Product cost percentage, meaning product used divided by revenue, is one of the clearest signals of whether your pricing still matches your costs. But it is only useful if it is measured correctly.
Usage, not purchases
Many clinics look at product purchases each month and divide by revenue. That number swings wildly: a large order one month makes the percentage spike, and the next month it drops. It reflects buying, not consumption.
Instead, measure cost of product used:
Opening inventory + purchases − closing inventory = product used
This requires a monthly inventory count, which you should be doing anyway for injectables.
Break it down by service line
A single clinic-wide percentage hides a lot. Injectables and fillers carry high product cost; many energy treatments carry little; facials sit in between. Calculate product cost percentage for each service line:
- Neuromodulators
- Dermal fillers
- Skin treatments and peels
- Laser and energy treatments, including tips and cartridges
- Retail products sold
What movements mean
- Rising percentage, stable prices: supplier costs have increased, waste has grown, or providers are using more product per treatment.
- Rising percentage after a promotion: discounts reduced revenue while product cost stayed the same.
- Falling percentage: a price increase, better purchasing or less waste.
Set a target by service line
Decide what product cost percentage each service line should run at, based on your pricing model. When a line drifts above target for two months, investigate.
Include the full cost
Product cost should include shipping, taxes you cannot recover and minor consumables such as needles, cannulas and gauze if you track them. Reliable rebates can reduce the cost, but only when you are sure of receiving them.
Make it part of the monthly close
Inventory count, product used calculation, then product cost percentage by service line. Once it is routine, it takes less than an hour and protects one of your largest costs.
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