Operations

How to Set up a Budget for a Medspa

Feb 3, 2025

Creating a budget for the day-to-day operations of your medspa is key to maintaining financial stability and ensuring long-term growth. While startup costs are critical, the operational budget is where you’ll see the true difference between success and failure. This budget covers everything from employee wages and supplies to utilities and marketing costs. Here’s how to set up, track, and adjust your operational budget.

1. Identify Your Recurring Monthly Costs

When setting up your medspa’s day-to-day budget, it’s essential to first identify all recurring monthly expenses. These costs are predictable, so you can build a solid foundation for your financial management. Here are the primary operational expenses you’ll need to account for:

Staff Wages & Payroll

One of your largest ongoing costs will be payroll. Medspa staff usually includes aesthetic injectors, estheticians, receptionists, and office managers. Staff salaries can vary widely depending on their roles, experience, and location, but these figures typically take up 30-50% of your overall budget.

Tip: To optimize payroll costs, consider hiring a mix of part-time and full-time employees. For instance, injectors may work on a per-service basis while front-desk staff work full-time.

Medical Supplies & Inventory

From injectables (Botox, dermal fillers, etc.) to skincare products and medical-grade facial equipment, these items are essential to your services. Establishing a set budget for supplies ensures that you don’t overspend or run out of necessary products.

Tip: Regularly review inventory usage and adjust orders based on demand, trends, or promotions to avoid overstocking or understocking.

Rent and Utilities

Your medspa’s physical location is vital to your success, so rent will likely be one of the largest ongoing expenses. Additionally, utilities such as electricity, water, internet, and phone services are necessary for smooth operations.

Tip: Negotiate your lease terms carefully and consider energy-efficient appliances to reduce utility costs in the long run.

Insurance

Operating a medical spa requires comprehensive insurance coverage, including malpractice insurance, general liability, and workers’ compensation. Insurance premiums vary depending on the size of your medspa and location, but they should be a fixed cost factored into your monthly budget.

Tip: Periodically shop around for insurance policies to ensure you’re getting the best value for your coverage.

Marketing & Advertising

Marketing your medspa is crucial for attracting and retaining clients. This includes both digital and traditional marketing, such as social media ads, Google Ads, print marketing, and influencer partnerships.

Tip: Start with a small but consistent marketing budget and adjust based on performance. Focus on cost-effective methods like social media marketing, referral programs, and partnerships to reduce costs.

Loan Repayments or Debt

If you took out loans to finance your medspa, factor in monthly loan payments as part of your budget. Managing this debt efficiently ensures that your medspa remains financially sound.

Tip: Aim to pay off high-interest loans faster to reduce long-term financial strain, but ensure that your monthly payments fit within your operational budget.

2. Factor in Variable Costs

In addition to fixed, recurring expenses, you’ll also face variable costs that fluctuate depending on demand, seasonal factors, or unforeseen circumstances. These expenses can make budgeting a bit more challenging, but by forecasting and tracking them, you’ll be prepared.

Client Acquisition Costs

This includes the money spent on marketing efforts like ads, social media campaigns, and promotions designed to bring in new clients. Client acquisition costs tend to fluctuate, but it’s crucial to track them monthly and ensure that your efforts are converting into bookings and sales.

Tip: Use tracking tools to measure the ROI of different marketing channels and adjust your efforts accordingly. Cut back on the least effective campaigns to maximize spending efficiency.

Equipment Repairs & Maintenance

Medical equipment like lasers, injectables, and skincare devices may need repairs or maintenance to keep them running smoothly. These costs can be unpredictable, so it’s important to set aside a maintenance fund to avoid emergencies.

Tip: Plan for regular maintenance and inspect equipment monthly to catch minor issues before they escalate into costly repairs.

Contingency Fund

Unexpected costs, such as an emergency repair or an unexpected surge in demand, will inevitably arise. Setting aside a contingency fund (usually 3-5% of your monthly budget) can provide peace of mind and help prevent financial stress during the leaner months.

Tip: Treat your contingency fund like an emergency savings account. Don’t dip into it unless absolutely necessary, and aim to replenish it after it’s used.

3. Establish a Pricing Strategy

To ensure your day-to-day operations are profitable, you must establish a pricing strategy that covers your costs and allows for profit. Your pricing should reflect the value you’re offering and consider your target market’s income levels.

Service Pricing

Base the cost of your services on a combination of factors: the cost of materials (Botox, fillers, etc.), labor (injectors, estheticians), overhead, and a markup that ensures profitability.

Tip: Regularly analyze your competition’s pricing and adjust your rates to remain competitive while covering your costs.

Upsell and Cross-Sell

Encourage clients to book additional services or purchase retail products after their treatments. Upselling and cross-selling are effective ways to increase the average transaction value and keep your revenue steady.

Tip: Train your staff to make personalized recommendations based on clients’ needs. For example, a client who receives Botox may also be interested in a facial treatment or skincare products.

4. Track Your Spending and Adjust as Needed

Tracking your budget on a daily or weekly basis is crucial to staying on top of expenses. Here’s how you can stay on track:

Use Budgeting Software

Use budgeting software like QuickBooks, Xero, or Wave to track expenses in real-time. This allows you to monitor where your money is going and adjust spending as necessary. Many of these tools integrate with your accounting system, making it easy to manage your finances.

Tip: Set up automatic reports that track your cash flow and profit margins so you can quickly identify areas where you’re overspending or not meeting financial goals.

Review Performance Regularly

Make time each week to review your medspa’s performance against your budget. Look at your revenue, expenses, and client bookings to identify trends. For example, if you see a drop in sales during a particular month, you may need to adjust your marketing efforts or promotions.

Tip: Use key performance indicators (KPIs) like revenue per service, client retention rates, and average transaction value to assess performance.

5. Implement Cost-Saving Strategies

Staying within budget doesn’t mean you need to cut corners. Instead, focus on strategic cost-saving measures that won’t compromise the quality of your service.

Negotiate with Suppliers

Reach out to your product and equipment suppliers to negotiate better pricing or bulk discounts. Many suppliers offer loyalty programs or incentives to businesses that purchase regularly.

Tip: Establish relationships with your suppliers to get the best deals and prioritize cost-effective brands without sacrificing quality.

Outsource Non-Essential Services

Instead of hiring full-time staff for every role, consider outsourcing services like marketing, accounting, or legal consultation to save on salaries. You can always hire more full-time employees as your medspa grows.

Tip: If you don’t need a full-time marketing team, consider working with freelance marketing professionals or agencies that can offer expertise without the overhead costs.

6. Set Goals and Review Quarterly

Setting specific financial goals will help you stay motivated and ensure that your budget is working towards larger business objectives. For example, you may want to set a revenue goal or a cost-cutting target.

Track Your Progress

Regularly review your medspa’s budget and compare your financial results to your goals. Adjust your strategy if necessary to ensure that you’re on track to meet those objectives.

Tip: Schedule quarterly financial reviews to assess your budget and performance against your growth targets.

Join MBClub for Medspa Business Support

Managing a medspa’s day-to-day budget can be a challenge, but with the right tools and strategies, you’ll set your business up for success. If you need guidance on how to stay on top of your finances, or if you want to take your medspa to the next level, MBClub is here to help.

Our expert resources, coaching, and support are designed to help medspa owners like you thrive in this competitive industry. Join MBClub today and get the support you need to turn your vision into a profitable reality!

By following these steps, you’ll not only be able to set an effective operational budget for your medspa, but you’ll also be able to adjust it in real-time to ensure that you stay on track for long-term success.