As massage therapists, if we want to create meaningful change, we need to look at the big picture. We must become more educated, involved, and invested. We need to spread awareness about our industry. We need to build a community, share our knowledge, and cultivate one another. It is time to let go of our lone wolf mentality. We can embrace a life of abundance, foster meaningful relationships with our peers, and realize there is enough business for everyone. We can become allies, teach each other techniques, and uplift our community.
Though many of us may be hurting we cannot attack when we act. We need to put away our pitchforks and douse our torches’ flame. If we want to improve our community, we need to guide with a loving light. We must raise our lamps of wisdom to illuminate the way, guide others toward good days, and encourage a better life without causing more strife.
As therapists we are helpers and guides. The way we perform massage must match how we address the aches and pains of our industry. To be an amazing massage therapist we must espouse the virtues of empathy, creativity, and humility, while leading our professional peers the same way. If we want meaningful change our actions must be fueled with love, hope, and careful consideration. Many of us are massage therapists because we want to live in the service of others. If we act as disruptors, lash out, and demand more than we have earned we will become the same enemy we are attempting to root out.
Our industry needs leaders who create change with calculated and purposeful intent. We must never change for the sake of change, because if we do, all we will ever know is chaos. To avoid this fate we must be honest, empathetic, and loving from surface to center. The way we achieve our goals is equally important as our intent and the energy we infuse into our actions.
We can offer empathy to each other and our employers. We can live with humility and navigate life with a creative mind. Together we can transform our industry, resurrect its spirit, and feed its soul. We can work together as individuals to help each other feel full and whole, and ally as a community to achieve our goals.
In this article we will explore business related concepts related to estimated break-even calculations, the Silver Spoon Agreement between franchise facilities and LMTs, the benefits of empathetically communicating with employers, and an introduction to massage business.
The Silver Spoon Agreement
Though I would rather direct recent graduates toward LMT owned facilities, some people need the Silver Spoon agreement provided by the chains.
What is the Silver Spoon Agreement? This is an arrangement where a massage facility agrees to provide a therapist with a steady flow of bookings. In exchange the therapist will receive lower pay, no influence over their environment, and limited professional growth. This agreement makes it so that you do not have to pay the overhead of running your own business. If you rented your own room and paid for all of the overhead you would have to perform 9.21 massage hours, plus about 20-hours of unpaid marketing and administrative work per week to equal the value of the Silver Spoon Agreement. Is 39.21 hours of labor worth it? That is up for you to decide.
If you work for a chain there is an unspoken understanding that your role at the company is a job, not a career. You are a factory employee working on a conveyor belt, nothing more, and nothing less. Other than flipping your room, folding some sheets and towels you are expected to clock in, do your massages and clock out. This reduces your negotiating power as an employee, but it allows you to avoid the responsibilities and hardships associated with running your own business or working at a smaller LMT owned facility.
If you are a recent graduate considering employment at a chain, take some time to evaluate what you want out of your career. Then determine if your school has provided you with the entry level skills necessary to enjoy practicing massage while avoiding injury and burnout. The first place you work has a huge influence on your path as a massage therapist. Select one that is a perfect fit for you, rather than what is alright for now.
Empathy, Knowledge, and Wages
Today we are going to talk about wages and the backend of a massage business. We will explore the importance of empathy, and the intricate aspects of running a business. You will learn about the break-even analysis, its importance, and how to use it to negotiate higher wages, run a business, and serve as an invaluable asset to your employers.
To have a firm grasp of what a reasonable wage is we must understand how a massage company makes profit. We must possess the ability to empathize with others, and research.
When I went to massage school my education was a joke. Our instructor lied to us about wage expectations, insulted us, and often refused to answer the simplest questions. The school advised us to avoid working for LMT owned facilities and ourselves. Other than designing a logo, and creating a name for our dream spa, our business education was abysmal. In many respects they ruined the career of my peers before theirs even began.
My journey has been a baptism by fire, but yours doesn’t have to be. Read my words, allow my knowledge to guide you, and discover your perfect professional life. With this information you will have a better understanding of business, have the tools to determine if your employers can pay you more, and hopefully have empathy for everyone within our industry.
What is a break-even analysis? It is the point at which cost, and income are equal and there is neither profit nor loss.
The goal of running a business is to generate profit, but before that goal is reached a company must first break-even.
In this calculation we are going to use $87.50 to represent the hourly service rate of an imaginary massage facility. This will be used to help calculate its breakeven point.
The price for an hour of massage varies based on a company’s business model, geographic location, and demand. Typically, an hour of massage ranges from $75 to $100. To keep this calculation clean and simple we will use $87.50 (the average of the two) to represent the revenue generated per service hour.
$75 + $100 = $175
$175 ÷ 2 = $87.50 average per service hour
Now it is time to determine the service cost of the LMT performing the massages.
Most massage therapists, especially recent graduates will earn between $19.17 to $24.97 per service hour. To simplify our math, we will use the average of $21.57 per service hour.
$19.178 + $23.97 = $43.1505
$43.1505 ÷ 2 = $21.57 per hour
We will roughly estimate payroll taxes per hour by multiplying the average pay by 1.17. This number comes to $25.23.
$21.57 × 1.17 = $25.23 per service hour.
At this point in the calculation the facilities have a gross profit of $50.02 per service hour.
$75.25 – $25.23 = $50.02
Now we will include an estimated $6 cost from linen cleaning and resource consumption. This brings that number down to $44.02.
$50.02 – $6.00 = $44.02
As you can see nearly half of the revenue generated is instantly eaten up when performing the service.
The $44.02 is an essential number when determining the facility’s break-even point. The break-even point is an important factor that illustrates whether a business is making nothing, or losing money.
*Determining Monthly Expenses
Our imaginary spa will have 10 to 14 rooms and have a lease of $5,000.
Now let’s add in $500 for CAM/NNN, $1,000 for local marketing, $1,000 for phone, utilities, internet, software, insurance, and miscellaneous expenses.
$5,000 + $500 + $1,000 + $1,000 = $7,500
Next we will add in CPA costs. Taxes are paid quarterly, and a good estimate of this fee is about $1,500. This will add an additional $500 to the total.
$1,500 x 4 quarters = $6,000
$6,000 ÷ 12 months = $500
Now we are up to $8,000 a month.
$7,500 + $500 = $8,000
A facility of this size would most likely cost over $500,000, but we are going to assume half of the buildout cost used liquid capital. Thereby requiring an additional $250,000 loan to cover the remaining cost.
We are going to give them a conservative APR of 6.195% APR, paid over 10 years. This total roughly comes to $6,651 a month.
$6,651 + $8,000 = $14,651
Now let’s add in payroll processing, booking software, cleaning supplies and toiletries, miscellaneous software, website design & maintenance, facility repairs & upgrades, physical marketing & office supplies. This will increase the total by an additional $1,450 per month.
$14,651 + $1,450 = $16,101
Now let’s look at administrative costs and fixed payroll.
This imaginary facility will be open from 9 am to 9 pm, Monday through Sunday. It will have at least two receptionists working at all times, and they will be paid $12.00 an hour.
12 x 7 = 84 hours
84 hours x 2 receptionists = 168 hours per week.
168 hours x $12 = $2,016 per week
$2,016 × 52.143 weeks = $105,120.28 a year
$105,120.28 ÷ 12 months = $8,760.02 a month
Now we need to add in estimated taxes which brings the total to $10,249.22.
$8,760.02 x 1.17 = $10,249.22 a month
As we calculate the costs thus far it brings us to $26,350.22 a month.
$16,101+ $10,249.22 = $26,350.22 a month
Now let’s add a single manager. For their pay we will set it at $38,000 a year.
$38,000 ÷ 12 = $3,166.66 a month
$3,166.66 x 1.17 estimated taxes = $3,704.99
Now we add that to the cost which becomes $30,058.21
$3,704.99 + $26,350.22 = $30,055.21 per month.
Finally let’s pay the owner. The owner of this imaginary spa is going to pay themselves $20 an hour for 40 hours even if they work more.
Their payroll comes to a total of $4,067.15 a month.
$20 × 40 = $800
$800 × 52.143 weeks = $41,714.40
$41,714.14 ÷ 12 = $3,476.20
$3,476.20 × 1.17 = $4,067.15
Finally we have the spa’s estimated breakeven amount of $34,122.36.
$30,055.21 + $4,067.15 = $34,122.36.
How many massages will this imaginary facility have to sell to break-even?
This part requires a few steps to calculate. We will start by dividing $34,122.36 by $44.02. The $44.02 is how much the company makes from each service performed.
$34,122.36 ÷ $44.02 = 775.15 hours per month.
Now we need to calculate the cost for each credit card transaction. Each credit card company has their own rates, and this typically varies from 1.5% to 3.5%. We will use the average of these two numbers of 2.5%.
According to the Board of Governors of the Federal Reserve System, 74.25% of all transactions used a credit card in 2020. We will use this percentage to calculate this cost.
To calculate this cost we will need to apply the 2.5% to the cost of 74.25% of the services purchased, then add that total amount to the break-even calculation. The additional amount is $1,258.99.
775.15 x .7425 = 575.54 service hours
575.54 x $87.50 = $50,359.75
$50,359.75 x.025 = $1,258.99 in credit card fees
To pay for the service fees it will require an additional 28.6 hours of massage. To keep this calculation simple, we will ignore the service fee for these transactions. The total number of massage-hours required to break-even becomes 803.75.
775.15 + 28.6 = 803.75 massage hours per month.
Let’s give that a moment to sink in. In order for the company to break-even our imaginary facility would have to sell 803.75 massage-hours a month.
If the company had 10 LMTs, each service provider would need to perform 18.49 massage-hours a week to break-even.
803.75 service hours ÷ 10 LMTs = 80.375
80.375 hours ÷ 4.345 weeks = 18.49 massages
Imagine how frustrating it would feel to generate $70,328.12 in one month without generating a single penny of profit.
803.75 × $87.50 = $70,328.12 a month
Imagine taking out a loan for $250,000, building a business from nothing, and then collecting a $20 an hour pay check.
Take a moment to actually see this from someone else’s eyes. Empathize with them and filter your feelings through love. Once you have done this you can begin your search to see where you can wedge in a raise and substantiate the increased cost for your employer.
You must offer something more than those around you. How do you make your employer’s life easier? What do you bring to the table (other than massage) that indicates you should be paid more? It is a delicate dance of showing your value, energy, and significance, while being empathetic, humble, and creative.
When working for an LMT owned facility there will be more wiggle room. The primary reason is because their break-even point is typically lower than a franchise.
Franchises often have a massive overhead. Many massage therapists do not realize the chains pay a considerable share of their gross revenue to the corporate office. This gross franchise fee can be as high as 16% but are typically no lower than 12%. We will use the average of 14% when analyzing their business model.
Once again take a moment to empathize with the owners of these franchise facilities. Many of the owners are less-than stellar leaders, but there are some who are loving and caring. They want to make things right but are being crushed under the weight of the monolithic entities they are contractually bound to. Sure, they chose their situation, but so did you. Just because we make a mistake doesn’t mean we should be burned at the stake.
Negotiating your wage should be a fair and mutually equitable arrangement. Be honest with yourself about what you need and be firm, humanize your employer and empathize with their professional plight.
A 14% gross franchising fee is an incredible burden, especially in our era of limited LMTs. This equals an additional 112.52 massage hours, to a total of 916.27 hours that must be performed in one month to break-even.
803.75 x .14 = 112.52 massages
112.53 + 803.75 = 916.27 massages per month
916.27 ÷ 10 LMTs = 91.62 massages per LMT
91.62 ÷ 4.345 = 21.08 a week.
Some facilities have resorted to raising their service rates to remain in operation. Many of these businesses did not increase employee pay in the process. Though I believe this was a mistake on their part, it was enacted to save the company. They most likely had to make a choice, go out of business, or reduce morale.
If they increased their service rate by $10, how much of an impact does that make on the break-even calculation? Remember most of these numbers are estimates for an imaginary company. This calculation is a tool, not an absolute.
The gross revenue using the 916.27 massage-hour model equals $9,162.70 per month.
$10.00 × 916.27 massages = $9,162.70
Now we need to calculate credit card fees. This brings the gross profit down to $8,992.62.
$916.27 × .7425 = 680.33 services w credit card fees.
680.33 × $10 = $6,803.30
$6,803.30 × .025 credit card fees = $170.08
Now let’s calculate the imaginary company’s franchise fee.
$9,162.70 × .14 = $1,282.77
$8,992.62 – $1,282.77 = $7,709.85 estimated net profit.
Keeping with the imaginary franchise model lets pause, reflect, and empathize with them. The owners have invested their life savings into their facility, they work 60+ hours a week (even if you don’t see them), they probably have their personal assets tied to the business loan and pay themselves $20 an hour for only 40-hours of income.
After investing so much and having no traction for years how eager would they be to split that new revenue with their team? If you invested everything into something, wouldn’t you hope to be rewarded for your hard work?
$7,709.85 is a lot of money, but imagine having a company generate $89,336.32 a month in revenue and only profit $7,709.85. We haven’t even calculated the taxes they will pay on this revenue.
Is there any room to give you a raise? I think there is, but I operate with the belief that LMTs should be paid more than $21.57 per service hour. Truly any W2 massage therapist making less than $27 per service hour is making too little.
If the imaginary massage company increases every employee’s wage by a single dollar this reduces their net profit by $1,072.03 (after payroll taxes) per month. When you are negotiating a pay raise consider this. Think about how your request may impact the survivability of your company.
When your employer tells you they cannot afford to give you a raise they are probably telling you the truth, especially if they only have 10 LMTs.
Introduction to the mind of an owner
At this point we need to dive a little deeper into the mind of the owner, and the trends of the massage industry. The first factor we need to consider is the expected washout rate for all first year LMTs based solely on the projected MBLEX pass rate of 67%. This means the employer will expect to lose 33% of every first year LMT on their team in 12-months. This danger may be bypassed if the employer invests in the academic ability of new LMTs, but this will require additional time and resources.
Additionally new LMTs will wash out within the first 4-12 months due to injury and burnout. An LMT owned, or caring leadership team can mitigate this by properly investing in each new massage therapist, but this too requires time and resources.
In my observation I find that LMTs wash out of the industry at a rate of 50% at one year, 70% at three years, and 90% at seven years. Every effective business owner is aware of the washout rate of our industry, and they take that into account when planning for the future.
When you approach your company for a raise this too should be calculated in your proposal. What is your long-term viability? Are you someone they can invest in? Do you enjoy working for the company?
I reduce burnout and injury within my facility by running weekly classes, encouraging my staff, offering them massages when they are tired, and guiding them toward their professional passions. I am different than most, but I am not the only one offering my arm to those who are hurt, tired, and are about to break. If you know anyone else who wants to help our professional peers thrive, send them my way.
*How much influence do we have over the owners?
When a large LMT owned massage facility, or a medium to large franchise owned facility has ten or fewer LMTs the company enters the danger zone. This may have a profound impact on how leadership interacts with service providers and willingness to negotiate with new and established LMTs.
When a service provider approaches them for a raise, they will typically ask themselves the following two questions:
“Can I afford to pay them more?”
“Can I afford to lose this LMT if I do not give them a raise?”
When a massage facility has fewer massage therapists it increases the influence and power each practitioner has. This is valuable information to know because it may allow you greater leverage when negotiating with management. However, it comes with a cost. In the eyes of management their employees have a certain degree of professional equity. The more this is tapped into the less valuable you become in their eyes. This is just human nature. People tend to prefer being around those who enrich their life and avoid those who irritate them.
Now let’s explore your current rate of pay
- Other than massage, what do you actively contribute to the spa’s success?
- Are you liking, sharing, and commenting on your employer’s social media posts?
- Do you find your own clientele to bring into the spa?
- How many new ideas have you offered, and how many have you created and implemented?
- Do you raise the spirits of those around you?
- How often to you offer and run training classes for other LMTs?
- Do you foster a harmonious relationship between the receptionists and the service providers?
- Are you a team player?
- Do you refrain from gossip?
- Do you come to work on time with a clean uniform and a presentable appearance?
These are just a handful of questions you should be asking yourself. Search inwardly, critically assess your value and create a mutually equitable arrangement. If you are empathetic, humble, and creatively navigate the negotiation you may receive everything you asked for and more.
Small LMT owned massage facility break-even analysis
We will use the same basic calculation from the prior two models to ensure we are comparing apples-to-apples for a small LMT owned massage facility. $87.50 massage price, $21.57 pay per service hour ($25.23 owner’s cost), and $6 for linen cleaning and resource consumption. These calculations with represent a gross profit of $44.02 per massage hour.
Now we will determine monthly expenses. Our imaginary LMT owned multi-therapist facility will have 4 treatment rooms with an estimated lease of $1,500. We will include $250 for CAM/NNN. $1000 for local marketing. $600 for phone, utilities, internet, software, insurance, and miscellaneous expenses. CPA expenses $500.
$1,500 + $250 + $1,000 + $600 + $500 = $3,850
Many facilities of this size rarely have a build-out cost due to the availability of awkwardly shaped office spaces, but equipment will still need to be purchased. Most facilities of this size will use portable massage tables and minimal equipment. The total cost for this could be from $5,000 – $10,000. For the sake of this calculation, we will assume the LMT saved up to purchase these items without a business loan. At this point the monthly total will come to $3,850.
Even a small business like this needs to have someone answer the phones. However, the hours of operation will be fewer than the larger models. This facility will be open for 10-hours, from 10 am to 8 pm. This will cost the spa $4,270.51 in fixed labor costs per month.
10 hours x 7 days = 70 hours per week
70 hours x $12 = $840.00 per week
$2,016 × 52.143 weeks = $43,800.12 a year
$43,800.12 ÷ 12 months = $3,650.01 a month
$3,650.01 a month x 1.17 = $4,270.51 labor costs per month.
Adding these two fixed costs bring the total to $8,120.51 per month.
$4,270.51 + $3,850 = $8,120.51 per month.
The owner in this model is a massage therapist, so they will pay themselves based on the number of massage services hours they work per month.
To determine the break-even mark for this company model we will divide $8,120.51 by $44.02. The total will come to 184.47 massages per month. However, we will still need to add credit card transaction fees to the total.
To calculate this cost, we will need to apply the 2.5% to the cost of 74.25% of the services purchased with credit cards, then add that total amount to the break-even calculation. The additional amount is $299.60 in credit card fees.
184.47 x .7425 = 136.96 service hours
136.96 x $87.50 = $11,984.00
$11,984.00 x.025 = $299.60 in credit card fees
$299.60 ÷ $44.02 = 6.8 service hours.
To pay for the service fees it will require an additional 6.8 hours of massage. To keep this calculation simple, we will ignore the service fee for these transactions. The total number of massage-hours required to break-even becomes 143.76.
136.96 + 6.8 = 143.76 massage hours per month.
If this were a single LMT operated business the calculations would be further adjusted by the following modifications.
We will change the monthly expenses by reducing the lease to $400. Reduce local marketing to $400, and $400 for phone, utilities, internet, software, insurance, and miscellaneous expenses. The estimated break-even calculation comes to $1,700 per month.
$400 + $400 + $400 + $500 = $1,700 per month.
$1,700 break-even ÷ $44.02 per massage hour = 38.61 massage hours per month.
After calculating credit card fees, the total becomes $62.69 in fees or an additional 1.42 massage hours per month. This brings the monthly break-even cost to 40.03 massages per month.
38.61 x .7425 = 28.66 service hours
28.66 x $87.50 = $2,507.75
$2,507.75 x.025 = $62.69 in credit card fees
$62.69 ÷ $44.02 = 1.42 service hours.
1.42 + 38.61 = 40.03 service hours per month.
40.03 massages ÷ 4.345 weeks = 9.21 massages a week.
Remember, this calculation is to simply break-even. This is not enough to generate even a single penny of profit.
Silver Spoon Agreement Conclusion
The Silver Spoon Agreement waves the costs and quality of life reduction of running your own business, but it comes with a cost. They will feed you a steady flow of clients to massage, but you may have to give up your hopes and dreams as an LMT.
What is the cost? You will effectively work 9.21 massage hours per week to pay for this agreement.
Another way of thinking about this is you are roughly paying your employers $2,507.75 a month to enjoy clocking in, performing your massages and leaving without hunting for a single client. This calculation includes the time it takes to perform the unpaid administrative duties, pay for the facility, overhead, and attract clientele.
Consider these factors when negotiating a higher rate of pay, selecting your place of employment, or opening your own facility.
*Disclaimer: These estimates do not represent any specific businesses. They are estimate and an instructional tool designed to help students and licensed massage therapists navigate their massage career.
