Relaxing medical spas offering professional-grade medical clinic services are extensively on the rise. Be it laser, botox, chemical peeling, or cryotherapy—the demand for these services has grown considerably over the last few years.
Starting a medical spa in such a marketplace can be a rewarding opportunity for anyone, whether you are a trained medical practitioner or just a seasoned entrepreneur.
However, like every business, you need to make a considerable investment to kickstart a medical spa business as well.
Wondering, how much does it cost to start a medical spa?
Well, look no further. With this guide, we will help you get a thorough understanding of all the costs associated with starting a medical spa and the factors influencing those costs.
Ready to get started? Let’s dive right in.
What is the cost of starting a medical spa?
The average cost to open a medical spa in the US varies between $134,000- $417,000. These expenses are largely influenced by a variety of factors such as location, concept, and size of your medical spa.
On average, a medical spa earns a profit margin of 10-15%. However, the demand for luxurious spas is on the rise and there are ample opportunities for you to earn lucrative margins of up to 25% in that segment.
Average costs for starting a medical spa
Before we dive into details, check out this medical spa startup cost checklist. It will help you plan your startup budget and know how much financing you need to get started.
| Item | Average Cost |
|---|---|
| One-time Expenses | |
| Business registration | $150-$300 |
| Lease deposits | $8,000-$15,000 |
| Leasehold Improvements | $10,000-$50,000 |
| Furnishings | $10,000-$35,000 |
| Medical Spa Equipment | $80,000-$250,000 |
| Training costs | $2,000-$10,000 |
| Inventory and Supplies | $5,000-$10,000 |
| Legal fees | $1,500-$2,000 |
| Licenses and permits | $500-$1,000 |
| Business Plan | $150-$300 |
| Insurance | $1,000-$3,000 |
| website | $150-$1,000 |
| Hoardings and signboards | $1,000-$10,000 |
| Office hardware | $600-$2,000 |
| ERP system | $500-$3,500 |
| Total One-Time Expenses | $120,000- $392,000 |
| Recurring Expenses (Per Month) | |
| Lease/ Mortgage | $3,000-$7,000 |
| Utility Bills | $1,000-$1,200 |
| Payroll | $8,000-$12,000 |
| Ongoing marketing | $2,000-$5,000 |
| Software subscription | $150-$300 |
| Total Recurring Expenses | $14,000-$25,000 |
| Total | $134,000- $417,000 |
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How to calculate the cost of starting a med spa business
You now have a list of potential expenses and a rough estimate of your startup costs. Let’s estimate your actual startup costs using these two proven methods.
The first, traditional method involves using a startup costs calculator to estimate the startup costs. However, the second, the Upmetrics method, is an innovative method that uses the Upmetrics financial forecasting tool.
Let’s understand both methods so that you can choose one that suits your requirements the best.
The traditional method—startup costs calculator
The calculator includes categories such as pre-trading, website setup, marketing, operations, and people. You can enter the estimated costs in each field and let the calculator estimate the costs for you.
Remember that many startup costs fall under recurring expenses, so cover those costs monthly, quarterly, or annually.
Calculate your startup costs using this calculator.
The Upmetrics method—financial forecasting tool
It is an intuitive and efficient method of calculating startup costs. Using Upmetrics will not just help you estimate startup costs but also help with financial forecasting.
All you need to do is enter your sales, costs, and other financial assumptions and let the tool calculate monthly/quarterly/ and yearly projections for you.
Pro-tip
Check out the financial forecasting tool for accurate financial forecasting. Once you have an accurate estimate of startup costs, you can easily identify funding requirements for your medical spa business.
Raising funds for a new startup is certainly a nerve-wracking and time-consuming process, but having a solid medical spa business plan can make things a lot easier.
Let’s move ahead and discuss the factors that affect your medical spa startup costs.
Factors that affect medical spa startup costs
The cost of opening a medical spa relies on multiple factors, some of which will be discussed in detail in this segment.
1. Rent and Mortgage
Property expenses are the largest expenses for medical spas whether you choose to rent or purchase.
To begin with, expect to spend anywhere between $100,000-$1M+ on the purchase of a commercial space. With that, make a provision of at least $400,000-$600,000 to pay for the downpayment.
Now, your monthly lease expenses are also greatly influenced by the state or city you choose for your medical spa.
For instance, the rental expenses for a medical spa in a state like New York are much higher than in states like Florida, Ohio, or Arizona.
An interesting statistic revealed that the annual asking rent per square foot for retail spaces in the different corridors of Manhattan varies greatly between $155-$2,750. However, the same for Florida varies from $210 to $420 annually.
Ideally, you should budget anywhere from $3,000-$7,000 for lease rental expenses every month. However, if you are choosing a place somewhere in Manhattan, the rental expenses could be as high as $80,000-$100,000 every month.
Apart from this, you also need to consider the lease rental deposits that are worth 2-3 months of rent before finalizing the property. This would account for nearly $8,000-$15,000 depending on the terms of the contract and the property location.
2. Leasehold Improvements
When you open a medical spa, you need to undertake certain renovations and refurbishments to make the space welcoming and relaxing for your customers.
Now you can either build out the medical spa from scratch which would cost you $90-$130 per square foot. or somewhere around $225,000-$325,000. However, that’s quite expensive for an emerging startup.
On the other hand, if you lease a place that requires minimum modifications, you can bring down the refurbishing costs considerably ($10,000-$50,000).
Depending on the scope of work and essential improvements, the renovation costs and furnishing can take up to 10% of your overall startup budget.
Further, you need to consider the cost of installing specialized equipment and furniture in a medical spa.
The cost of treatment tables, couches, chairs, reception desks, storage cabinets, and many other essentials can cost you anywhere between $10,000-$35,000.
If you are planning to start a luxury venture in the medical spa industry, you need to invest considerably in the decor, furnishings, and overall look and feel of the spa. This would cost you up to $600,000 sometimes.
3. Medical Spa Equipment
Invest in essential equipment depending on the medical spa treatments you would be offering.
Now, you cannot skimp on the quality here. To make your med spa stand out in the medical spa industry, you need the most advanced equipment available in the market.
Some common medical equipment for a med spa includes laser hair removal machines, botox equipment, microdermabrasion, cryotherapy, etc.
The cost for these machinery soars quite high and is definitely the largest capital expenditure you would incur on your startup.
For instance,
- Laser hair removal equipment: $40,000-$80,000+ for multi-application laser hair removal machine
- Botox Machines: $5,000-$25,000+
- Cryotherapy: $30,000-$60,000
- Microdermabrasion: $10,000+
- Chemical Peel machinery: $1,500-$3,000
Now, these are the average costs of equipment that are extremely essential for your med spa. However, you must take a look at your financial projections and ROI and consider the maintenance costs before making a purchase.
To offer a rough average you would be spending anywhere from $80,000-$250,000+ on high-quality equipment and machinery.
4. Payroll and Wages
Payroll is amongst the largest ongoing costs for any business. Medical spa is no exception.
Take a look at your spa business plan, and identify your staffing requirements. Ideally, a medical spa should have a medical director, trained practitioners, medical aestheticians, a massage therapist, and an administrative staff to deliver the services and oversee the operations.
Now, identify the salaries and hourly wages you would be paying your employees. According to Indeed, an average aesthetician in the US has a median pay of $19.67 per hour.
Similarly, figure out the payroll expenses for other staff and add those to your start-up costs calculation.
Generally, a small-scale med spa with less than 5 employees can expect to spend $8,000-$12,000 every month on payrolls.
If sparing this amount seems infeasible initially, you can consider hiring staff and specialists on an hourly basis till the business gains momentum.
5. Spa Inventory
Aestheticians and practitioners would require a variety of products to deliver specialized treatments. Building an inventory of such products is another significant expense to consider while calculating your start-up costs.
Generally, a medical spa would require beauty products to deliver medical-grade facials, laser treatments, microdermabrasion crystals, medical supplies, and sterilization equipment.
Depending on the number of treatment rooms and aesthetic treatments, you can consider spending $5,000-$10,000 to stock your spa with essential supplies for 3 months.
However, if you plan to sell those merchandise at the reception counter, you would be required to build a larger inventory costing you somewhere between $15,000-$20,000.
6. Licenses, Permits, and Insurance
Making a business legally compliant has certain costs attached to it. This includes initial costs for business registration, entity formation, licenses, and the cost of insurance.
The cost of registration and acquiring a business license is anywhere between $150-$300. However, that’s not it.
You also need a health department permit, certain certifications and licenses for practicing staff, and a director’s license before opening a medical spa for business operations. The costs for these would vary between $500-$1,000.
Legal help might sound like an extra expense at this stage, however, it would help you ensure legal compliance and easy setup. The cost for legal help at a time would cost you $1,500-$2,000.
Before opening your spa facility, you should also consider getting professional liability insurance. Since medical spa treatments involve certain risks and complications, it is ideal to get yourself insured.
The cost of professional liability insurance varies significantly depending on your needs. However, you can budget spending $1,000-$3,000 initially.
7. Marketing and Branding
Marketing and advertising are crucial for the success of medical spas. However, the question is how much should you ideally spend on marketing?
Well, to begin with, you would require a well-functioning med spa website. The cost for this would vary between $150-$1,000 and sometimes even more.
Further, you need to get the hoardings, signboards, and business signs ready to attract customers to your medical spa. The cost for these would span anywhere between $1,000-$10,000 depending on the location and size of your hoardings.
Additionally, you need to consider expenses for social media marketing, email marketing, SEO, video marketing, and other marketing practices included in your business plan. Budget somewhere around $2,000-$5,000 on your monthly marketing activities to grow the prominence of your business.
And lastly, plan for the grand launch of your medical spa. If not, a soft launch also rewards well, if planned efficiently. However, you need to have a sizable budget for marketing to gain maximum traction in the market.
8. Hardware and Software Expenses
You need computer devices, a few technologies, and software subscriptions to deliver seamless services to your customers.
Considering an average model for a desktop system, you can consider spending $500-$1,500 on computer devices. Further, you also need a printer, scanner, and company phone that would cost you somewhere between $100-$600.
A robust ERP system could be a worthy investment as it helps with booking, appointment scheduling, and payments. The cost of an ERP system vary depending on the features. However, you can expect to spend anywhere between $500-$3,500 on an ERP.
Lastly, you would be spending $150-$300 on accounting and marketing software every month.
And that’s pretty much all the large expenses you would incur while starting your small business. Let’s now move forward and discuss the tips that can potentially reduce your start-up costs.
Tips for reducing medical spa start-up costs
The costs above were the approximation gathered from an overview of the medical spa industry. However, you can regulate your startup expenses by spending mindfully on certain aspects.
Here are a few tips that can help you bring down your startup expenses.
1. Choose a quaint location
The location of your business greatly influences all the other expenses of your business, be it rent, payroll, or renovations. Instead of choosing a bustling marketplace like Manhattan, consider starting your business in states and cities that are less dense.
It is possible to create a thriving business in quaint cities at a comparatively low budget.
2. Lease the medical equipment
Medical equipment is amongst the largest startup expenses for any spa business. Instead of purchasing every piece of equipment upfront, try getting a lease on equipment.
Apart from cost savings, leasing can be helpful, especially when the equipment is replaced by higher-end models every year or two.
3. Get used furniture
If bringing down your startup costs is your ultimate goal, try getting second-hand furniture from garage sales and online websites. This will help you directly save thousands of dollars on your startup investment.
4. Start with limited services
Instead of offering a wide range of medical services right from the beginning, keep your list of service offerings limited. Limited services would require limited equipment and limited inventory, and this would ultimately help you to save the costs.
5. DIY Marketing
Don’t hire a professional help to execute every marketing function. Activities like social media marketing, brochures, email marketing, and designing can be undertaken on your own.
Equip yourself with essential skills and save the costs where possible.
Conclusion
And there you go. By now you must have a better understanding of the average cost to start a medical spa. What next?
Well, now you must calculate the actual costs to open a medical spa in your location and start budgeting for it.
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