Cost Center

What the Cost Center answers

The Cost Center answers three questions about a single location. What does it cost to keep the doors open for a month? How much revenue does it take to cover that? And of the cost you are carrying, how much is buying you something and how much is sitting idle?

It is a cost and capacity view, not a revenue report. Financials tells you what came in. Profitability tells you which services and providers earned it. The Cost Center starts from the cost side and works toward the revenue needed to justify it.

The cost basis, and why it may not match your date picker

At the top of the page you will see a line like this:

Cost basis: Trailing 90 days (90 days, 463 completed appointments)

That is the window used for the main cost, margin, break even, capacity and provider economics figures. It is not always the window in the date picker. The Trend and variance section is the exception. It uses trailing calendar months through today so you can see whether cost is drifting over time.

Monthly figures are produced by scaling a window up to an average month of 30.4375 days. A six day window has to be multiplied by roughly five to reach a month, so two quiet days would swing the headline cost badly. When your selection is shorter than 21 days, the page widens the cost basis to a trailing 90 days and tells you it did. Anything 21 days or longer is used as selected.

This is the one place where the page deliberately ignores your input, so it always explains itself when it does.

Reading the confidence header

Four percentages sit to the right of the cost basis. They describe how much to trust the numbers below. None of them describe how the business is doing. A struggling clinic with clean data scores well on all four.

Revenue with a provider is the one to watch. Revenue that has no provider attached carries no labor cost, so its margin reads high and provider utilization reads low. If that number is 80%, then a fifth of your revenue is being treated as though it took nobody's time to produce.

Cost from records distinguishes between costs the system derives and costs you enter. Provider payroll built from the people table, product cost from recipes multiplied by real volume, equipment from equipment records and payment fees from actual payments all count as from records. Rent, insurance, utilities and software are typed. A typed figure is not wrong. It just cannot correct itself when reality moves, so it goes stale quietly.

Below the percentages, the page lists specific issues it found. Items marked Fix are blocking and mean something downstream is wrong until you address them. Items marked Check are worth confirming. Items marked Note are disclosures rather than problems.

What this location costs

Operating cost and cash requirement

These two numbers differ on purpose.

Operating cost is every expense involved in running the location for a month. It excludes loan principal and owner distributions, because neither is an operating expense. This is the figure that belongs in a margin calculation.

Cash requirement adds debt service and owner draw back in. Those are real money leaving the bank account even though they are not expenses, and the business still has to produce enough to cover them.

A location can be profitable on an operating basis and still shrink its bank balance every month. Keeping the two separate is what makes that visible.

EBITDA

Recognized revenue minus operating cost, before debt service and owner compensation. The percentage beneath it is that figure as a share of revenue.

Recognized revenue and what is left out

Revenue here means money earned because a service was delivered, a product was sold or a cancellation or no-show fee was charged. Work that was delivered counts whether or not it has been paid yet; the unpaid part is a receivable, not missing revenue. Three things are deliberately excluded.

Gift card sales, membership sales and package sales are cash you collected against a service you still owe. They appear separately as deferred sales cash: what clients actually paid for those sales, by the day they paid. Deferred sales billed is what those sales were invoiced for, paid or not. Counting either as revenue would make a location look profitable while it is really borrowing against future capacity.

Fully refunded invoices are removed from revenue. Their cost stays, because the product was still consumed and the provider still spent the time. A partial refund with a recorded amount comes off revenue when the refund happens.

Tips and tax never appear. Neither is yours.

This is the same definition used on Financials, Profitability, the Dashboard and Forecasting, so those pages agree on revenue for the same dates. Cancellation and no-show fees are shown as fee revenue, never as retail, and are never costed as a treatment.

Contribution margin

The share of each revenue dollar left after the costs that only exist because a service was sold. Those are products, commission and other per service pay, and payment processing fees.

Contribution is what every additional appointment leaves behind to pay down fixed cost. It drives break-even and operating leverage, so it is worth understanding before either of those.

Cost per delivered room hour

Operating cost divided by the treatment room hours that actually produced revenue. Next to it is cost per available hour, which uses every open room hour whether or not it sold.

The gap between the two is the price of empty rooms. At high utilization they converge. At low utilization the delivered figure climbs sharply, because the same fixed cost is being carried by fewer productive hours.

Cost structure

The page splits cost three ways.

Fixed cost is committed monthly whether or not a client books. Variable cost only exists because a service was sold. Non-operating cash is real money out that is not an expense, which currently means debt service and owner draw.

The fixed and variable split is not cosmetic. Break-even and operating leverage are both meaningless without it, because both depend on knowing which costs move with volume.

Which providers carry a committed cost

A provider carries committed pay only when you owe them whether or not a client books.

Hourly and salaried people are owed their pay on a quiet day. The other three are not, so their entire cost is variable. That has a consequence worth knowing: moving a provider onto commission or a flat fee lowers your break-even rather than raising it, because it moves cost out of the fixed base and into the part that only occurs when you sell something.

Committed pay is counted once, in full. The portion absorbed by delivered services is reported separately under capacity as a disclosure, never added to the total a second time.

Rostered hours against bookable hours

These are different numbers and the page keeps them apart.

Rostered hours are what the payslip covers. An hourly provider rostered for 32 hours is paid for 32 hours even if only 24 of them can hold a client. Committed payroll is calculated from rostered hours.

Bookable hours are the hours available for client work, after admin, turnover and breaks. They are the denominator that spreads committed cost across the services that consumed it, and the denominator utilization is measured against.

The practical consequence: lowering someone's bookable hours raises the cost charged to each service without changing what that person is paid. It does not save money. It concentrates the same money into fewer treatments.

A salaried provider with no roster on file is assumed to work a standard 40 hour week for the hourly equivalent. A configured bookable week overrides that.

Capacity and idle cost

A medspa sells room time and provider time. Everything you do not sell, you still pay for. This section puts a dollar figure on what went unsold.

These figures overlap on purpose. Each views the same idle cost through a different lens, so adding them together double counts.

Practical capacity and why overhead goes unabsorbed

No treatment room is busy every minute the doors are open. Allocating overhead as though it were would spread the cost too thinly and make every service margin look better than it is.

The page allocates overhead across practical capacity, which defaults to 85% of open room minutes. Whatever is not absorbed at that rate is reported as unabsorbed overhead rather than quietly disappearing into service margins. Financials, Profitability, Forecasting and the Allocation Rules preview use the same 85% and treat the same kinds of cost as overhead: rent, plus utilities, insurance, cleaning, software, other overhead and the pay of staff who do not treat clients. Marketing and equipment are never spread as overhead.

If unabsorbed overhead is large, the cause is usually low utilization rather than high overhead. Check room utilization before deciding rent is the problem.

Reading low room utilization

Low room utilization is not automatically a room problem. Provider hours are frequently the real constraint.

Consider a location with three treatment rooms open 234 hours a month, giving 702 available room hours, and three part time providers scheduled for 277 hours between them. Even if every provider hour sold, room utilization could not exceed about 39%. The rooms are not underused so much as overbuilt relative to the staff available to fill them.

Compare room utilization against provider utilization before acting. If provider utilization is high and room utilization is low, you have more rooms than you need. If both are low, the constraint is demand.

Break-even

Break-even is fixed cost divided by contribution margin. It is not total cost divided by revenue per appointment.

The difference matters. Adding an appointment adds its own variable cost, so only the contribution it leaves behind pays down fixed cost. The simpler formula is only correct at exactly break-even. Above it, it overstates the volume you need. Below it, which is precisely when the number matters, it understates it.

The page shows two versions.

Operating break-even covers operating cost. Cash break-even also covers debt service and owner draw, which is the number that determines whether the bank balance grows.

Alongside them, the appointments needed per working day and your current pace are both expressed per working day so they are directly comparable. The sentence underneath tells you which working day of the month the location covers its operating cost. If the current pace does not cover cost within the month at all, it says so and reports the daily appointment gap instead of printing a day number beyond the end of the month.

Break-even volume here is appointments: the appointments linked to recognized revenue, with revenue per appointment as all recognized revenue divided by those appointments, so retail attached to a visit is included. That is not the average ticket. The average ticket in the monthly trend and comparisons is recognized revenue per revenue-generating invoice, the same figure Financials shows.

When variable cost per appointment is at or above revenue per appointment, break-even cannot be calculated. More volume would increase the loss. The page says so rather than showing a number, and the fix is pricing, product cost or provider pay before it is volume.

Where the money goes

A waterfall from recognized revenue down to EBITDA, in the order costs actually hit.

Variable costs come out first, giving contribution. Fixed costs come out next, giving EBITDA. If debt service or owner draw exist, they come out last to give net cash after distributions.

Each row shows its share of revenue, so a category that looks small in dollars but large as a share of revenue is easy to spot.

Cost ratios and reference bands

Dollars are not comparable across locations. A ratio is.

Each row shows a cost as a share of recognized revenue against a reference band drawn from typical aesthetics practices. The green stripe is the band and the marker is where this location sits.

These bands are directional industry ranges, not rules and not your targets. Where a band is wrong for your business, set your own figure in Business Targets and use that instead.

Every band is a percentage of revenue, so an unusual revenue month pushes several bands at once. If most rows suddenly read above band, check revenue before concluding you have several cost problems.

Sitting outside a band is a question rather than a verdict. An injectable heavy clinic genuinely runs product cost above the band, because toxin carries roughly 45% product cost. That is a service mix fact, not a purchasing failure.

Total operating cost and EBITDA margin are exact complements and always flag together. They are one finding shown as cost and as profit.

Cost categories

Every operating category and what drives it. The rows sum exactly to monthly operating cost, and the percentage column sums to 100%.

Non-operating rows are listed separately below the total, because they are cash out rather than expense. The cash requirement line at the bottom includes them.

Each category carries a type. Fixed is committed monthly. Variable moves with volume. Mixed contains both, which currently applies to provider compensation, since it holds committed base pay alongside commission that only exists when a service sells.

The Edit link on each row opens the setup screen where that cost is maintained.

Trend and variance

Trend and variance is separate from the cost basis at the top of the page. It always looks at trailing calendar months through today, even when the rest of the page is using a custom cost basis.

Each month in the table carries the fixed commitments that were in force that month: a cost, person or device you retired still counts for the months before you retired it, and each month carries its own campaign spend. These are the same commitments the Financials page charges to that month. Nabu does not record when a cost or person started, so something you add today also counts in the earlier months shown. Months with no sales data are labeled. So are months where the location's history begins partway through, since a partial first month otherwise reads as a collapse.

Variance compares the two most recent complete months that both have sales data, and names them in the card heading so you always know what is being compared. A line is flagged as material when it moves more than 10% or more than $2,500. The threshold is deliberately generous. Flagging everything trains people to ignore the flags.

Across your locations

The same ratios for every location in the organization, calculated on the same cost basis with the same definitions.

This is where dollars become comparable. A location running products at 22% against a group median of 14% is visible immediately, and the gap between them is recoverable margin.

Provider economics

Provider pay is usually the largest controllable cost in the business, and the one most often renegotiated with the least data.

Three gaps are visible in these numbers, and they mean different things. Paid hours minus bookable hours is time you deliberately do not sell. Bookable hours minus delivered hours is capacity you tried to sell and did not. Revenue per delivered hour reflects pricing and service mix rather than either.

Comp as a share of provider revenue is the figure to negotiate against. Note that its denominator is service revenue with a provider attached, which is why it differs slightly from the provider compensation cost ratio, which uses all recognized revenue including retail.

Hourly providers with no roster on file are flagged, because rate times zero hours is no payroll at all. Salaried providers are not flagged: their pay does not depend on hours, and a missing roster falls back to a standard full-time week for the absorption rate. Commission-only, flat fee and per unit providers are never flagged, since hours do not enter their cost.

What to put in the room

Services ranked by contribution per hour of treatment room time.

Ranking by margin percentage drives the wrong scheduling decision. A high margin service that occupies a room for 90 minutes can be worth less than a lower margin service that turns the room over in 30. Room time is the constrained resource, so contribution per hour of it is the number to schedule against.

Services that were actually delivered are ranked on what they really earned and labeled actual. Services with no volume in the window fall back to list price and are labeled accordingly, because a list price figure is a ceiling rather than a result. Delivered services always rank above list price ones. A service sold by quantity (see Service cost allocation below) has no list price for a whole treatment, so it is ranked only once it has been delivered.

Contribution in both columns is price less the costs the treatment itself causes: products, commission and per-service pay, and card fees. Base pay and device time are owed whether or not the treatment happens, so they appear in margin after overhead, not here.

A device costed per treatment carries its cost for the period divided by the treatments it was used for in the period, a membership benefit visit included. A device costed by time is charged here at its cost per minute of practical capacity. If a service is marked as needing no device, no device is charged to it, even if one is still mapped.

Service delivery margin against the unweighted average

Two margin figures appear side by side, and they usually disagree.

Service delivery margin is the contribution of the services you delivered divided by their revenue. It accounts for how often each service actually sells. It covers services only, so it differs from the contribution margin on Financials, which also carries retail, cancellation fees and the cost of membership benefit visits.

The unweighted average is the plain mean of every service's margin percentage. A service sold by quantity has no treatment margin, so it is left out. It counts a $50 add on the same as a $900 laser treatment. It is shown only as a contrast, and when the two diverge sharply, the unweighted figure is the one to distrust.

Rows marked with an asterisk have product or labor cost missing. Their contribution is a ceiling rather than a result, since a treatment with real product cost will always look highly profitable until that cost is entered. A service counts as having product cost only when every product it uses has a cost and a quantity Nabu can cost, or when it carries a manual product cost ($0 if it truly uses none).

Operating leverage

This business carries high fixed cost and high contribution margin, which means profit moves much harder than revenue does.

Fixed cost per appointment falls as volume rises. It is not a cost the appointment causes.

The two sensitivity figures show what a 10% move in volume does to monthly EBITDA at the current mix and pricing. Because fixed cost is already paid, nearly the entire contribution on incremental volume drops to the bottom line. This is why filling the schedule usually beats cutting cost. The same leverage works in reverse, which is why a soft month costs more than it looks like it should.

Degree of operating leverage expresses this as a multiple. At 6x, a 1% revenue move swings EBITDA by roughly 6%. It is only defined above break-even, where EBITDA is positive, and the page withholds it below that rather than printing a meaningless negative.

Service cost allocation

The full cost stack for every service: price, labor, products, equipment, room time, allocated overhead and payment fees.

Expanding a row shows how each component was derived, including the provider whose rate was used, the consumable quantities and unit costs, the equipment allocation method, and the overhead denominator.

Margin here is calculated against list price at full volume rather than against actual sold revenue. For realized margin after discounts and actual booking volume, use Profitability.

Services sold by quantity

A service that declares a service unit, or is priced per unit or per syringe, is sold by quantity: each sale states how many units were delivered. Its list price is the price of one unit, so it cannot be set against the costs a whole treatment carries to give a treatment margin. Nabu does not assume a quantity for it, not a default number of units and not an average.

For such a service the table shows its unit economics instead: the price per unit, the product cost per unit (what one delivered unit consumes, at each requirement's default product), and commission per unit. Costs a treatment carries whatever its quantity (provider time, products used once per treatment, a manual product estimate, room, overhead and device) stay per treatment and are never divided into units. Payment fees follow the charge, so they appear in neither figure. Net profit and margin read "Depends on quantity", and the status reads Variable quantity rather than Healthy, Low Margin or Losing Money. Realized profitability, on Profitability and Financials, uses the quantities actually delivered on completed treatments.

Where the numbers come from

Every figure resolves back to the database. Nothing on the page is a stored snapshot.

Common questions

Why does the page say trailing 90 days when I selected Month to Date? Your selection was shorter than 21 days. Scaling a very short window to a full month multiplies the noise in it, so the page widens the basis and says so. Select 21 days or more and your range is used as chosen.

Why is some provider pay fixed and some variable? Hourly and salaried people are owed their pay whether or not a client books, so that pay is committed. Commission-only, flat fee per service and per unit providers earn only when a service sells, so they carry no committed cost at all and their whole cost is variable.

Why did committed payroll go up when nothing about my team changed? Hourly pay is calculated from rostered hours rather than bookable hours. A provider rostered 32 hours with 24 bookable is paid for 32. The earlier figure understated payroll by the difference.

Does reducing someone's bookable hours save money? No. It raises the cost charged to each service, because the same committed pay is spread across fewer treatments. What that person is paid does not change.

My cash requirement is much larger than my operating cost. Why? Debt service and owner draw are included in cash requirement and excluded from operating cost. If the gap looks implausible, check whether a loan balance was entered where a monthly payment belongs. The page flags this when debt service exceeds total operating cost.

Why is my products percentage above the band? Service mix is the usual reason. Toxin carries roughly 45% product cost, so an injectable heavy clinic sits above a band built for a general practice. Confirm your unit costs and units per treatment are right, then judge the number against your own mix.

Room utilization looks terrible. Do I have too many rooms? Compare it against provider utilization first. If provider utilization is healthy and room utilization is low, you have more rooms than staff to fill them. If both are low, the constraint is demand.

The margins on my services look too good. Check the services fully costed figure in the header and look for asterisked rows in the ranking. A service with no product cost mapped will always look highly profitable. Unmapped cost does not make a service cheap, it makes it unmeasured.

Why do two similar numbers disagree slightly? Some metrics use different denominators on purpose. Comp as a share of provider revenue uses service revenue with a provider attached. The provider compensation cost ratio uses all recognized revenue including retail. Each tooltip states its own basis.

Nothing on the page has revenue figures. The window contains no completed appointments and no recognized revenue. Cost commitments are still real and still shown, but every revenue, margin, utilization and break-even figure is unavailable until sales data is connected. The header will show this as a blocking issue.

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Profitability

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