ROI 101

We all make assumptions. That’s OK, because if we always had to explain what a ‘cup’ is, and what ‘coffee’ is we’d never get to meet our friends for a cup of coffee. So assuming some common ground is a basic that we all follow, all the time. Or most of the time anyway.

As the distributor of the Elysion Pro laser hair removal system, the team often mentions the superb Return On Investment which our product delivers. People nod in agreement, but are we guilty of assuming they know exactly what we’re talking about? Of course owners of Spas and Salons clearly understand profitability, but is ROI too fancy a term? It’s a concept that comes from the world of corporate business, and perhaps the details seem unclear. So let’s dive a little deeper into ROI, and see why it’s an important tool in assessing the purchase of new equipment.

Everyday ROI calculations

In our everyday life, we rarely run a formal measurement of Return On Investment over our purchases. We buy food because we need it, not because we will ‘profit’ from eating it - although try not eating and see how you profit from that! When we face having to buy a major new item for our home - a new furnace, say, or even a new auto - we usually do so because it’s really needed and there is little choice but to go ahead and make the purchase. Sure, we shop around to compare features, benefits and costs, but the ROI doesn’t really interest us. The old car has come to the end of its life, we need a new one, and so we get a new one. The longer that new car lasts, and the fewer trips to the repair shop, the better. After a certain number of years we consider that the car has ‘paid for itself’ and maybe don’t even recall what the original cost was. Paying for the family’s education is also an investment, but few parents plan on getting a strict ‘profit’ when their offspring graduates. 

So when we feel that spending money is absolutely necessary we tend not to worry about strict budgeting. We take the attitude that ‘It has to be done’, and if that means tightening our belts in other areas, then that’s what we do. On the other hand, proper planning isn’t taking place to ensure profitability. So let’s now turn to the lessons that can be learned from bigger organizations, where ROI decides whether purchases are made. 

Crunching numbers

There are several somewhat complex formulas to calculate ROI. Here’s an example from Investopedia using the buying and selling of Stocks and Shares to make the point:

Jo invested $1,000 in Slice Pizza Corp. in 2017 and sold the shares for a total of $1,200 one year later. To calculate the return on this investment, divide the net profits ($1,200 - $1,000 = $200) by the investment cost ($1,000), for a ROI of $200/$1,000, or 20%.
With this information, one could compare the investment in Slice Pizza with any other projects. Suppose Jo also invested $2,000 in Big-Sale Stores Inc. in 2014 and sold the shares for a total of $2,800 in 2017. The ROI on Jo’s holdings in Big-Sale would be $800/$2,000, or 40%.

Well, that’s one way of looking at things, but let’s look at capital purchases, like that furnace for the home, or a new laser hair removal device. The point is that you want to recover the cost of your purchase as soon as possible - to ‘break even’ - and then go on to earn further from the ownership. Notice the mention of ‘as soon as possible’ because time is always a factor in assessing ROI. In terms of buying equipment for a business, it’s unlikely we’d be impressed if profitability is 20 years away! Too many other things can happen in that timeframe which could upset ROI predictions. To see some examples of capital equipment purchases and ROI, take a look at a useful article on how this applies to a veterinary practice.
Always keep in mind that the timeframe is key: If equipment purchase pays for itself within the period of a year, or even quicker, then the short term pain of buying it will be greatly relieved by the rapid start of profitability.

Rapid ROI is the key

And that’s the situation with Elysion Pro. It’s far from the most pricey laser hair removal device on the market, and this is combined with a whole set of features and benefits which are in advance of any competitor systems. One example is that treatments with Elysion Pro are up to 4 x faster than with any other device. The obvious benefit: a Spa or Salon can have a throughput of up to 4 x as many customers! Or to look at it another way, the same customer can have up to 4 x as many treatments in the same session. That is a very significant improvement in efficiency and productivity.

Another major plus for Elysion Pro is that all skin types on the Fitzpatrick Scale can be treated. It now seems unbelievable that until the advent of Elysion Pro, Salons and Spas with older (and now obsolete) devices were actually turning away up to half of all prospective customers because they had ‘the wrong skin type’. With Elysion Pro, all potential customers can become actual customers, because there is no barrier to what kind of skin can be treated. 

And to wrap up with another huge benefit - the special features of Elysion Pro, including the patented Crystal Freeze technology, ensure that treatments are comfortable. Again, it seems amazing that until now many customers have experienced discomfort with old-style laser hair removal, but had to accept, ‘that’s just the way it is.’ Well, the fact is that laser hair removal can now be a pleasant experience. And what’s that got to do with profitability and ROI? Well, happy customers come back for further treatments, and spread the word to friends and family too. 

So it’s clear that with Elysion Pro, the number of customers can be increased dramatically, because of the time efficiency and speed; because all skin types can be treated; and because ‘word of mouth’ will spread the news of a safe, reliable and pleasant experience.

Calculating profitability

Since Elysion Pro arrived in the USA in Fall 2020, the number-crunching has been continuous, to assess the potential for rapid ROI. Using as a basis the average costs for laser hair removal published by the American Society of Plastic Surgeons (at $285 per session), the LAX Distribution team created a profit calculator to compare treatment costs and customer numbers. In fact, since the calculator was devised, Forbes Health now quotes the ASPS treatment figure as being an average of $389, so the profitability of Elysion Pro has further increased. The beauty of the profit calculator is that how you use it is up to you. You can raise or lower the charges for an average treatment, and can adjust how many treatments you might expect to give each week. The figures are entirely up to the individual Spa or Salon owner to input. 

What becomes clear is that even when inputting quite conservative figures for the number of treatments - and costs depending on your local circumstances - Return On Investment is rapid. In fact it’s quite reasonable to expect ROI within months, not years. Compare that to a car purchase, or someone attending college, where payback might only start 7 or 8 years down the line!


Check your assumptions

And here’s a key thought to wrap up the ROI discussion: Customers have ROI concerns too! It’s not just a business owner who has to assess Return On Investment, but anyone coming for a treatment will weigh up whether the expected costs can be justified by the expected benefits. With Elysion Pro they’ll get up to 4 x faster treatments, which are comfortable, and that’s a Return On Investment in itself.

We’ve done the math and have many cases showing that high ROI is rapidly achievable with Elysion Pro. A great way of starting with the subject is to check in with our profit calculator.
We know you’ll be pleasantly surprised, and that’s one assumption we feel very safe in making.

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For an Executive Summary, majoring on the efficiency and profitability of Elysion-Pro, we have a 3-minute read brochure for you. That’s a super-quick guide to how the system offers such a great Return On Investment.