Profitability per Square Foot

200135899-001Yes, the relaxation room is spacious.  It’s soothing and pleasant to lounge in.  The tea served in the lounge is to die for.  And exactly how much money is that room making for your spa?  Zero!!  Not a dime.  Rethink your space and get rich.

A glycolic peel costs $55-120 per treatment.  The peel itself takes 5-8 minutes.  The complete service may take 30 minutes.  Lucrative?  You bet!  What’s more, a glycolic peel treatment is typically sold in a series of 6 and requires a great deal of home-care which adds another k’aaacching in retail sales.  Now take a natural manicure as an example.  This service can take from 45 minutes to an hour.  The amount of time spent on the nails is primarily based on how bad of shape the hands are in.  Will the client be back any time soon?  Probably not, maybe in a month for another manicure; maybe in a week for a $8-12 polish change.  What might this client purchase in retail?  Perhaps the color of polish used on her nails.  Maybe one or two nail care items.  Nonetheless, this type of service with retail will top out at a figure well under $75.  A glycolic peel series with retail is way over the top at an average of $890.  Big difference.  So, do you want more manicure stations or more facial rooms?

In simple math, the equation looks something like:

  1. Make a list of the most common services performed in a service room.  Let’s use the facial room where facials are $90, peels are $120, microdermabrasion is $95.  We’ll just use three examples to keep our formula simple.
  2. Take the total of $90, $120 and $95.  The total adds up to $305.  Divide $305 by the three service examples.  That total is $101.60.  We can round up to $102, which gives us the average dollar per hour that a facial room in this spa generates.
  3. Work retail into the mix by taking the average sales per service amount for the services done in that room, or square footage area.  So, for example, a facial room generates an average $180 sale for every one hour of services provided.  That might compare to a $25 retail sale on every massage given per hour.  Obviously, your facial room is coming out ahead.
  4. That is until you start to depreciate the equipment used in each room.  This calculation is very specific to the type of spa you are running and the scope of equipment housed within your spa.  If you have microdermabrasion units, facial units, skin scopes or scanners and oxegynation units…then you have a hefty amount of skin care to depreciate.  In your body therapy rooms, you may have a simple massage table or you may have a wet room with a massage table built in.  Each room must hold its own in profitability based on these figures, no matter how glamorous.  As far as depreciation goes, the less equipment, the better if you can still bring home the same profitability figures per hour.
  5. Insurance.  Is that wet room, tanning bed or vichy shower costing you dearly in insurance?  That amount that is extra on your statement needs to be allocated to that room.  Decide if its profitability per hour justifies the extra expense in liability.
  6. One last significant consideration is what is the average ticket for services typically offered in the room you are analyzing.  Traditionally a massage service will not produce the same retail sale that a facial service.  When doing this math, take well into account the retail margins that each service will generate.  If your massage therapists can’t sell retail, then calculate your body therapy rooms accordingly.  It is all a part of the equation.
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