Full Episode Transcript

Great Modality, Bad Business? How to Know If a Wellness Modality Will Actually Make You Money

Welcome to the Wellness Means Business podcast for entrepreneurs in the fitness and wellness space.

If you want to discover new opportunities, implement them successfully, and grow your business while helping more people achieve optimal health, you're in the right place.

My name is Casey Conrad, your host, and in today's episode we're going to talk about one of my favorite topics—money.

Specifically, can a wellness modality make you money?

In the last episode, I gave you seven things I want you to consider before making that decision:

Who is it for?

What problem does it solve?

What are the space and operational considerations?

What are the staffing demands?

What are the liability issues?

Does it fit your existing business and brand?

And can you test it before committing?

I told you: Don't fall in love with the modality, because a great modality is not necessarily a great business opportunity.

So today, we're going to take off our wellness hats for a few minutes and put on our business hats.

Because this is Wellness Means Business.

Let's dig into how you evaluate whether or not you can actually make money with the modality.

1. Know the Real Investment

Don't just look at the sticker price.

There can be wildly different investment levels even within the same general category.

In Beyond Reps, I used recovery as an example.

You could have something around the level of a $200 Theragun, roughly $2,500 air-recovery wearables, or something like a $7,000 4-D massage chair.

All of those can fit under the broad umbrella of "recovery," but they're completely different in terms of investment, customer experience, space requirements, staffing, potential price point, customer perception, throughput and revenue potential.

The purchase price isn't the investment.

You also need to add in things like shipping, installation, training, maintenance, warranty or service contracts, financing costs and interest, build-out, electrical, plumbing or HVAC requirements if applicable, software subscriptions, licensing fees, consumables, laundry, cleaning and sanitation, insurance implications and staff time.

And don't forget opportunity cost.

What else could you do with that same $10,000, $20,000 or $50,000?

Is this the best use of your available capital?

Could that money produce a better return somewhere else in the business?

I'm not trying to spook you out here. It's just that the number on the invoice is not necessarily the number you're investing.

Start with your budget and work backwards, ensuring you've thought through the entire scope.

2. Decide How You're Going to Make Money—Before You Buy It

Now we're getting into the meat of Wellness Means Business.

You must decide the business model first after running the numbers.

There are lots of possible revenue models.

You could offer the modality à la carte, through packages or bundles, as part of flat-fee recovery or wellness-room access, through a monthly recurring membership or a premium VIP membership tier.

It might be included in certain programs, offered as an add-on to an existing service, made available to non-members or the general public, incorporated into corporate or employer wellness programs, or used through practitioner or referral relationships.

Ask yourself:

What will I charge?

How often should someone reasonably use it?

How frequently will someone realistically use it?

Can it create recurring revenue?

Can it increase average customer value?

Can it increase retention?

Can it attract people who aren't currently customers?

Can it create an upgrade opportunity for existing customers?

Could it serve as an entry point into other products or services?

There's also an important distinction between direct and indirect revenue.

A modality doesn't necessarily have to make all of its money from session fees.

It might bring a new person through the door, differentiate you from competitors, increase membership retention, help sell a higher-tier membership, create referrals or introduce someone to other services.

Now, let me be clear.

Don't use "it helps retention" as an excuse for not knowing whether it's actually producing value.

You still need a way to measure that.

And this is where doing some research is important.

Ask the seller how they've seen other similar businesses monetize the item. Get names if possible and call them. Ask lots of questions.

Go visit another business or facility that has it.

The distinctions you'll uncover with boots on the ground can be profound.

And if a seller or manufacturer can't help you answer those questions, be wary.

3. Understand Capacity and Throughput

This deserves its own section because it can completely change the economics.

Ask:

How long is each session?

How much turnaround time is required?

How many sessions can realistically happen per hour?

How many hours per day is it available?

Can multiple people use it simultaneously?

Does someone have to supervise it?

Does staff need to set it up between customers?

Can the customer operate it independently?

Does cleaning or resetting create downtime?

Let's compare two hypothetical modalities.

Modality A is a $20 session that takes 15 minutes with minimal staff involvement.

Modality B is a $50 session that takes 60 minutes and requires staff setup and cleanup.

The $50 service initially sounds more profitable.

It may not be.

Price per session means very little without understanding revenue per available hour.

4. Know Your Variable Cost Per Session

This is one of the easiest things to overlook.

For every session sold, does something else get consumed?

Think about disposable supplies, supplements, gels, linens, laundry, cleaning products, replacement components, staff labor and merchant or credit-card fees.

If you charge $40 for a session, that doesn't mean you made $40.

Know your formula:

Revenue per session – variable cost = margin.

That margin is what actually helps pay back your investment and eventually generate profit.

5. Do the Math—and Don't Confuse Revenue With Profit

You would think that having passed a margin question, we're a go.

But that's not the case.

Now we can actually run the numbers.

You need to know your total upfront investment, fixed monthly expenses, variable cost per session, realistic selling price, capacity, expected utilization, margin, break-even point and a reasonable payback period.

And run multiple scenarios.

Don't create one beautiful spreadsheet where everything goes according to plan.

Run at least a conservative scenario, a realistic scenario and an aggressive scenario.

Then ask the uncomfortable question:

What happens if utilization is half of what I'm projecting?

Because sales projections can look fantastic on paper.

Reality is what happens Tuesday afternoon at 2:00 when nobody is booked.

Another number worth knowing is:

How many sales do I need every month just to cover the payment and operating costs?

Turn break-even into something tangible.

Instead of saying, "I need $3,000 a month," think:

"I need 75 $40 sessions every month before this thing contributes one dollar toward profit."

That's a much more useful number.

The moral of the story here is that revenue is interesting, but profit is what we're actually after.

6. Don't Forget Customer Acquisition

A spreadsheet often assumes:

Customer exists → customer buys session.

But how did that customer get there?

Ask yourself:

Is this primarily for existing customers?

Or am I counting on attracting new customers?

If new customers are part of the model, how will I reach them?

What will that marketing cost?

Will I need paid advertising? Events? Introductory offers? Staff sales incentives? Referral partnerships? Community outreach?

If you're spending $50 to acquire someone who buys one $30 session and never comes back, you've got a problem.

Which leads to the more important question:

What's the lifetime value of the customer this modality can create?

If a $29 introductory experience ultimately creates a $1,500 annual customer, that's an entirely different business model.

I'm sure your head is spinning at this point, but this is a business, and you need to make decisions like a business.

7. Ask Who Is Going to Sell It

This may be one of the biggest hidden differences between a spreadsheet and reality.

Wellness modalities don't sell themselves.

In fact, I've had clients who did all the right analysis, and then their staff literally killed the launch because the head trainer didn't believe in the technology.

Big problem.

Ask yourself:

Who introduces customers to it?

Who explains the benefit?

Who recommends frequency?

Who follows up?

Who asks them to buy the package or upgrade?

Is your staff comfortable talking about it?

Do they understand it?

Do they believe in it?

Is there a sales process?

You can have the greatest modality in the world sitting in an empty room.

We can have the best plans in the world, but unless someone is doing the selling, it's not going to fly.

8. Validate Before You Scale

Whenever possible, talk to businesses already using the modality.

Ask for actual utilization numbers—not just testimonials.

Ask what they charge.

Ask how long it took them to build demand.

Ask what surprised them.

Ask what they would do differently.

Ask whether they would buy it again.

And if possible, demo it. Presell it. Survey customers. Run a limited test.

Start with one unit before buying five.

One of my favorite questions is:

"If you were starting over today, would you make this investment again?"

You'll learn a lot from the pause before they answer.

You've now got the full checklist between Episode 2 and this one.

Today we discussed:

What's my real investment?

What's my business model?

What's my capacity?

What's my actual margin?

What's my break-even point?

How much utilization do I realistically need?

What's it going to cost me to acquire the customer?

Who is going to sell it?

And ultimately, what does this investment need to do to earn its place in my business?

Because there's a big difference between owning great wellness technology and building a profitable wellness business.

And that's really what this podcast is about.

I want you to bring wellness into your business and find products, programs and modalities that can genuinely improve people's lives.

But I also want you to make money doing it.

So don't fall in love with the modality.

Fall in love with the customer problem.

The solution.

The customer experience.

And the business model.

If you follow that recipe, you will go out and make a difference and make a profit.

Remember—Wellness Means Business.

Until next time, this is Casey Conrad.