Key Takeaways
- Vet clinics can be highly profitable, with 74–77% gross and 20% net margins.
- Strong pet ownership in Australia (73%) and New Zealand (63%) drives steady demand.
- Startup costs range from $550K–$1M+ or $300K–$10M to buy an existing clinic.
- Profitability relies on good management, good use of technology, and cost/revenue optimisation.
When considering how profitable a vet clinic is, it’s important to understand first the opportunities currently available within the Australian and New Zealand veterinary industry.
Animal Medicines Australia reports that the country’s estimated pet population is 31.6 million, and survey data estimates that 7.7 million households have a pet today. This equates to 73% of all households, which shows a strong rise from 69% in 2022 and 61% in 2019, pre-COVID.
Australians spend over $21 billion each year on their pets, with food the highest category ($9.8bn), followed by vet services ($1.9bn), and products and accessories ($1.4bn).
Pet ownership in New Zealand is slightly lower (63%), but expenditure is still significant ($1.8bn). Like Australia, the highest spending categories are food, veterinary care, and toys.
This healthy industry outlook creates an environment for potentially profitable revenue streams into the future.
An Overview of How Profitable a Vet Clinic is
According to IBISWorld, the veterinary services industry has performed well over the past few years. It has been boosted by strong growth in pet ownership following the COVID-19 pandemic, a growing awareness of the importance of animal health, and the increasing availability of advanced surgical and diagnostic procedures for pets.
Pet owners are also increasingly prepared to spend more on their pets and vet procedures to give them the best possible care and help prolong their lives.
Brisbane business valuation accounting practice, Lotus Amity, quotes an Australian Tax Office (ATO) 2021 report that says veterinary practices with a turnover of more than $800,000 earned an average gross profit margin of between 74% and 77% and an average net profit margin of 20%.
These margins are considered very high compared to the overall average in Australia and New Zealand, and they align with other industries that operate in a niche environment with strong cost control, such as finance and technology. This makes veterinary clinics an attractive investment and business opportunity.
How Much Does It Cost to Start a Vet Clinic?
The costs to start a vet clinic in Australia or New Zealand can vary significantly depending on its size, location, services offered, software and equipment. Estimates range from $550,000 to over $1 million, with facility costs being the largest expense.
Equipment and technology can account for 20-30% of your initial budget, with fitout costs ranging from $100,000-$500,000+, depending on the clinic size. New clinics can cost $550,000+, while buying an existing practice ranges from $300,000-$10 million based on revenue multiples.
| Cost category |
Typical range (AUD) |
Notes |
| Facility |
$150,000–$750,000 |
Lease, fitout, build, permits, and design |
| Equipment |
$60,000–$200,000+ |
Exam tables, anaesthesia, X-rays, dental, diagnostics |
| Staff |
$100,000–$350,000+/yr |
Vet, nurse, practice manager, technician, receptionist salaries |
| Software |
$1,000–$10,000/yr depending on user count |
Practice management and cloud systems (costs dependent on size of practice) |
| Working Capital |
$50,000–$100,000+ |
Initial buffer for wages, supplies, utilities |
Source: Covetrus
“Ascend has been a positive experience for us. The monthly costs are really reasonable. It’s also a lot easier to manage our cash flow versus the yearly license fee that we used to have. Plus, it actually worked out cheaper than I expected, which I love!” Jodie Swan, Owner of Stones Corner Veterinary Surgery
How Much Can a Vet Clinic Owner Make?
A veterinary clinic owner’s income in Australia and New Zealand is based directly on the clinic’s profitability, which varies according to location, business model, veterinarian experience and specialty, and market demand.
In Australia, the median income for veterinarians ranges from $105,000 to $177,000 and varies according to specialisation and location.
The average salary for veterinarians in New Zealand ranges from $95,000 to $115,000, but it could be higher, depending on specialisation or location. Net profit margins for established clinics with turnover over $800,000 are around 20%, after paying a market-rate salary to the veterinarian.
How much a vet clinic owner makes depends on four main factors: Clinic revenue, operating expenses, debt profile, and ownership structure.
Sound profitability and earnings result from balancing a sound income stream with business expenses and debt servicing costs. Ownership structure also affects how much a vet clinic owner can make.
Revenue
The profitability of a vet clinic directly affects the owner’s earning potential. A clinic that operates well and generates a healthy income means the owner can potentially draw a larger salary.
The key components of strong revenue are sound clinic management and performance, a healthy and growing client base, and offering a range of in-demand services to maximise revenue potential.
Business expenses
Operating expenses, such as staff salaries, equipment and technology, pharmaceuticals and supplies, facility costs like rent and utilities, insurance, and marketing, all need to be factored in when working out how profitable a vet clinic is. Another key investment for any successful clinic is getting the best and most cost-effective practice management software for your clinic.
Debt servicing
If your clinic is financed through loans or business lines of credit, loan repayments are made from the clinic’s revenue, which directly affects how much the vet clinic owner can make. That’s why a realistic debt repayment plan is developed – it will make sure a sustainable cash flow is maintained and excessive financial strain on the practice is avoided.
Ownership structure
A veterinary clinic might have multiple owners or investors, who share the profits based on the ownership structure. In this scenario, it’s important to have clearly defined ownership agreements to avoid financial disputes and make sure there’s a fair distribution of profits among the clinic owners.
Careful business planning, budgeting, cost management, and efficient operations are crucial for making sure a vet clinic enjoys a healthy profit margin and positively influences how much a vet clinic owner can make. Some of the most successful vet clinic owners benefit from professional business improvement coaching.
“Over the past three years, we have used Crampton Consulting Group to guide our staff and business to a much better place. Their business coaching package has enabled us to easily benchmark my business and by ways of simple graphs, let me know how the business and individual vets are tracking.” Geoff Golovsky, Vet HQ
Revenue Potential of a Vet Clinic
Veterinary clinics generate revenue by providing a variety of services. Here’s a closer look at some key income streams:
Consultation fees
These are the central drivers of clinic revenue, and they’re charged for patient examinations, follow-up appointments, and specialist consultations. These professional fees will vary according to the complexity of a patient’s symptoms and diagnosis, and the veterinary professional’s experience.
Vaccinations and parasite prevention
Routine vaccinations and parasite prevention medications are essential for patient health, and they provide a steady source of revenue potential for a vet clinic. To maximise this revenue source, it’s important for a clinic to offer a variety of vaccination packages and parasite prevention options that cater to different patient needs and client budgets.
Surgery and other procedures
Surgical procedures like spaying and neutering, dental work, and other medical interventions offer tremendous revenue potential for a vet clinic. To benefit from this, it’s important to develop a realistic pricing structure for the various procedures to maximise revenue while remaining competitive.
Diagnostics and imaging
Services like X-rays, ultrasounds, and laboratory testing also contribute to a clinic’s revenue stream. A clinic owner needs to invest in reliable, advanced imaging equipment that provides accurate diagnoses as well as specialised diagnostic services for more complex cases.
Retail sales
A potentially significant additional revenue stream is selling pet food, treats, toys, and other pet care products through a clinic. Be sure to partner with a reputable supplier who offers high-quality retail products with healthy margins. Also consider offering competitive pricing or loyalty programmes to incentivise retail sales.
4 Tips to Maximise Profitability
To maximise clinic profitability, it’s essential to have Key Performance Indicators (KPIs), goals and metrics in place. To start with, use your Practice Management Software (PMS) to extract benchmarks, such as total revenue, total clients, new clients, average transaction value, and Cost of Goods Sold (CoGS) – generally known as expenses.
This will help you estimate your profit and earnings and also put goals in place to maximise profitability for your vet clinic.
Covetrus identifies four easy ways to potentially increase revenue:
Tip #1: Reduce missed charges
Missed charges represent a big revenue opportunity for vet clinics. Studies show that up to 20% of diagnostic charges can go un-invoiced. These charges include faecal exams, injection fees, recheck exams, ultrasounds, and blood draws. Your PMS and KPIs will help you address bad debts and recover payments from clients.
Read our case study from Animal Emergency Hospital Launceston to find out how Ascend helped them to avoid missed charges and invoices.
Tip #2: Increase new customers and repeat business
Attracting new clients and retaining existing ones are critical to maximising clinic profitability. Good branding and marketing will help promote your services and drive traffic to your clinic. Excellent customer service and client communication are important for building loyalty and encouraging repeat business.
Tip #3: Pet health plans and subscriptions
Pet-health plans set up as subscriptions help make pet care more affordable for clients. Research shows they appreciate a reasonable monthly fee that guarantees their pet’s health maintenance, including annual vaccinations and check-ups. This creates a steady flow of income for a veterinary practice and makes it easier to increase profits.
Tip #4: Reduce expenses and review stock management
Stock management and inventory are usually the second largest practice cost after staff salaries.
Good practice is to use a PMS to carry just the right amount of stock to minimise waste and maximise profit.
Listen to our related podcast: Discover your vet clinic’s hidden profit centre – $84,000 per vet
Other tips to maximise profitability are:
- Diversify services: Offer comprehensive services beyond routine checkups and vaccinations.
- Optimise staffing: Make sure you have the right staff mix with the necessary skills and experience to meet patient needs efficiently.
- Ensure competitive pricing with suppliers: Find a trusted supplier, such as Provet, who offers competitive pricing and loyalty rewards to reduce operational costs.
- Use technology: Practice management software will streamline your operations, save time, improve efficiency, and lift practice profitability.
Improve Your Veterinary Practice and Profits with Ascend
Covetrus Ascend helps manage the demands of a busy veterinary hospital by streamlining workflows, integrating patient management, and offering robust reporting tools – all within an intuitive, cloud-based system. It also lifts practice performance and operational efficiency to reduce costs and maximise profitability.
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FAQs
Can I acquire a veterinarian practice?
Although it’s feasible to start a new veterinary practice from scratch, sometimes a faster path to practice ownership is to buy one. Based on Lotus Amity’s valuation multiples, practices typically sell for 0.7x to 2.0x their annual revenue.
Is a vet clinic a good investment?
Owning a veterinary clinic in Australia or New Zealand can be a good investment, but it comes with risks, costs, and management challenges. Its success and profitability depend very much on its location, business model, operational efficiency, and what services it offers.
What is the profit margin for a veterinary clinic?
An Australian Tax Office (ATO) 2021 report states that veterinary practices with a turnover of more than $800,000 earned an average gross profit margin of between 74% and 77% and an average net profit margin of 20%.