Med Spa Profitability: An Honest Look and How to Increase Med Spa Revenue

It may seem like nearly everywhere you go, a new med spa is opening. And the truth isn’t far from that perception. From 2021 to 2024, there’s been a 100% increase in the number of med spas in the U.S. But are med spas a profitable long-term endeavor or a passing fad? 

Med spa profitability isn’t as black and white as the industry’s market size or average annual revenue make it seem, which are impressive. To determine if a med spa will be profitable, med spa owners should assess their local market, research the most profitable med spa services, explore ways to make a med spa run more efficiently, and consider how to lower costs while increasing their client base. 

Are Med Spas Profitable?

As a whole, the US med spa market size is $16.31 billion. By 2032, it’s expected to rise to $63.79 billion. More impressively, the projected annual growth for the next eight years is about 14% each year. It’s clear that the industry as a whole is performing well and there’s money to be made for savvy entrepreneurs and medical specialists interested in diversification and growth. The American Med Spa Association reported in 2022 that the average med spa’s revenue was $1,982,896. 

There are many factors contributing to the popularity of med spas and their potential for profit. New technology and shorter recovery times for minimally invasive procedures such as Botox, fillers, and laser treatments have sent demand soaring. And many of those treatments have relatively low cost to perform compared to average pricing for clients, creating favorable profit margins. Meanwhile, wellness and self-care trends have persistently been influencing consumer behavior and have spread across a wide range of demographics — leading to a vast pool of prospective clients eager to indulge in affordable luxury services. Plus, the med spa business is built to scale with convenient opportunities for recurring revenue such as memberships.

Tips for Becoming More Profitable

Some factors are out of your control when it comes to revenue. If the market takes a dip, it could result in less discretionary income for clients and therefore less spending on aesthetic services. Or if a competitor opens down the street, it may draw away some clients and negatively influence your revenue. But while you can’t entirely control revenue, you can have more influence over profitability. Many of the actions to become more profitable will also be a positive influence on revenue too. 

Five of the best ways for your med spa  to become more profitable include:

1. Audit offered services
2. Invest in advanced technology 
3. Focus on the client experience
4. Retain staff
5. Market your med spa strategically 

1. Audit Offered Services

To understand your med spa’s current profitability, break down revenue and costs for each service you offer. Pay attention to which services are bringing in the most revenue, as well as how that compares to the cost and time required to deliver those services. With a med spa-specific technology platform that offers advanced analytics, most of these figures will be right at your fingertips.

Exploring consumer demand for newer, niche services and complementary services you don’t already provide could spark ideas on additional offerings that could boost profitability. A med spa where the most profitable service is liposuction, for example, may want to offer additional weight loss procedures to increase its profitability. 

2. Invest in Advanced Technology

Investing in the best equipment makes your med spa run more efficiently to deliver a better client experience, minimizing wait times and making the check-in/out hassle-free. The more efficiently you can manage the flow of clients, the more clients you can see per day. And when a client is delighted with a fast, smooth visit, they’re more likely to return for more treatments, share positive reviews, and refer that med spa to their friends.

When Motykie Med Spa invested in their administrative technology, for example, they were able to save up to three hours on scheduling alone. Motykie Manager Ethan Reynolds used to spend 40 minutes each morning balancing transactions from the day before, but now that entire process is automated. 

Reynolds reflects on this change. “I used to spend 40 minutes of my mornings balancing transactions from the day before with our old system. With Nextech, everything is done right there on the terminal and the reports make it easy to cross-reference if necessary. It really helps our team.”

3. Focus on the Client Experience to Keep Clients 

The age-old adage that it’s more profitable to keep a customer than find a new one certainly applies to med spas. Consider all the resources that go into getting a client in the first place. Once you have them, you’ll want to do whatever it takes to retain them to get some return on that investment — and then some. 

Make sure when they visit your med spa, they feel like the focus is on them. Happy customers are more likely to keep coming back for more and to refer friends, amplifying your marketing efforts without adding to budget.

Some proven ways to deliver a great experience and increase client satisfaction include:

• Communicate effectively with clients
• Make it easy to schedule an appointment
• Invest in your physical space
• Add a chatbot on your website
• Improve your staff’s cultural competency
• Have a straightforward billing process
• Personalize client care 
• Recommend additional services based on a client’s needs

Med spa staff are a key component of providing an excellent client experience. Help ensure your staff can focus on the client experience by streamlining administrative tasks such as billing. Christine Stafford, the manager at Perfectly Bare Laser, reflects on what their operations used to look like before streamlining these processes, “There’s a lot of moving parts that weren’t happening that made the front desk clogged up.” Now, since streamlining processes with the help of new technology, Stafford and the team have seen more positive reviews and referrals come in. 

4. Retain Staff

Each time a staff member leaves, you have to reinvest in the training process for someone new. It may take them a while to achieve the same efficiency as the staff member they replaced, which could lead to some operational delays in the meantime. Unfortunately, staffing is becoming a more difficult problem to solve. The World Health Organization reports that by 2030, there will be a shortage of 10 million healthcare workers globally.

You can stay ahead of this trend by implementing practices and processes that retain staff:

• Provide excellent pay and benefits
• Have resources to prevent burnout
• Create a smooth onboarding process
• Offer flexibility with work schedules and vacations

5. Market Your Med Spa Strategically 

Before deciding how to invest your marketing dollars, clarify who your audience is, how they find your med spa, and where you can reach them within the local community and/or online. Having a comprehensive technology platform with robust analytics can help you identify key demographic information and automate marketing campaigns, without sacrificing personalization. 

That way, you can feel confident the messages you’re sending are reaching the right people on the right channels at the right time. And you’ll be reassured the resources you’re using are being spent wisely. No more guessing whether anyone saw that big discount on Botox you tried to promote.

Plus, that same technology should make administrative work more efficient, freeing up time to strategize those marketing campaigns. Ahmed Bhutta, COO of Perfectly Bare Laser, explains, “As a med spa owner, I looked at the value proposition Nextech brought to the table, the efficiency, the ease of use, and the capabilities was definitely worth the investment.”

The History and Rise of Med Spa

Med spas straddle the line between medical clinics and traditional beauty spas. Spas have been around at least since the days of the ancient Romans, but the idea of combining a spa’s healing properties with aesthetic treatments is much newer. One study places the first med spas in the 1990s, a time when many aesthetic procedures received FDA-approval. Since then, the demand for med spas has continued to grow.

Med spas offer both medical services and spa treatments, with popular options including

• Non-surgical cosmetic procedures 
• Treatments for skin rejuvenation 
• Massages
• IV infusions 
• Wellness services

Unlike a traditional beauty spa, med spas are overseen by a licensed healthcare provider, such as a nurse practitioner or M.D. By taking the best from the spa experience and combining it with the rejuvenating qualities of aesthetic medical treatments, a med spa can serve a large clientele and provide many types of services. A client, for example, may book a massage, IV infusion, and Botox at a med spa, but they couldn’t book all three at a regular medical clinic or spa.

How Much Do Med Spa Owners Make?

Med spas on average make about $1,982,896 a year for a multiple location business and $121,623 per month for a single location med spa. But those figures aren’t necessarily the take-home pay of med spa owners. There are many costs associated with operating a successful med spa, including:

• Rent for the med spa office space
• Staff salaries
• Costs associated with training staff
• Administrative technology for the office
• Equipment and technology required to provide services
• Marketing costs

Those are just some examples of costs, and each individual med spa owner will have other choices to make about additional investments in the business that could impact profitability. A major influence over how much money a med spa owner takes home depends on their ability to uncover ways to make the business profitable — which is different than just driving revenue. 

Factors Affecting Profitability

When discussing profitability, revenue and billing are important but don’t tell the full story. “People tend to focus on these billing KPIs or the revenue KPIs, but if you don't tie that back to what you're actually doing and the costs of service that comes into that, you can lose perspective,” explains John Gwin, CEO and co-founder of the Auctus Group, a revenue cycle management consultancy. 

Gwin works with practices to identify which services are bringing in the most revenue and how that revenue compares to the service’s cost and time. By analyzing the cost and revenue from each service, you can get a better idea about how profitable different offerings are and adjust your marketing and business model accordingly. 

Another factor that impacts profitability is efficiency. Efficient med spas can serve more clients each day (bringing in more revenue and opportunities for referrals) and save on administrative costs; for example, by implementing technology that helps streamline and automate many time-consuming and headache-inducing administrative tasks. 

When done well, increased productivity will amplify the client experience because the entire team will have more capacity to contribute to meaningful client interaction. And a good client experience leads to repeat visits and word-of-mouth marketing. 

Most Profitable Med Spa Services

Whether you’re just opening a med spa or looking to make more within an existing one, it’s important to stay current on the most profitable med spa services. Trends in aesthetics and healthcare in general are constantly changing, so it’s important to keep track of what services your clients want, how much it costs you to perform, and what you can charge. 

According to the American Society of Plastic Surgeon’s 2023 report, the most profitable services med spas may be able to perform include:

• Noninvasive fat reduction
• Noninvasive skin tightening 
• Skin resurfacing
• Hyaluronic acid fillers
• Non-hyaluronic acid fillers
• Botox
• Laser hair removal

The most profitable services may differ within your area or based on a med spa’s efficiency and equipment. For example, while Botox is profitable for med spas on average, it may cost more for your med spa if you don't currently have enough credentialed health providers to perform the treatment. 

Future of the Med Spa Industry 

The med spa industry is booming – total med spa facilities have doubled in the past three years – and it’s predicted to grow throughout the next decade. Naturally, a booming industry attracts competition. However, med spas dedicated to finding ways to improve their profitability can take advantage of this boom and serve more clients. 

Having the right technology is an important element of maintaining a successful and profitable med spa that stands out from the competition. Nextech’s comprehensive software built for med spas delivers advanced analytics on clients and potential leads, streamlines processes for a more efficient daily workflow, and lifts administrative burdens so your team can focus on an excellent client experience. See how it works for yourself — book a free demo.