How Profitable is a Veterinary
Clinic? Break-even & Profits
REMI ●
NOVEMBER 1, 2024
If you are planning to open a veterinary clinic, you need
to understand how you can turn your revenues into
profits. In other words, you must know how much
revenue you must generate to reach break-even and
make profits as part of your business plan.
Statista reports that the US veterinary services market
will reach approximately $54.9 billion by 2024. Another
Statista research of 2018 found that US households
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spend approximately $253 per year for vet services on
a dog and $98 per year for vet services on a cat.
What does that tell you in terms of the profits you can
make if you own a veterinary clinic? You’ll have to
consider all the costs and your break-even point. Let’s
now look in more details how much profits you can
generate with a veterinary clinic on average in the US.
Let’s dive in!
Veterinary Clinic
Financial Model
Template | Excel
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your business.
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What is the average turnover for a
veterinary clinic?
According to Business Valuation Resources, veterinary
clinics have an average revenue of anywhere between
$300,000 to $600,000. The wide range is explained by
geographic variations, work rates, species treated, and
various other factors.
As for the take-home salary of veterinarians in the US,
Salary.com reports that vets in the US have an average
annual take-home salary of $102,334. However, the
average vary significantly by state, anywhere between
$80,372 and $129,852.
How does a vet clinic make money?
Veterinary clinics provide different procedures and
services, which vary based on the type of species they
treat, their specialisations and other factors. Live Oak
Bank conducted a research in 2014 on 700 US vet
clinics and found out they had the following revenue
mix:
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Service Revenue split
In house pharmacy 10-20%
Vaccinations 5-10%
Lab services 10-20%
Dentistry services 0-5%
Preventative care services 10-15%
Examinations 15-25%
Surgical 10-20%
Total 100%
What is the average profit margin
for veterinary clinics?
Today’s Veterinary Business estimates that the average
profit margin for a vet clinic is:
10% to 15% for small animal hospitals
15% to 25% for emergency and specialty
practices
In addition, DVM360 states that profit margins are
considered:
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Superior above 18%
Excellent: 16% to 18%
Good: 13% to 15%
Fair: 8% to 12%
Poor: below 8%
How much does it cost to run a
veterinary clinic?
There are some recurring expenses of running a
veterinary clinic and they are:
Salary: You need to pay your staff and yourself
Rent: You need to pay rent for the commercial
space that you are using for your clinic
Marketing: You must spend money on marketing
and advertising your clinic
Insurance: You must purchase business
insurance, workers’ compensation insurance, etc.
Bookkeeping: You may hire an accountant, or
you may use an accounting software
Miscellaneous: There will other expenses like
utility bills, office supplies, janitorial services,
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food, etc.
In general, it costs anywhere between $28,000 and
$44,000 to run a small veterinary clinic with two
vets.
We’re including below the revenue to profits
breakdown chart of a small vet clinic over a year
(average profit margin of 14%).
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Veterinary Clinic
Financial Model
Template | Excel
Spreadsheet
Get a professional business
plan and get funding for
your business.
TrustScore
4.7
128
reviews
Download now
How to forecast profits for a
veterinary clinic?
In order to calculate profits for a veterinary clinic, you
must first forecast revenues and expenses.
Profits = Revenue – Expenses
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Forecasting veterinary clinic revenue
Revenue can easily be obtained by multiplying the
number of procedures by the average procedure price.
Revenue = Procedures x Procedure price
For example, if you receive 200 customers (200 pets)
in a month paying on average $250 per procedure,
monthly revenue is $50,000.
Forecasting veterinary clinic expenses
There are 2 types of expenses for a veterinary clinic:
Variable expenses: these are the COGS as
explained earlier. They grow in line with your
revenue: if your turnover increases by 10%,
variable expenses grow by 10% as well
Fixed expenses: mostly salaries, rental costs
and all the other costs listed above
Calculating veterinary clinic profits
When we refer to profits, we usually refer to EBITDA
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(Earnings before interests, taxes, depreciation and
amortization) as it represents the core profitability of
the business, excluding things such as debt interests,
non cash expenses and other non-core expenses.
In order to get to EBITDA, we use the following
formula:
EBITDA = Revenue – COGS – Operating Expenses
To make it clearer, we’ve included below the profit-
and-loss of a veterinary clinic (from our financial model
template for veterinary clinics).
Whilst gross margin (after variable costs) is very high
(~85%), EBITDA margin can go up to 20-25%
depending on the clinic, and net profit margin up to
15-20%.
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Business Plans Financial Models Start your business plan
What is the break-even point for a
Table of Contents
veterinary clinic?
What is the average turnover
for a veterinary clinic?
Break-even is the point at which total costs and total
How does a vet clinic make
revenue are equal. In other words, the breakeven point money?
What is the average profit
is the amount of revenue you must generate to turn a
margin for veterinary clinics?
profit. How much does it cost to run a
veterinary clinic?
How to forecast profits for a
Because you must at least cover all fixed costs (that
veterinary clinic?
aren’t a function of revenue) to turn a profit, the What is the break-even point
for a veterinary clinic?
break-even point is at least superior to the sum of
How to increase profits for a
your fixed costs. veterinary clinic?
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Yet, you also need to spend a certain amount for every
$1 of sales to pay for the variable costs. As we just Veterinary Clinic
saw, veterinary clinics have very high gross margins Business Plan Template
(85%). That’s because almost all expenses for a (Download)
veterinary clinic are fixed costs (mostly salaries and Download a 30+ slides
rent). business plan template
Get the business
plan
Excellent
4.7 out of 5
The break-even point can easily be obtained by using
the following formula:
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Break-even point = Fixed costs / Gross
margin
Using the same example earlier, let’s assume a
veterinary clinic has the following cost structure:
Variable vs. Amount (per
Operating cost
fixed month)
COGS (lab fees,
medical Variable cost $4,000
supplies)
Salaries* Fixed cost $25,000
Rent Fixed cost $6,000
Marketing Fixed cost $3,000
Other Fixed cost $2,000
Total $40,000
The break-even point would then be:
Break-even point = Fixed costs / Gross
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margin %
= $36,000 / 85% = $42,000
In other words, you need to make at least $42,000 in
sales to turn a profit.
How to increase profits for a
veterinary clinic?
You can increase the profits for your veterinary clinic
using the following strategies:
Merchandising: Sell products from
manufacturers and brands against a commission
Healthcare membership plans: Introduce
healthcare membership plans for clients who
have budgetary constraints
Payment plans: For high-cost procedures,
consider introducing payment plans to ease the
financial burden
Social media platforms: Use social media
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platforms to educate pet parents through videos,
articles, etc. You can monetize certain content
such as YouTube videos
Affiliate program: Start an online affiliate site to
generate additional revenue
Referral program: Ask existing clients to refer
new clients against incentives like coupons, flat
price cuts, freebies, etc.
Use SaaS platforms: These platforms make
invoicing, billing, etc., easy and thus, help to save
time that you can use to attend to more patients
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