The employee based massage business model is about the same regardless if a single owner independent massage clinic with 2 or 3 employees or an owner of multiple franchise/chains locations. Some have higher services fees for the massage or maybe other services such as skin care or yoga and some a bit lower. A middle range initial investment of the owner is about $200,000 plus a year of operating costs. The initial investment in a facility and equipment is expensive and advertising is a huge cost especially in the beginning. $300,000 as a commitment is reasonable. Before that owner makes any money, the business must earn back $300,000. Let’s also use an average of $50 as the amount paid for each unit of service—a massage. The business must sell over 5000 massage sessions. –That is a lot. Full time massage practice for an individual massage therapist ranges from between 1000-1200 massage sessions a year and MANY massage therapist only want to work part time.
At the same time and for ever after, the business must generate enough gross income to pay all expenses including wages BEFORE the owners get any profits. This amount can range from
$ 150,000 a year to $350,000 a year—about 4000 service units ($50 massage sessions).
As an employee, if the cost of each massage is $50 you have to provide a minimum of 650 massage sessions per year just so the employer can pay your wages. In addition, all the other overhead operating expenses must be paid. There are not just massage therapists to pay, but also receptionists and housekeeping, management, repairs and maintenance staff. This is another 250 massage sessions at $50 each. So when working as a full time massage therapist employee you have to do 900 massage sessions in the year before the owner makes ANY money off of you IF you want to earn $30,000 a year.
REALITY CHECK--- And this is based off of $50 per massage. Most unit sales will be less than the $50 because of member discounts, coupons, specials, etc.
If massage therapists were paid a flat $15 per hour for a 40 hour work week performing 25 -30 massage hour during the 40 hours on the job, the yearly income is $30,600 which costs the employer $40,600 in payroll and another $12,000 in operating costs. So the business owner has to cover about $53,000 of expenses if they pay $15.00 an hour for every hour at the job regardless if you perform a massage or not. That is 1375 hours of massage per year working 40 hour work weeks and based on figures of actual massage hours of BUT you are getting paid for 2040 hours a year.
Soooo-the profit to the owner on this model of employment is based on 25 units of service at $50 or $1250 a year. If that owner has 15 massage therapists working full time, yearly profit margin is about $20.000 and that is less than what each massage therapist makes. I wouldn't take all the risk for this type of profit. Would you? So why do people become business owners? Well, that is a good question.
Quite a different picture isn’t it. These figures are within a realistic range and based on maximum schedule. What happens when there are no shows or a bad weather day?
This is a tough cookie to eat. A lot of people have their fascia in a twist. The employee model is miss understood in the massage community. This is unfortunate.
What are the solutions? Paying employees less for sitting around when not doing a massage and charging more for the services hoping there is enough volume. The massage franchise membership model was originally based on affordable massage for the masses. The average yearly income in the US is around $35,000 per year. The most a massage can cost to serve this majority of the population is $50 with the tip. That means the price point cannot be much more than $45 per massage and that only buys one massage a month which in really not enough to gain the health benefits massage can provide. Volume will likely decrease as the cost of a massage exceeds $50. $40 per massage is a better price point for client retention, multiple massage session and volume. So much for raising the price of services. Over time owners often do better than the $20,000 profit mentioned earlier but the first 5 years is really hard. There are product sales and add on services. Paying the low rate for sitting helps the profit margin. And if the massage therapists are fully booked everybody does better.
Still being a massage business owner is not the huge money maker many would think and the intent is not to work massage therapists to the bone and treat then badly.
Often it is to keep the doors open.