more rural area.