Labor Costs of Treatments
I think about this months feature topic "Machines" I
think about "Labor Savings Devices". The subject of
"Saving Labor" and "Maximizing Profit" is
one that I spend most of my time thinking, researching, and implementing.
the risk of repeating my other writings
Managing the cost
of labor should be 100 times more important than any other
job of an Owner or Manager. No other expense will dictate the
failure or success of a Spa or Salon as the cost of labor.
you are still unconvinced please consider the following example
(you may change the numbers to conform to your situation):
you could reduce the average cost of each hour of treatment by
$8, it might look something like this:
per Room per Day
Treatments per Day
Treatments per Year
Savings per Year
this type of savings you could afford to overpay rent by a couple
of thousand a month, or pay double your insurance premium and
still be way ahead of the game.
question then becomes; "How do I control and better manage
this run-away expense?"
the past I have talked about changing pay systems (Dermascope
Nov/Dec 1999), and I still believe this is a very viable way to
achieve major savings over the long run. Today however
I would like to discuss two other pieces of the labor saving puzzle,
"Efficiency" and "Automation".
cost-effective use of existing labor will result in more profit.
Spa/Salon treatments such as Massages and Facials are usually
sold by length of time and working more efficiently will not help
increase profit. Others however, are sold by result, for example;
waxing, derma-peels, hair color, and nails. Whenever we can perform
these types of treatments in less time we can increase revenue
without adding square footage, without adding personnel and thereby
maximize our existing labor.
seems pretty basic, yet I see many people balk at the price of
the new piece of equipment they need. They say that they can not
afford the $10,000 or $20,000, so they continue to spend many
thousands more in labor than they have to.
question is not "can I afford a piece of equipment?"
the question should be "can I afford NOT to have a
particular piece of equipment?" Let us look at an example
to prove the point.
for example you wanted to do some new Hair/Aesthetic/Body process
in your Spa/Salon and after your do your research you find two
machines that will do the job.
"A" costs $10,000 and can do the job in 90 minutes.
"B" costs $20,000 and can do the job in 60 minutes.
is how the Math works (again please feel free to change the numbers
to fit your situation):
= 90 minutes
- 60 minutes
= 30 minutes
x $30 per hour
per Treatment = $15
by Savings / $15
to Pay-Back= 667
per Day / 3
= 222 (or 7.4 months)
mileage may vary depending on cost of labor and treatments per
a day times 60 minutes equals 1095 hours of labor per year
a day times 90 minutes equals 1642 hours of labor per year
save a total of 547 hours of labor per year or $16,410.
of you may have thought it would take years to pay back the additional
$10,000. Sixteen thousand dollars additional in the bank for the
same amount of sales is significant. Not to mention any additional
taxes or benefits, additional square footage, personnel or equipment
it might take to sell those 547 hours without the better, more
you "do the math", it can also tell you NOT to buy equipment
that cost more only for needless bells and whistles.
working more efficiently does not involve buying a piece of equipment
at all. It may mean using a product that will do the job faster,
or it may mean coming up with a more efficient way of preparing
for or performing the treatment. Encourage your staff to find
more cost-effective ways to do their job, and be sure to reward
them when they do.
Skip, I went along with you on the "Efficiency" thing
but you have really lost your mind when your talking about "Automating"
may be picturing conveyor belts and robots, but that is not quite
what I mean. The value of "Touch" can never be underestimated,
people will continue to come to your facility primarily for facials
and massages that will never (and should never) change. There
are however a few "adjunct" treatments that take little
or no labor.
the "Tub Treatment", a simple elegant drain/fill aromatherapy
whirlpool tub, where a client enjoys a 20-30 minute immersion
treatment prior to a massage or facial. I often read with interest
Dr. Bergels articles on Hydrotherapy and the important therapeutic
benefits of simple immersion baths (see Dermascope Nov/Dec 1998
"Tub Treatment" or "Immersion Bath" is a great
example of an "automated" treatment; it does not require
a Certified Therapist to perform any labor-intensive service.
The Client sits there and allows the water, the peloid, and the
jets to do there magic.
have learned from Dr. Bergel and others that these treatments
can be more therapeutic than wraps and are even considered "kurs"
(cures) in much of Europe. They may like the therapeutic benefits,
but I like these treatments for a completely different reason
is the Math (again please feel free to change the numbers to fit
= $7,000 (this may
per Half Hour
per Treatment -
per Treatment =
per Day =
per Treatment x
days (or 2 months)
revenue per day times 365 days equals $73,000 per year.
product and labor costs for year equals $11,680, (or 16%) or a
profit of $61,320.
matter what we do, the "hands-on treatments" (where
direct expenses usually run about 45% to 65% of revenue) will
never enjoy a 16% ratio on expense to revenue. Incorporating this
type of treatment into your existing operation can add significantly
toward your bottom line, indeed I have seen this treatment alone
make the difference making a profit and go out of business. Likewise
it goes along way toward reducing our total labor cost as a percent
can see when the alternative is $30+ per hour labor an automated
treatment like this has a very quick payback and lots of profitability.
It will never take over the popularity of massages and facials
but it makes a lot of sense to incorporate it in every package
you sell and because of their low cost, use it as a promotional
tool that helps you sell your other services. Do not forget the
therapeutic benefits as well, this could be a great alternative
to "wraps" without all the labor.
also automated water massage, oxygen therapy, exercise equipment,
virtual reality equipment, and any other "adjunct" services
you might be able to sell in your facility that take little or
the larger the capital investment made in your facility the more
it tends to limit your competitors from competing. We have a term
for this and it is called "Barrier to Entry", simply
put, the more expensive we make it for someone to compete with
us the LESS competition we will have. Anyone can hire an employee,
few have the capital it takes to buy "expensive" equipment,
but if you spend the money your "profit" can be dramatically
increased, what more could you ask.
can not speak to the therapeutic values of the wide variety of
devices out there, I will leave that to the Experts in those fields
and your own judgment, but from a profitability standpoint these
types of devices make a lot of sense. When you look at how many
hours of labor $10,000, $20,000, even $30,000 will buy you, paying
that much for a machine does not seem so expensive after all.