Contribution margin: the number nobody taught us

I had to google "contribution margin". I'd been running a clinic for years by then, which tells you how much business training comes with an aesthetics course.

What it is

It's what is left from one treatment after the costs that only exist because you did that treatment. The product. The card fee. The room for that half hour. Any commission you pay out.

It isn't your profit, because rent, insurance and training still come out of the pile. But it tells you which treatments are filling that pile and which are just keeping you busy.

A quick example

Say you charge £220, the product costs £60, the room works out at £12.50 for half an hour and the card fee is about £4. You keep roughly £144. That's about 65% of the price, or £287 for every hour in the chair.

Now do the same sum for a treatment with pricey product and a long appointment. The price tag can look healthy while the hourly figure is half as good.

Why it matters

A full diary feels like success. But a diary full of your lowest-margin treatment is a lot of work for not much. Once you know the number for each treatment, pricing, offers and what you promote all get easier to decide.

You can work out yours here in about ten seconds. No email needed.

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