“Once you’ve
HERE’S HOW TO BE A “BALLER”:
STEP 1: Know your spa’s fixed expenses.
mastered
Beyond rent, there are several other fixed expenses you should calculate to understand the
operating expenses in your spa. Expenses like:
‘baller’ math
Software
Insurance
you will no
Website
Loan payments
Salaried employees, including yourself
Phone lines
longer be
STEP 2: Know your spa’s variable expenses.
running an
These are the expenses in your business that are directly related to a specific service.
Examples of variable expenses could be:
ordinary
Office supplies
business: you’ll Hourly staff members
Disposables/consumables
be running an
Marketing and advertising
CPCA (Cost Per Customer Acquisition Cost)
extraordinary
STEP 3: Calculate your fixed hourly cost.
one.”
l l
l l
l l
l
l
l
l
l
You had better be charging the
right price for your treatments,
because that rep told you that
you could charge US$199 per
client and make your money
back. Yet, if that was the price
you charged per service, you’d ac-
tually be going bankrupt.
Of course, there are other ele-
ments that you should pay close
attention to, such as proprietary
ingredients, scalability of opera-
tions, lifetime customer value
and making sure there is a bar-
rier of entry from you against the
competition. This calculation is a
jumping-off point, not an end in
itself. But by mastering the baller
math—and thinking critically
about your spa’s true operating
costs when purchasing new
equipment or devices—I know
unequivocally that you will make
better decisions for your busi-
ness now and into the future. n
What is a fixed hourly cost, you might ask? It’s the cost of your fixed expenses divided by the
number of rooms and hours open at your spa.
HERE’S AN EXAMPLE: Your fixed expenses together cost US$10,000, you are open 40 hours
a week and you have six treatment rooms. In this situation, your fixed hourly cost equation
would look like this:
l 40 hours x 6 treatment rooms = 240 total hours a week
l 240 hours/week x 4.3 weeks in a month = 1,032. This is the total number of hours you
operate at your spa!
l US$10,000 (total fixed costs month) / 1,032 total hours your rooms are open = US$9.69
l You now have your fixed hourly cost: US$9.69. This is an important cost to know,
because any service you provide that doesn’t earn enough to cover your fixed hourly ex-
pense is losing you money.
STEP 4: Now you’re ready to “ball.”
Add your fixed hourly cost, variable costs and the cost of the new equipment together to
figure out just how much it truly costs to purchase it, assuming that you use it on four
clients per month like that sales rep in the example used earlier said.
l US$9.69 - Fixed hourly cost
l +US$20.00 - Hourly staff member to do the treatment
l +US$152.11 - Payment on machine (actual payment is $608.44/4 clients)
l +US$30.00 - Disposables/consumables per treatment
l +US$10.00 - Insurance/warranty for device or machine
l +US$40 - CPCA (Cost Per Customer Acquisition)
l US$261.80 - Total cost per service to break even
BRANDON ROBINSON is the founder of Skin Body Soul MedSpa, a multi-location medical spa company that
partially exited to Orange Twist MedSpa group in 2017. He is a board member of AMSPA (American Medical Spa
Association). He and his wife co-founded LOMS investments, a real estate holding company, and Flatstick Pub,
an indoor mini-golf bar. You can follow him on social media at @SkinBodySoulSpa and @RobinsonBrandon.
MAY 2020
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