UpClose & Personal - Richard Eidson

When you are faced with the decision to purchase a piece of spa equipment, the following guidelines may help. It is all too common for some equipment companies or distributors, to provide misleading information, which can result in false expectations regarding the real cost of the equipment and exaggerate potential profits. This can have serious negative consequences for a spa owner and many spa owners have had this experience.

Real Total Initial Cost: To determine the real cost of a piece of spa equipment, the following information must be known.

1. Purchase Price:
• If you pay cash, this would be the amount paid for the spa equipment.
• Lease or credit card purchase would be the to total purchase price
plus the amount of interest. This would be paid over a period of time,
with fixed monthly payments.

2. Shipping:
• Shipping costs for many items are often not that great, but shipping
for items such as hydro-tubs, certain massage tables and other large
equipment can be significant.

3. Installation:
Installation cost can be very significant for some spa equipment, especially hydro-tubs and Vichy showers. Make sure to get an accurate projection on these costs from the manufacturer.

4. Room Renovation:
Room renovations can be minimal but not always. If a wet-room is required, this can be approximately $25,000. Special electrical or ventilation requirements also must be considered.

5. Training
Spa technicians must be trained properly to use a piece of spa equipment. This can be as simple as written instructions or a video, but often it requires on-site training by the representative of the manufacturer. This can be a major expense.

Total Cost = (cash price or principle and lease payments) + shipping + installation + training

Operating Costs Per Treatment on the Spa Equipment:
Often spa equipment Companies will state that after a certain number of treatments that generate a certain amount of revenue, that this pays for the price of the equipment by that amount. For example, if a piece of spa equipment costs $2000, sometimes it is claimed that after 20 treatments at $100 each, that you have paid for the equipment. As all spa owners know, the operating costs of each treatment (variable costs) must be first subtracted from the cost of the spa treatment.

Operating Costs Include:

1. Utilities
•   Water
•   Electricity, gas
2. Labor
•   Per cent of the revenue of the treatment that must be paid to therapists, including time for clean-up
3. Products for the treatment
4. Towels or other miscellaneous items
5. Maintenance – are there any costs to maintain and service this equipment? You must be very careful to see how long the warranty is for, how much repairs after that may be, and how good of a reputation the company that makes the equipment has for repairing equipment in a timely and affordable way. Many spa owners have had major problems getting often-expensive spa equipment repaired when it breaks. This costs them not only repair costs but many days when they cannot use the equipment.

It is now possible to make accurate projections of how much revenue various spa treatments on the piece of spa equipment can generate for your spa.

To do this, you take the total cost of a piece of spa equipment, which is the total initial costs to purchase the equipment as mentioned above. Then, you must calculate what the operating costs for the spa equipment are for the different treatments done on it. Then, you can project how many treatments you think will be able to do each day. Then you can make a more accurate projection of how much can be earned from those treatments.

These revenues generated from the spa equipment can then be used to pay back the initial investment of the spa equipment, other fixed expenses of the spa and also to generate profits.

innospa@lisco.com