Underused equipment: how to calculate when a device pays for itself

The real cost of a device: the five items you pay every month

The purchase of an aesthetic device is decided on two figures: its price and what is billed per session. The difference looks like the margin and serves to justify the investment. Yet neither figure is the one that matters for the decision.

The purchase price is a one-off payment, already made or spread over a financing plan, that does not appear again. What repeats every month are five items, paid whether the device runs at full occupancy or sits idle. Three of them appear on the bank statement:

• The financing payment, or the depreciation if it was bought outright. A device paid for in a single payment also has a cost: that amount has already left the bank account and has to be recovered. Spread it across the months of its commercial life, which is shorter than its physical life. The device keeps working when the manufacturer has already launched two newer generations and patients ask for what they see advertised.
• Maintenance and inspections. On emitting devices (laser, intense pulsed light, radiofrequency, radiology) they are paid for having the device, regardless of how much it is used. It is the item most often underestimated before the purchase.
• Insurance. A new device changes the center's policy, with a small increase, but a monthly and fixed one.

The two remaining items do not appear on any invoice, and they are precisely the ones that decide. Space: if the device has its own room, that room generates rent, utilities and cleaning, and is unavailable for another treatment with demand. Consumables that expire: dated consumables are bought in batches and thrown away when they expire, used or not. On a device with little activity, this item is a fixed cost that looks like a variable one.

With the five items added up, you can ask the question that has an exact answer: from how many sessions a month does this device pay for itself?

The same device, two very different costs per session

Add up the five items for one of your devices. The following example, with round numbers, shows how the calculation works:

The usual question at this point is whether €1,295 a month is a high cost.

With that figure alone, the question has no answer yet. With forty sessions a month, the device costs €32 per session; with twelve, it costs €108.

The device, the contract and the room are the same; only the divisor changes. A device with little activity is expensive twice over: it costs more per session, and it also generates few sessions to spread that cost over.

So the useful question is not “is this device expensive?” but “what is its session threshold?”, which does have an exact answer.

The session threshold above which the device pays for itself

The calculation needs two more figures, and both are already in your clinic:

1. The actual price of the session, after discounts, prepaid vouchers and sessions included in a package.
2. The variable cost of that session: the consumables used plus the practitioner's time, valued at its cost per hour.

The difference between the two is the margin per session, and the threshold comes from a single division:

Sessions needed per month = monthly fixed cost ÷ margin per session

In the example, the session is priced at €120, consumables and time add up to €45, and the margin is €75. The threshold is 1,295 ÷ 75 = 18 sessions a month. Below eighteen sessions, the device consumes cash; above that, it contributes margin to the clinic.

This figure has two advantages. It can be verified—it is in the schedule, not in a forecast—and it turns a debate of opinions into a decision. “That device doesn't seem profitable” and “that device needs eighteen sessions a month and does nine” are two different conversations.

Calculate the threshold before the purchase and update it every year, because maintenance goes up, the lease ends and the price of the session changes.

Four decisions for a device that has not yet reached its threshold

A device below its threshold calls for a decision, which does not necessarily mean getting rid of it. There are four reasonable options, best weighed in this order.

Increase the sessions. It is the option that keeps the investment whole, so it is explored first. Before concluding that demand is lacking, check three points. First, whether the treatment is in the talking points of whoever answers the phone and handles the first visit. Second, whether it appears on the website and in the center's communication. Third, whether the device is available in the time slots when patients can come. A device available only on Tuesday mornings has a scheduling problem more than a demand problem.

Review the price. With a low margin per session, the threshold rises sharply. A moderate increase has a broad effect because it acts on margin: going from €120 to €135 raises the margin from €75 to €90 and lowers the threshold from 18 to 15 sessions. A 12% higher price lowers the threshold by 17%.

Recover the space. If the device does not need its own room, moving it immediately removes the least visible item in the calculation and gives a room back to the schedule. In the example above, that item weighs €320 a month: keeping the device and freeing its room lowers the fixed cost by that amount.

Divest the device. If the threshold is far off and no lever brings it closer, an orderly exit is better than carrying the cost month after month. The options are a second-hand sale, early termination if the contract allows it (check the penalty first) or replacement with a pay-per-use model. In any case, the decision rests on an exact figure, because the cost of each month without deciding is already calculated.

Four questions before you sign for your next device

Equipment purchases are decided at a trade conference, in front of a sales rep, with a recent demonstration as the reference. It is a good moment to get to know a device, and the signature is best kept for after the analysis. These four questions, asked before signing, bring forward to today the calculation you would otherwise make two years from now:

1. What is the threshold? Calculate it with the payment offered, the real maintenance cost and the space the device will take up. Ask the sales rep for the maintenance cost in writing, because you need it to complete the calculation.
2. Where will those sessions come from? They can come from new patients or from current patients who will switch from another treatment. In the second case, the device redistributes existing revenue instead of adding to it.
3. Who will use it, and in which time slots? A device that depends on one person inherits that person's schedule and vacations.
4. What does the contract provide if the device does not reach the threshold? Review the early exit terms and their cost. It is the question asked least often and the one with the greatest financial impact.

Equipment is one of a clinic's main cost items and one of the few that allow a precise calculation before investing. Controlling it does not mean buying fewer devices, but knowing, for each one, how many sessions it needs and how many it performs.

Every device with its threshold covered: your equipment, reviewed with your figures

The session threshold tells you whether a device pays for itself. What to do with one that falls short depends on the rest of the treatment portfolio, on prices and on the schedule.

In our Growth service, our team of consultants reviews your equipment together with pricing, schedule and team, with the direct knowledge of manufacturers that comes from working only with clinics since 1999.

Before you sign for your next device, the initial diagnostic meeting is at no cost and we call you within 48 hours.