Are you struggling to make your marketing profitable?
Wondering why your medspa’s Google Ads or Meta campaigns aren’t delivering the results your competitors seem to get?
Let’s dig into a business superpower you might be missing: unit economics.
Table of Contents
- What Are Unit Economics (And Why Should You Care?)
- The Real Reason Your Marketing Might Be Stuck
- Breaking Down Unit Economics for Clinics
- Essential Metrics: The Numbers That Matter Most
- How Unit Economics Drive Campaign Success or Failure
- Case Study: Medspa Google Ads—From Struggle to Scale
- Fixing Common Problems: Real Solutions
- Pro Tips: How We Help Our Partners
- Takeaway Checklist: What to Do Next
- Final Thoughts: Your Next Steps
What Are Unit Economics (And Why Should You Care?)
Unit economics is a fancy term for understanding how much profit you make on every sale or customer, after all your costs.
It’s about answering one simple question:
“For every new patient or client I get, do I actually make money?”
If you run ads on Google, Instagram, or anywhere else, and you don’t know your unit economics, you’re flying blind.
Unit economics is the hidden engine behind why some medspas dominate Google or Meta ads, while others get zero traction.
Why Does This Matter for Clinics?
In cosmetics, customer value, margins, and acquisition costs vary a lot between services like Botox, fillers, facials, laser hair removal, and packages. You can’t afford guesswork.
Great unit economics means you can outbid competitors, scale your campaigns, and grow profitably—without burning through your cash.
The Real Reason Your Marketing Might Be Stuck
You’ve probably wondered:
- Why are some clinics at the top of Google ads all year, while I can’t break into the top 3?
- Why are my leads expensive—or my campaigns unprofitable, even when my ads look great?
- Why is scaling my spend so hard—every extra dollar seems to bring less in return?
It often comes down to this:
Their unit economics are stronger than yours—or they just know their numbers better.
A quick story from my own experience:
When I first started helping medspas with digital marketing, I was shocked.
Sometimes, even with amazing ad copy, landing pages, and targeting, the campaigns still lost money.
It wasn’t the ads. It was the math underneath:
- Low margins on popular treatments
- Expensive customer acquisition
- Weak follow-up or poor conversion
When we fixed the unit economics, everything else fell into place.
Ps. If you would like our aesthetics marketing agency to help your clinic with your numbers don’t hesitate to reach out
3. Breaking Down Unit Economics for Clinics
Let’s keep this simple and practical. Here’s how unit economics looks for your clinic:
Key concepts:
- Average Order Value (AOV): What does the typical client spend per visit or transaction?
- Gross Margin: How much profit is left after you pay your suppliers, staff, and costs?
- Customer Acquisition Cost (CAC): How much do you spend on marketing to bring in a single paying client?
- Lifetime Value (LTV): How much does a client spend with you over their relationship with your clinic?
- Conversion Rates: What % of inquiries or leads actually become paying clients?
Each metric tells you something vital about whether your business can thrive, scale, and win in today’s competitive market.
The Simple Math
Gross Profit per Client = AOV x Gross Margin (%)
Net Profit per Client = Gross Profit – CAC
If Net Profit per Client is positive, your campaigns are scalable. If not, you need to adjust—fast!
Essential Metrics: The Numbers That Matter Most
Let’s break these down with formulas, examples, and benchmarks relevant to clinics and medspas.
A. Average Order Value (AOV)
How much does a client spend on an average visit?
Formula:
AOV = Total Revenue / Number of Transactions
Example:
Last month, you generated $32,000 from 200 transactions:
- AOV = $32,000 / 200 = $160
Why It Matters:
A higher AOV gives you more margin to spend on marketing. If AOV is low (e.g., from single low-cost treatments), your marketing gets squeezed.
B. Gross Margin (%)
How much profit do you keep after direct costs?
Formula:
Gross Margin = (Revenue – Cost of Goods Sold) / Revenue
Example:
- Revenue: $160 (from above)
- Cost of treatment supplies, staff time, disposables: $100
- Gross Margin = ($160 – $100) / $160 = 37.5%
Benchmark:
Most medspas should target 50–70% gross margin depending on service mix.
If you’re below 40%, it’s hard to grow profitably, especially with paid ads.
C. Customer Acquisition Cost (CAC)
How much does it cost to bring in a new paying client?
Formula:
CAC = Total Marketing Spend / Number of New Clients Acquired
Example:
- You spend $2,400 on Google Ads in a month
- 24 new, first-time clients book and show up
- CAC = $2,400 / 24 = $100
Reality Check:
If your average profit per client is $60, but it costs $100 to get them in the door, you’re losing $40 per client (before overheads). Ouch.
D. Lifetime Value (LTV)
How much will a typical client spend with you over their relationship with your clinic?
Formula:
LTV = AOV x Number of Visits per Year x Average Years as a Client x Gross Margin (%)
Example:
- AOV = $160
- Clients visit 3 times per year
- Stay on average 2 years
- Gross Margin = 37.5%
- LTV = $160 x 3 x 2 x 0.375 = $360
Tip:
Many clinics underestimate LTV by only looking at the first transaction. Loyal clients are worth way more.
E. Conversion Rate
What percentage of leads become paying clients?
Formula:
Conversion Rate = Number of Booked Appointments / Number of Leads x 100
Example:
- 40 booked appointments from 100 inquiries = 40% conversion rate
Industry Reality:
- Average is around 20-40%—but top-performing clinics can achieve 50%+ by focusing on fast follow-up and strong sales scripts.
F. Break-even ROAS (Return on Ad Spend)
How much revenue do you need for every dollar spent on ads, just to break even?
Formula:
Break-even ROAS = 1 / Gross Margin (%)
Example:
- If gross margin is 37.5%, Break-even ROAS = 1 / 0.375 = 2.67x (or 267%)
You need $2.67 in revenue for every $1 in ad spend, just to cover direct costs. Profit requires even higher ROAS!
Let’s pause and recap:
If you don’t know these numbers, you’re guessing. But once you do, you’ll see exactly how much you can afford to spend to acquire new clients—and where you might be leaving profit on the table.
How Unit Economics Drive Campaign Success or Failure
Let’s connect the dots: unit economics decides if your ads work.
Scenario A: Healthy Unit Economics
- High AOV (thanks to packages or upsells)
- Strong gross margins (well-managed costs)
- Reasonable CAC (smart, targeted marketing)
- Solid client retention (good LTV)
Result:
You can bid higher for keywords, attract more clients, out-market the competition, and grow profitably.
Scenario B: Poor Unit Economics
- Low AOV (single low-margin treatments)
- High cost of service (expensive products or labor)
- High CAC (inefficient ads, low conversion)
- Weak follow-up (poor retention or rebooking)
Result:
Campaigns are unscalable—raising your budget just loses more money. Your best competitors can afford to outbid you, and your team gets frustrated.
Real Numbers Example
Let’s take this straight from the real-world numbers:
- AOV: $100
- Gross Margin: 40%
- Gross Margin per Client: $40
- CAC (Cost to Acquire a Client): Needs to be below $40 for profitability
- Break-even ROAS: 2.5x (250%)—for every $1 spent on ads, you must get $2.50 in revenue
If your cost per booked client is $50, but your gross profit per client is only $40, every client you acquire loses you $10 before you even pay rent or staff.
This is why having a solid Google Ads strategy for medspas matters – you need campaigns that attract high-value clients, not just cheap clicks.
Table: How Changes Affect Profitability
| Metric | Strong Clinic | Struggling Clinic |
|---|---|---|
| Average Order Value | $250 | $80 |
| Gross Margin (%) | 60% | 25% |
| Gross Margin per Client | $150 | $20 |
| CAC | $80 | $60 |
| Net Profit per Client | $70 | -$40 |
| Break-even ROAS | 1.67x | 4x |
As you can see, a high-margin, high-ticket clinic can outbid, out-market, and outlast weaker competitors—every single time.
Case Study: Medspa Google Ads—From Struggle to Scale
Let’s get practical. Here’s a real example (numbers slightly changed for privacy, but based on true client cases):
Background
- Clinic spent $3,300/month on Google Ads
- Revenue from those ads: $40,200/month
- Gross Margin: 12% (very low, due to heavy discounts and high staff costs)
Result:
- Gross Profit: $4,824
- Subtract ad spend: Net Profit = $1,524
- Contribution Margin: Only 4%!
Despite big revenues, the actual take-home from ads was minimal—one rough month and they’d be in the red.
Why?
- Over-discounting services
- High cost of supplies and labor
- Not enough upselling or cross-selling
- No focus on retaining clients for repeat visits
What Turned It Around?
We worked with them to:
- Raise prices on core treatments
- Create high-margin packages and memberships
- Upskill the front desk to rebook clients before they leave
- Focus on Google Ads for higher-ticket services only
Three months later:
- Gross margin improved to 30%
- CAC dropped by 25% (better targeting and follow-up)
- Break-even ROAS went from 8.3x (!) to a much more realistic 3x
Revenue grew, but profit grew much faster.
Fixing Common Problems: Real Solutions
Problem #1: Low Gross Margins
Common Causes:
- Deep discounts on popular treatments
- Over-staffing or inefficient scheduling
- High product or supply costs
Solutions:
- Focus on high-margin services or combine treatments into profitable packages
- Review supplier contracts and negotiate better deals
- Invest in staff training for efficiency
Problem #2: High Customer Acquisition Cost (CAC)
Common Causes:
- Broad, untargeted ads
- Slow or weak lead follow-up
- Low conversion from inquiry to booked appointment
Solutions:
- Sharpen your ad targeting—focus on your best customer types and local markets
- Increase conversion rates by adding trust signals, testimonials & reviews
- Automate and speed up lead follow-up (text, call, email)
- Use scripts and training for your front desk team to convert more inquiries
- Test different headlines & formulars
Problem #3: Low Average Order Value (AOV)
Common Causes:
- Only selling single treatments
- Missing out on upsells or product sales
- Not offering packages or memberships
Solutions:
- Bundle popular services (e.g., Botox + facial + take-home skincare)
- Train staff to recommend add-ons
- Implement a membership or loyalty program
Problem #4: Poor Conversion Rate from Leads
Common Causes:
- Leads not qualified or not contacted quickly
- Confusing offers or unclear pricing
- Unskilled front desk or sales team
Solutions:
- Pre-qualify leads with online forms (budget, needs, timeline)
- Make pricing clear and transparent
- Role-play booking calls with your team to boost their skills
Problem #5: Weak Client Retention / LTV
Common Causes:
- No rebooking at checkout
- No follow-up for lapsed clients
- No incentives for repeat visits
Solutions:
- Always rebook before the client leaves
- Run reactivation campaigns (texts, emails)
- Offer packages with built-in future visits or member benefits
Pro Tips: How We Help Our Partners
After working with dozens of clinics and medspas, here are some tried-and-true tips that really move the needle:
Know Your Numbers Cold
Before you spend more on ads, calculate your current:
- AOV for each core service
- Gross margin per treatment
- CAC (monthly and by channel)
- Conversion rates at each step (lead → consult → booked → paid)
- Client LTV (segment by service if possible)
Tip: If you need help, ask your agency (that’s us!), your bookkeeper, or just start with a simple spreadsheet.
Fix Your Follow-Up
Speed is everything. We’ve seen clinics double their conversion rate simply by:
- Calling/texting leads within 5 minutes
- Using scripts that focus on empathy and value – scripts built from real voice of customer data perform significantly better because they use language your clients actually relate to, rather than industry jargon they don’t understand.
- Booking directly into the schedule (no “We’ll call you back”)
Focus Ads on High-Margin Services
Not every treatment is worth advertising.
- Calculate the true profit on each service
- Run ads for services with high margins and/or high rebooking rates
- Use packages to raise AOV and lock in repeat business
Leverage Memberships and Packages
Predictable revenue is gold.
- Offer monthly facials, Botox “banks,” or VIP memberships
- Bundle in product sales (retail margin can be >50%!)
Report, Refine, Repeat
You can’t improve what you don’t track.
- Set a time each month to review your numbers—especially CAC, gross margin, and rebooking rates
- Adjust your ad budget to favour the channels and services delivering the most profit, not just the most bookings. For more on this check out our tracking tips article
Don’t Be Afraid to Raise Prices
If your margins are tight, it’s often a sign you need to:
- Review your pricing vs. market rates
- Raise prices on underpriced services, or
- Focus on services where you can command a premium
Ask for Feedback
Your team (and even your clients) can spot margin killers you might miss.
Regular team huddles often turn up big opportunities.
Takeaway Checklist: What to Do Next
Ready to make your marketing dollars work harder? Here’s a checklist you can use this week:
Unit Economics Checklist for Clinics & Medspas
- Calculate your current AOV, gross margin, and CAC
- Map your conversion funnel: inquiry → consult → booking → payment → rebook
- Identify your highest-margin services
- Check your break-even ROAS for paid ads
- Audit your lead follow-up process
- Brainstorm ways to increase AOV (bundles, memberships, upsells)
- Plan a retention campaign to bring back past clients
- Schedule a monthly “numbers meeting” with your team
- Ask your agency or marketing partner for a full funnel report
- Commit to tracking and improving these numbers every month
Final Thoughts: Your Next Steps
We know this can feel like a lot. But knowing your unit economics isn’t just for “big clinics” or MBAs—it’s the foundation of every profitable, growing business.
Here’s the truth:
- If you want to beat your competitors, know your numbers.
- If you want to scale your ads without stress, know your numbers.
- If you want to sleep well at night, knowing every new client is growing your business (not draining it), know your numbers.
We’re here to help.
I’ve worked with many medspas and clinics who started with broken campaigns, low morale, and “marketing doesn’t work for us” stories.
Every time, the breakthrough happened when we got clear on the math—and used those insights to guide our ad strategy.
Your Turn!
What’s your AOV, gross margin, and CAC?
Do you know your break-even ROAS?
What’s your client retention and lifetime value?
If you’re not sure, let’s talk. Reach out for a free strategy session—or just reply with your numbers and I’ll help you walk through them.
Remember: with the right unit economics,
there’s no limit to what your clinic can achieve.
Quick FAQ: Unit Economics for Medspas
- Q: What if my CAC is higher than my profit per client?
A: Your marketing isn’t sustainable—either lower CAC (better ads/follow-up) or increase margin (price, upsells). - Q: How often should I review my numbers?
A: Monthly, at minimum. The best clinics check weekly. - Q: Should I run ads for every service?
A: No! Focus on services with the highest margin and client retention. - Q: My staff doesn’t “sell”—what can I do?
A: Train them in consultative sales, and always script out booking and rebooking calls. It’s not “hard selling”—it’s client care.
Need More Help?
We’re always happy to help medspa owners and teams make sense of their marketing math. Drop us a message for practical, real-world guidance—no jargon, no hype, just numbers that work for your business.
Thanks for reading! Remember, you have the power to change your growth story—one smart decision at a time.