By Jessica Hunter, Hunter Consulting
Navigating the intricacies of a medical aesthetic practice can be daunting without the right tools, knowledge, and strategies. While many in the aesthetics field excel at delivering exceptional results, the business side of things can be a challenge.
To streamline operations and boost profitability, it’s essential to pinpoint areas that can significantly influence your clinic’s financial health.
Key Performance Indicators (KPIs) are metrics that give insights into where to channel efforts in your business. They offer a roadmap for making informed decisions.
Yet, the dilemma often lies in identifying the right metrics to monitor.
Decoding the Metrics
Let’s delve into the three pivotal KPIs by first understanding some foundational terms:
- Revenue: This represents the income from your business operations, encompassing both services rendered and products sold.
- Gross Margin: This is what remains after subtracting the cost of goods (COGs) from your revenue. For instance, if you earn $100,000 from injectables and spend $60,000 on related supplies, your gross stands at $40,000.
- Net Revenue: This is what’s left over after all of your business expenses; and typically includes overhead, marketing, and salaries. If your total revenue is $100,000 and expenses amount to $80,000, your net is $20,000, indicating your business’s profitability.
- Profit Margin: Represented as a percentage, it gives a snapshot of your profit. It’s calculated by dividing net revenue by total revenue and multiplying by 100.
Three KPIs to Elevate Your Clinic’s Performance
- Revenue per Provider:
This metric reveals the revenue one provider generates per hour. For instance, if Provider A brings in $40,000 over 160 hours, they generate $250/hr.
Importance: It gauges the revenue efficiency of each provider, enabling comparisons and insights into individual productivity.
- Revenue per Patient:
This is the average revenue from each patient over a set period. If you earn $100,000 from 250 patients, the average spend is $400/patient.
Importance: It offers insights into staff effectiveness and helps identify areas for improvement in service pricing or consultation techniques.
- Profit per Treatment:
This metric highlights the profit from each service after accounting for expenses. If a Botox session costs $300 and the expenses (supplies, staff, overhead) total $150, the profit margin is 50%.
Importance: It aids in understanding the profitability of each treatment, guiding decisions on marketing strategies and budget allocation.
For aesthetic clinic owners, a deep understanding of revenue streams is paramount. It shapes marketing strategies, staff training, and resource allocation. KPI’s set revenue goals and establish benchmarks to track growth and progress.
For further insights, get in touch with Hunter Consulting.