Dayspa

JAN 2014

DAYSPA is the business resource for spa & wellness professionals! Each issue covers the latest in skin care, spa treatments, wellness services and management strategies.

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PROFIT CENTER manicures have low associated product costs, don't require a lot of physical space, and can be performed in a brief time frame, allowing for quicker turnover. MAXIMIZING SPACE 88 DAYSPA | JANUARY 2014 BACK BAR MATH Back bar costs are often not broken out by department on a spa's Income Statement, but without this detail, it can be difficult to determine true ROI on a service. Make sure your chart of accounts breaks out professional supplies by the same departments you are using to track revenue and labor, as this will give you a more accurate picture of treatment performance. Here's an example that demonstrates the vast differences in ROI among services within a single department. Which table really tells the story? This one: ESTHETICS DEPARTMENT SALES January Sales Product Costs Profit Margin $25,000 $1,750 7% Or this one? ESTHETICS DEPARTMENT SALES BY SERVICE Service January Sales Product Costs Profit Margin Facials $14,000 $1,260 9.0% Waxing $7,000 $56 0.8% Peels/ microdermabrasion $4,000 $434 10.8% © STEVE MASON/GETTY know their treatment costs by department, if not for each individual service. For example, the skincare department typically carries the highest delivery expense when measuring product costs against retail price of the service. This makes sense, given that most esthetic cabins are packed with high-priced serums and moisturizers. (To review a calculation of back bar costs, see "Back Bar Math", right.) But service costs can be highly variable, both within a spa and within a spa department, and too few spa managers focus enough attention on this aspect of service profitability. It may be expected that the skin department's professional supply expenses will be approximately 7% of sales, but that is an average across the board. If you were to look specifically at hair removal services such as waxing, sugaring and threading, you would see that product costs for those services are less than 2%, while advanced facials may yield a higher individual cost, closer to 10% of the treatment price. In determining ROI on a service, one of the considerations has to be the amount of space and time the treatment takes to deliver. When it comes to direct product cost per treatment, massage is among the lowest of any of the top-selling spa services, at approximately 1% for massage oils. But massage clients use robes and linens, generating laundry costs, and often take up a treatment room for an entire hour or more. On the other hand, makeup applications, waxings and even Obviously, just because the cost of providing waxing services is lower than for facials, that doesn't mean your should automatically focus more on the former than the latter. But you might want to be more strategic about how you use your physical space. For example, if a spa has three facial rooms and a loyal skincare clientele, with clients enjoying regular facials and peels and generating upwards of $125 per hour, you may want to nix the idea of booking an eyebrow wax into one of these treatment rooms. Brow and lip waxes can be done in a well-lit makeup area, preserving larger windows of times in the treatment schedule for higher-priced services. Conversely, in spas that do a lot of body waxing, it might make sense to convert an under utilized area into a waxing room. This space can be quite small, as it only needs to accommodate a portable treatment table pushed up against a wall, and a wax trolley. It can also be located near the front of the spa, so that patrons need not change or use locker room facilities. However, warns Normajean Fusco, owner/president of

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