A PRACTICAL EXAMPLE: Calculating a real spa’ s break-even point Consider a boutique spa offering a Signature Facial: l Price per facial: $ 150 l Variable cost per facial: $ 45( wages + disposables + consumables) l Monthly fixed costs: $ 18,000( rent, admin payroll, software, insurance, utilities)

STEP 1 Contribution Margin per Unit: $ 150 – $ 45 = $ 105 STEP 2 CM Ratio: $ 105 ÷ $ 150 = 70 % STEP 3 Break-even Units: $ 18,000 ÷ $ 105 ≈ 172 facials per month

Interpretation: The spa must perform 172 facials per month just to break even. If you average 130, you are below the line— so either raise price, reduce variable cost or build demand to close the gap.

WHEN DISCOUNTS QUIETLY DESTROY PROFIT Suppose you run a 10 percent promotion on the $ 150 facial, dropping price to $ 135. Your variable cost stays $ 45, so CM per service falls from $ 105 to $ 90— a 14 percent margin hit from a“ small” discount. Unless the promo reliably lifts volume enough to cover the lost margin, profit shrinks. CVP helps you test that before you launch.

THE HIDDEN IMPACT OF PAYROLL, INVENTORY AND EQUIPMENT Payroll often represents the largest expense in spas, especially when provider compensation is tied to revenue. Inventory and consumables add volatility as prices shift. On top of that, big-ticket equipment— lasers, RF devices, body sculptors— can demand steep monthly payments. CVP turns these moving parts into clear thresholds you can manage.

Before approving a new hire or machine, sketch the

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