Profit Margins in the Nurse Practitioner Niche Practice

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What are the profit margins of a niche practice?

How much money can you actually make in a niche practice?

Is your business on the right track?

The answers to these questions depend on the type of practice you decide to open as a nurse practitioner entrepreneur and how long you have been open but some basic math and determing what your profit margins are will help you.

First off though, I just want to ensure everyone is aware of the following definitions in case you might be new to business.

Profit margin: The amount of money you earn AFTER your business’s costs. It is your profit divided by revenue essentially. For simplicity purposes: $1000 profit x 100 / $2000 gross revenue = 50% profit margin.

Gross income: The TOTAL amount of your revenue. This is EVERYTHING including expenses and profits.

Net income: Your PROFIT. The amount you essentially walk away with after all expenses are paid.

Often times, people will show off how much gross income they have generated in their business. But what they aren’t telling you is their net income. The NET income is what is important. Who cares what gross income is.

I know a business owner who owns a very successful restaurant. He would brag how his business would generate over a million dollars a year. Sure, he generates $1.5 million in GROSS income a year, but what is his net income? Only $200,000… While that is pretty good, the profit margin is only: $200,000 x 100 / $1.5 million = 13% profit margin.

That is NOT that great but guess what? The average profit margin for the average business in the United States is 7-10%! So, in reality, a 13% profit margin is above average.

Now, lets talk about the profit margins of the nurse practitioner niche practice. I am getting ready to blow your mind and this is just another reason why you should do everything in your power to start your own practice or put the energy into growing your current practice.

First off, nurse practitioner niche practices are SOLID businesses to start. They have low overhead and high profit potential. This means HIGHER profit margins. Additionally, the investment of capital required to get a niche practice is nothing compared to most businesses…

Did you know it costs on average $300,000 to start a restaurant? The average profit margin is only 5%… (this means don’t start a restaurant!)

Did you know it should only cost about $10,000 (depending on the niche) to get a niche practice up and running? The average profit margin should be around 25-40% or even higher!

Let’s do some math for my men’s health clinic as an example:

Monthly GROSS income for June was $75,000.

Monthly NET income for June was $34,000.

Profit margin: $34,000 x 100 / $75,000 = 45% profit margin!

Let’s do the math for my medical cannabis clinic:

Monthly gross income for June was $12,500.

Monthly NET income was $9,000.

Profit margin: $9,000 x 100 / $12,500 = 72% profit margin!

Furthermore, it cost approximately $5,000 to start my men’s health clinic. In 3 years, we have generated profit margins of 45%! That is INSANE in the grand scheme of business.

Now, I have ran numbers for various niche practices and the results are similar amongst them all. From what I have found, the average nurse practitioner niche practice should EASILY have a profit margin of 25-40%! What does this mean? A SOLID BUSINESS! Especially when you factor in the low cost to get started.

The way you increase your profit margins is simple: LOWER YOUR EXPENSES! This is why creating a low overhead practice is a foundational principle within The Elite Nurse Practitioner Model! The lower your expenses, the more profitable your business is going to be. This is one of the issues with higher expense practices such as aesthetics or even IV infusion. The only way you can make up the difference is by increasing your prices, but sometimes this prices out potential patients. Regardless, those niches are still profitable.

Now, some services have LOW overhead with average prices that allow for MORE patients to utilize. This is a reason why I love weight loss and hormone replacement therapy so much. It literally costs me $15-30 a month to provide testosterone replacement therapy at my men’s health clinic and I charge $135-170 a month on average. THOSE are solid margins. $120 x 100 / 135 = 88% profit margin! But that isn’t factoring in rent, payroll, and so forth…

The big walk away here is you need to do everything in your power to DECREASE your expenses and INCREASE your prices while being reasonable to increase your profit margins. If you are not sitting at 25-40% profit margins, then you need to step back and figure out where the holes are in your business. Any nurse practitioner niche practice should have these margins if you follow the model.

Now, I also want to briefly look at the average return on investment (ROI) for a niche practice. ROI is determined by dividing the net income by the initial cost of the investment and multiplying it by 100.

My men’s health practice ROI for last year:

$350,000 net income / $5,000 initial investment x 100 = 7000% return on investment.

THAT IS INSANE! Good luck getting those returns in the stock market or anything else for that matter.

2 points here:

  1. If you haven’t started your own niche practice yet, then you should. You will NOT find any better ROI with your money. I guarantee it.
  2. If you already have your own practice, this is why you should ALWAYS be reinvesting your money back into the business. You will have a hard time finding better returns!

For every nurse practitioner business owner (or aspiring one!), then you should know your profit margins. You need to calculate these out from time to time to ensure you are staying within that 25-40% range. If you are not, figure out why! If you are in the startup phase, then run the numbers and ensure you are going to hit those numbers!

Calculating out your profit margins helps quantify your business. It gives you a NUMBER to ensure you are on track and profitable. Additionally, if you can calculate out your ROI, then it will enlighten you on just how powerful owning a business actually is. This will keep you FOCUSED on growing and scaling your business because you are not going to find better returns elsewhere!

6 Responses

    1. If they are real expenses yes. If it is more of a fringe benefit, then I wouldn’t. It is not NECESSARY for the business to operate.

  1. Justin, I am almost crying with delight to have found your site. I have been struggling with KNOWING that a niche business is a profitable use of my valuable NP license but not sure what product/services to move into. I have one day a week free, have established a small, very affordable office space, separate NPI from my employed licensing, an EMR and malpractice insurance ready to turn on. I have been studying and searching to determine what product/how to offer/develop a side business. I was definitely leaning toward women’s HRT for all the reasons you name, but then found your site, devoured everything on it, am 100% sold on your concepts and expertise and so excited to launch. I could NOT be happier to purchase a course from you with all your wisdom, experience and talent, as I have recently become a strong believer in this concept: “Unsuccessful people use their time to save money. Successful people use their money to save time.” The programs you offer, and the groundwork you provide about how to structure the business, are definitely not just worth their weight in gold, but also an encouraging wind beneath my wings with a blueprint for success and I am putting them into practice now. Many, many thanks from an NP who knew which way to go, just not which vehicle or how to drive it. You rock!

    1. You are very welcome Dashiel. It warms my heart to know that the courses and information on this site has provided you guidance. Now go out there and kill it 😉

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