Return on Investment Analysis

Variable Operating Cost Comparison: Floatation Sessions & Massage Sessions

Let’s consider the cost to offer floatation sessions vs. massage session for one hour. We’ll assume the facility has four rooms, a receptionist, and supply costs (such as towels, oil and other consumables). When planning for the ongoing costs of these services, massage sessions can cost 6 times more than the cost of providing floatation sessions. 

Table 1 – Operating cost comparison

Net Revenue Comparison: Floatation Sessions & Massage Sessions

While the daily gross revenue may be similar for floatation and massage – what is important is the differences in the net revenue as described below:

Table 2 – Profit Margin Comparison

 A 90 percent profit margin is expected from a software company, not a spa.  Based on the revenue analysis and assumptions above, the four float rooms would generate annual revenue of $432,000.  Of that, 90 percent or $388,800 is available as gross profit.

Return on Investment

Now let’s look at the initial investment, and the time it takes to see a clear return.  For this scenario, we will again look at an average four-room, float center. To purchase and install four float rooms and the control system (that operates session timing, lights, sound, air and water temperature, etc.), the cost is about $150,000.  Additionally, an operator would need to do the build out work on four, 120 square foot interior rooms. The approximate cost per room depends greatly on the facilities that already exist in terms of showers, general plumbing and electrical.

With margins in the 90% range, the return on the initial investment could be seen in the first year, perhaps even in the first 6 months.

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