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60/40 Splits
I've started working for a Chiropractor part-time and we're doing a 60/40 split where I keep 60%. I know this is the industry norm and I do think I'll be busy in his office. But when I think about the fact that, should I reach my goal 15 massages/week in his office I'll be paying out $17,000 annually, I start to rethink my decision. Right now I pay rent for a room for the other part-time use and I pay $200 month and bring in close to $1500/monthly. I know that businesses need to make money, but I work hard for my clients and feel that a $17,000 contribution to someone else's business is a bit extreme. I keep my overhead to a minimum, try to reschedule all of my clients myself and only use his scheduling system b/c he won't let me use mine in his office. I do all of the laundry at home, offer more discounts in his office than I do on my own and am expected to pay for marketing. Can anyone who has done a split - either as the owner or the independent contractor - help me understand better why it might cost me close to $20,000/year to work?
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Replies to This Discussion
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Permalink Reply by Linda LePelley, RN, NMT on
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Not sure I understand, have you been paying the $200.00 for a room and switched over to this new deal? That is a huge expense, especially if you are doing your own laundry at home, and not able to use your own scheduling system. I'm assuming that if you are using his system, your client information is now in his hands as well? If so, I would make sure the clients have signed a consent for that, and hopefully you can trust him not to target them in his own advertising. Any advertising you do will be to his benefit as well, with no cost to him at all. (Just by the fact that you are located in his offices)You said you are, "working for" this Chiro, but I'd bet you are contract help with no benefits of any kind. You may want to rethink a deal such as this. It is just my opinion, I have always worked alone. Good luck to you!
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Permalink Reply by Alexei Levine on
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Have you factored in the value of the referrals you get from the chiro?
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Permalink Reply by Relax & Rejuvenate on
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Several points:
Why do you care how much the Chiro is making? The only question you need to answer is "Am I satisfied earning $25,500 -- plus tips -- for doing 15 massages a week? If you would be, take the deal. If you won't be, don't.
its that simple. You cite 60/40 being the industry norm -- again, who cares? If you care about it, then you should be happy to be getting industry standard, but I don't see why it matters what % other people get in different geographies, with different office locations and different clientele and charging different prices.
Focusing on the % is meaningless. A % is a relative number. I will pay you 100% -- would you be happy with that? Good -- I have a dozen members of the media that want complimentary services when they come to visit our spa. All of a sudden 100% does not look so great.
I know that businesses need to make money, but I work hard for my clients and feel that a $17,000 contribution to someone else's business is a bit extreme.
Funny, I feel the same way about paying anyone 60% -- I would go broke if my payroll were 60% of revenue.
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Permalink Reply by Alyson C Schlobohm on
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Dear Relax & Rejuvenate,
I care about how much the "chiro is making" because he is NOT the one making the money. I'm the one in the room with the patients doing manual labor, offering my suggestions, advice, feedback and strategies for the patient to save money while improving their physical well-being. I am the one building client relations and I am the one that makes the client want to come back and see me.
It appears from your attack-mode sort of response that you're probably on the other end, where you're collecting a percentage of EVERY massage that someone else performs. Your line of thinking is exactly what I feel is wrong with the massage industry and why I feel that so many MTs get burnt out and leave the industry - they are getting by because they're making a decent salary, but they soon realize that they're working really hard for someone else to reap benefits and there's really no way to move up, because once they reach their maximum number of massages per day and week, they've capped out on all they'll ever earn. Most of us don't get benefits, hourly pay or raises. Most of the time laundry is done at home, which causes an increase in our own personal electricity and water bills, and decreases our "hourly" rate - as does time spent marketing, tracking mileage & expenses, answering client questions and emails, etc.
If a percentage is meaningless and a relative number, then why IS there a percentage taken out of so many MTs paychecks? Why isn't there a flat fee per month, referral, etc.?
I do not understand at all your reference to getting paid 100%. Would I be happy with that? Sure! Do I think that is the solution? Of course not. What do complimentary services from the media have to do with anything? If someone wanted to come to me and have a free massage in order to do a press piece about my services would I do it? Probably. At least once, to see what the turnout was like.
Instead of being defensive and attack-like, maybe you could offer a rational explanation as to where that $17,000 goes when I'm the one building client relations, performing the physical exertion, offering the advice/suggestions, bringing the client back, doing the laundry at home and creating and paying for marketing. That's simply what I was looking for - an explanation as to why I should give someone else almost $20,000 out of services I have rendered.
Relax & Rejuvenate said:Several points:
Why do you care how much the Chiro is making? The only question you need to answer is "Am I satisfied earning $25,500 -- plus tips -- for doing 15 massages a week? If you would be, take the deal. If you won't be, don't.
its that simple. You cite 60/40 being the industry norm -- again, who cares? If you care about it, then you should be happy to be getting industry standard, but I don't see why it matters what % other people get in different geographies, with different office locations and different clientele and charging different prices.
Focusing on the % is meaningless. A % is a relative number. I will pay you 100% -- would you be happy with that? Good -- I have a dozen members of the media that want complimentary services when they come to visit our spa. All of a sudden 100% does not look so great.
I know that businesses need to make money, but I work hard for my clients and feel that a $17,000 contribution to someone else's business is a bit extreme.
Funny, I feel the same way about paying anyone 60% -- I would go broke if my payroll were 60% of revenue.
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Absolutely. I think about that all the time, and while I do feel that there should be a financial benefit for both the MT and the Chiropractor, I just keep going back to the thought that $17,000/year is very high.
Alexei Levine said:Have you factored in the value of the referrals you get from the chiro?
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Hi Linda!
I have been working on my own for 2 years and have built up a great clientele. I was actually going to go to Palmer College of Chiropractic to further my education, so I started working for this Chiropractor on the side to get an "inside feel" for the job. After some bad news when it came to selling our home, my husband and I decided spending another $200K in student loans was not the right move.
When I first started working for him he wanted me to pay $500/month rent, which I could not afford as I was paying almost $500 rent at another location. So, we did a 60/40 split - BUT WE HAD A CAP, meaning that once we reached $500, I earned 100% of everything else. If we did not reach $500, we stuck with the 60/40 split. We quickly reached the point where we were exceeding the cap and he became agitated at having to pay me the surplus after the cap. I attributed this to him not budgeting correctly when people purchased gift certificates and packages. Wanting to make things work, I suggested a 70/30 split with no cap. This was fine until I decided not to move to his office full time and bring all of my clients with me. (Mainly because he hired another MT before I was able to move there full-time due to an existing lease - I do not feel that one room can accommodate one MT full-time and one MT part-time and I need to be full-time). So I decided to keep a room with the clientele I built up over the past two years (and now I'm paying $200/month for part-time use of this room). The Chiropractor decided that since I was going to be there less he needed to make more. EVEN THOUGH now he's going to have a MT in there 6 days a week, doing a 60/40 split with us both.
I am now weighing out my options and simply trying to get a better understanding of this type of setup and questioning it's fairness. As I was telling "Relax and Rejuvenate", I do all of my own laundry at home and now I'm expected to pay for my own supplies and marketing. And, of course, the marketing has to be under his business name - not mine, and I'm sure that as part of the new contract I will not be able to take these clients with me should I leave.
I understand why you've always worked alone, and am beginning to think that I just need to go back to renting a room on my own full time.
Linda LePelley, RN, NMT said:Not sure I understand, have you been paying the $200.00 for a room and switched over to this new deal? That is a huge expense, especially if you are doing your own laundry at home, and not able to use your own scheduling system. I'm assuming that if you are using his system, your client information is now in his hands as well? If so, I would make sure the clients have signed a consent for that, and hopefully you can trust him not to target them in his own advertising. Any advertising you do will be to his benefit as well, with no cost to him at all. (Just by the fact that you are located in his offices)You said you are, "working for" this Chiro, but I'd bet you are contract help with no benefits of any kind. You may want to rethink a deal such as this. It is just my opinion, I have always worked alone. Good luck to you!
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Permalink Reply by Teresa Avelar on
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I get the referrals that the Chiro is giving you but I would have to say that since you are doing the scheduling, the laundry, and the advertisement, a 60/40 split is too high. Ultimately it is whatever you are comfortable accepting and if the peace and mind of some $ versus no $. You could always keep working there until you find a better situation for you. I've learned that when you are not happy working at a specific place or feel that you are taking advantage of then it will reflect in your work and your being.
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Permalink Reply by Gordon J. Wallis on
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Well everyone deserves to make a living.. That being said.. A skilled massage therapist has way more to offer the general public then any chiropractor in my opinion...Most patients in those offices seem never to get better.. Patients are suing, lawyers are involved..Insurance is continually billed... Not a healing environment in my opinion.. If you cant substantially help someone within four sessions..you are ripping them off. I personally prefer working alone or in a spa or hotel setting. People get well way faster. My experience anyway.
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Alyson Schlobohm said:Dear Relax & Rejuvenate,
I care about how much the "chiro is making" because he is NOT the one making the money. I'm the one in the room with the patients doing manual labor, offering my suggestions, advice, feedback and strategies for the patient to save money while improving their physical well-being. I am the one building client relations and I am the one that makes the client want to come back and see me.
If he did not invest $200K in chiro school, a lease, advertising, equipment and building HIS clientele there would be NO room for your to rent, clients to offer suggestions/feedback to, etc.
Does a dental hygenist care how much the DDS earns? She does 90% of the clearning, but gets far from 60% of the fee.
You are valuing your work more than you are valuing the risk and work of the DC. Anyone with a license can give a massage -- not everyone has enough clients to give them to. If they did, there wouldnot be half the threads on this board, including this one.
It appears from your attack-mode sort of response that you're probably on the other end, where you're collecting a percentage of EVERY massage that someone else performs. Your line of thinking is exactly what I feel is wrong with the massage industry and why I feel that so many MTs get burnt out and leave the industry - they are getting by because they're making a decent salary, but they soon realize that they're working really hard for someone else to reap benefits and there's really no way to move up, because once they reach their maximum number of massages per day and week, they've capped out on all they'll ever earn. Most of us don't get benefits, hourly pay or raises. Most of the time laundry is done at home, which causes an increase in our own personal electricity and water bills, and decreases our "hourly" rate - as does time spent marketing, tracking mileage & expenses, answering client questions and emails, etc.
If you don't wan to work hard for someone else, then work for yourself. It's that simple. You have identified me, and my like-minded evil-doers, as the source of the problems with the massage industry. What you have jnot posited is a solution -- other than the obvious, start your own practice.
Just to give you an idea of what wrong-thinking economics looks like, lets take a look at the P&L of a basic spa operation
We have a 3 treatment room spa, with two nail stations in a town of only 50k people
Fixed Costs -- these I have to pay regardless of how many clients I see. Bad month --- too bad, still have to pay
Rent - $4,500
Utils - $1,000
Insurance - $750
Equp Lease - $600
PCs & software - $450
Total -- $6,250 --- open for business 24 days a month, 8 hours a day = $31 per hour. If ALL 5 rooms and nail stations are booked 8 hours a day, then it costs $6 PER TREATMENT to cover fixed costs. Most spas run 35% utilization, so that triples the per treatment cost to $18.
$95 - average hour of treatment
- $18 - fixed costs
Less per-appointment costs
- $5 - laundry
- $5 product costs
- $5 average discount (which does not affect therapist pay as is our policy)
- $2 credit card processing fees
$17 + $18 in fixed costs = $35 before technician pay and benefits or $60 operating revenue
Using your 60% / 40 split that you think is so horribly unfair, that would be $57 to the therapist and only $3 to the owner -- and that is before paying the employee payroll taxes -- which also apply to therapist tips (I have yet to receive a tip for hiring and training such wonderful therapists, yet, I have to pay 10% on top of the clients tip in taxes and cc processing costs -- so a $20 tip wipes out $2 of my remaining $3) Oh, and let's not forget paid vacation and health insurance taht we offer our employees -- so that means I am taking money out of my pocket to pay MTs to come to work just so they don't feel bad about themsefvles for not being paid some mythical percentage of what is fair...I would be financially better off not starting the business than employing ANYONE at 60% commission. Or even 40% commission.
Whose the greedy, evil expoiter now? I put up all the money, take all the risks and the government require I pay you for every hour you are at work, whether there is an appointment or not.
If a percentage is meaningless and a relative number, then why IS there a percentage taken out of so many MTs paychecks? Why isn't there a flat fee per month, referral, etc.?
Because people -- business owners and technicians -- are too set in what other poeple do and some mythical sense of fairness to think about compensation schemes any other way. You can be paid hourly $ + % commission, you can be paid a flat fee for service, or you could be paid a straight salary regardless of if you do 1 massage or 7 massages in a day (I have yet to meet the MT willing to work for salary).
I do not understand at all your reference to getting paid 100%. Would I be happy with that? Sure! Do I think that is the solution? Of course not. What do complimentary services from the media have to do with anything? If someone wanted to come to me and have a free massage in order to do a press piece about my services would I do it? Probably. At least once, to see what the turnout was like.
Getting paid straight % means 100% of a $0 appointment means the MT gets $0. Does that not meet with this mythical goal of fairness? I thought 100% is more than "fair"...can't get paid more than 100%, so if 100% is not fair, nothing is!
Instead of being defensive and attack-like, maybe you could offer a rational explanation as to where that $17,000 goes when I'm the one building client relations, performing the physical exertion, offering the advice/suggestions, bringing the client back, doing the laundry at home and creating and paying for marketing. That's simply what I was looking for - an explanation as to why I should give someone else almost $20,000 out of services I have rendered.
Don't be delusional to think that you are the one building client relations and getting the clients to come back. most clients aren't THAT attached to their techncians. If that wre the case, every MT who worked for a DC or a spa would have a full book of their loyal legions. It just is not that easy to start, grow and maintain a business of any kind. -
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Well, even though you have actually taken some time to answer the actual question, you still act and speak like a pompous jerk. I googled you and was not surprised to learn that you have horrible reviews. Not shocking given your overall attitude. Good riddance.
Relax & Rejuvenate said:
Alyson Schlobohm said:Dear Relax & Rejuvenate,
I care about how much the "chiro is making" because he is NOT the one making the money. I'm the one in the room with the patients doing manual labor, offering my suggestions, advice, feedback and strategies for the patient to save money while improving their physical well-being. I am the one building client relations and I am the one that makes the client want to come back and see me.
If he did not invest $200K in chiro school, a lease, advertising, equipment and building HIS clientele there would be NO room for your to rent, clients to offer suggestions/feedback to, etc.
Does a dental hygenist care how much the DDS earns? She does 90% of the clearning, but gets far from 60% of the fee.
You are valuing your work more than you are valuing the risk and work of the DC. Anyone with a license can give a massage -- not everyone has enough clients to give them to. If they did, there wouldnot be half the threads on this board, including this one.
It appears from your attack-mode sort of response that you're probably on the other end, where you're collecting a percentage of EVERY massage that someone else performs. Your line of thinking is exactly what I feel is wrong with the massage industry and why I feel that so many MTs get burnt out and leave the industry - they are getting by because they're making a decent salary, but they soon realize that they're working really hard for someone else to reap benefits and there's really no way to move up, because once they reach their maximum number of massages per day and week, they've capped out on all they'll ever earn. Most of us don't get benefits, hourly pay or raises. Most of the time laundry is done at home, which causes an increase in our own personal electricity and water bills, and decreases our "hourly" rate - as does time spent marketing, tracking mileage & expenses, answering client questions and emails, etc.
If you don't wan to work hard for someone else, then work for yourself. It's that simple. You have identified me, and my like-minded evil-doers, as the source of the problems with the massage industry. What you have jnot posited is a solution -- other than the obvious, start your own practice.
Just to give you an idea of what wrong-thinking economics looks like, lets take a look at the P&L of a basic spa operation
We have a 3 treatment room spa, with two nail stations in a town of only 50k people
Fixed Costs -- these I have to pay regardless of how many clients I see. Bad month --- too bad, still have to pay
Rent - $4,500
Utils - $1,000
Insurance - $750
Equp Lease - $600
PCs & software - $450
Total -- $6,250 --- open for business 24 days a month, 8 hours a day = $31 per hour. If ALL 5 rooms and nail stations are booked 8 hours a day, then it costs $6 PER TREATMENT to cover fixed costs. Most spas run 35% utilization, so that triples the per treatment cost to $18.
$95 - average hour of treatment
- $18 - fixed costs
Less per-appointment costs
- $5 - laundry
- $5 product costs
- $5 average discount (which does not affect therapist pay as is our policy)
- $2 credit card processing fees
$17 + $18 in fixed costs = $35 before technician pay and benefits or $60 operating revenue
Using your 60% / 40 split that you think is so horribly unfair, that would be $57 to the therapist and only $3 to the owner -- and that is before paying the employee payroll taxes -- which also apply to therapist tips (I have yet to receive a tip for hiring and training such wonderful therapists, yet, I have to pay 10% on top of the clients tip in taxes and cc processing costs -- so a $20 tip wipes out $2 of my remaining $3) Oh, and let's not forget paid vacation and health insurance taht we offer our employees -- so that means I am taking money out of my pocket to pay MTs to come to work just so they don't feel bad about themsefvles for not being paid some mythical percentage of what is fair...I would be financially better off not starting the business than employing ANYONE at 60% commission. Or even 40% commission.
Whose the greedy, evil expoiter now? I put up all the money, take all the risks and the government require I pay you for every hour you are at work, whether there is an appointment or not.
If a percentage is meaningless and a relative number, then why IS there a percentage taken out of so many MTs paychecks? Why isn't there a flat fee per month, referral, etc.?
Because people -- business owners and technicians -- are too set in what other poeple do and some mythical sense of fairness to think about compensation schemes any other way. You can be paid hourly $ + % commission, you can be paid a flat fee for service, or you could be paid a straight salary regardless of if you do 1 massage or 7 massages in a day (I have yet to meet the MT willing to work for salary).
I do not understand at all your reference to getting paid 100%. Would I be happy with that? Sure! Do I think that is the solution? Of course not. What do complimentary services from the media have to do with anything? If someone wanted to come to me and have a free massage in order to do a press piece about my services would I do it? Probably. At least once, to see what the turnout was like.
Getting paid straight % means 100% of a $0 appointment means the MT gets $0. Does that not meet with this mythical goal of fairness? I thought 100% is more than "fair"...can't get paid more than 100%, so if 100% is not fair, nothing is!
Instead of being defensive and attack-like, maybe you could offer a rational explanation as to where that $17,000 goes when I'm the one building client relations, performing the physical exertion, offering the advice/suggestions, bringing the client back, doing the laundry at home and creating and paying for marketing. That's simply what I was looking for - an explanation as to why I should give someone else almost $20,000 out of services I have rendered.
Don't be delusional to think that you are the one building client relations and getting the clients to come back. most clients aren't THAT attached to their techncians. If that wre the case, every MT who worked for a DC or a spa would have a full book of their loyal legions. It just is not that easy to start, grow and maintain a business of any kind. -
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