Marcon Matrix: How to Identify the Most Popular and Profitable Sanatorium Services

Why high demand does not always mean high profitability

A modern sanatorium may offer dozens of medical, wellness, accommodation, catering, and supplementary services. Its portfolio may include therapeutic procedures, medical consultations, diagnostic examinations, rehabilitation programmes, spa treatments, swimming pool access, fitness activities, beauty services, accommodation packages, and leisure activities.

Some services generate stable demand but contribute little profit because they require expensive materials, specialised equipment, or significant staff time. Other services produce a strong margin per treatment but are rarely purchased.

For this reason, sales volume alone does not provide enough information for effective service portfolio management. Revenue also gives an incomplete picture because it does not show how much of that revenue remains after variable costs have been covered.

A reliable analysis should consider demand, selling price, variable cost, total contribution margin, and contribution margin per service at the same time. This makes it possible to identify which services create profit, which mainly support occupancy or guest flow, and which consume resources without producing a sufficient financial result.

Manual analysis is difficult when appointments, medical procedures, materials, payments, staff schedules, and accommodation data are stored in separate systems or spreadsheets. Sanatorium automation with SandSoft brings these operational areas together and creates a consistent data basis for regular service profitability analysis.

Why is revenue not enough to assess a service?

Revenue shows the total value of sales but does not reflect the resources required to provide the service. Two procedures with the same revenue may have very different material costs, staff requirements, duration, and contribution margins.

What is the Marcon matrix?

The Marcon matrix is a quantitative service portfolio analysis method based on an organisation’s internal financial and operating data. It compares the popularity of each service with its economic contribution.

Unlike a basic sales report, the method considers several indicators simultaneously:

• number of services sold;
• selling price;
• variable cost per service;
• total contribution margin;
• contribution margin per unit;
• contribution margin as a percentage of revenue.

The purpose of the analysis is not simply to remove services with weak results. The Marcon matrix helps management decide whether to adjust the price, reduce costs, improve promotion, redesign a programme, increase availability, or discontinue an economically inefficient service.

The academic article “Matrix Methods for Product Portfolio Analysis and Their Comparative Characteristics”, published in the KANT journal, describes the Marcon matrix as a quantitative portfolio analysis method based on total gross margin, margin per unit, and gross margin percentage.

In a sanatorium, the object of analysis may be an individual treatment, a medical programme, an accommodation package, a tariff, a diagnostic service, a wellness procedure, or a supplementary service.

How does the Marcon matrix differ from a sales report?

A sales report shows how often a service was purchased and how much revenue it generated. The Marcon matrix also includes variable costs and contribution margin, allowing management to assess the financial value of each service.

Indicators used in the Marcon matrix

The method uses six related indicators.

Q — quantity sold

This is the number of times a service was provided during the selected period.

P — selling price

This is the average price actually paid for one service. Discounts, package allocations, and special rates should be reflected in the calculation.

C — variable cost per service

This includes costs that increase when an additional service is provided.

MCA — total contribution margin

The total contribution margin is calculated as:

MCA = P × Q − C × Q

The same formula may be written as:

MCA = (P − C) × Q

This indicator shows how much remains after variable costs have been covered. The remaining amount contributes towards fixed costs and operating profit.

MCU — contribution margin per service

The contribution margin per unit is calculated as:

MCU = MCA / Q

It may also be expressed as:

MCU = P − C

This indicator shows how much each additional service contributes after its direct variable costs have been deducted.

MCI — contribution margin percentage

The contribution margin percentage is calculated as:

MCI = MCA / (P × Q) × 100%

It shows the share of revenue remaining after variable costs.

The Investopedia explanation of contribution margin defines it as sales revenue minus variable costs and notes that it can be used to assess the profitability of individual products, services, or business units.

Which costs should be treated as variable?

Variable costs may include medicines, disposable materials, laboratory reagents, cosmetics, laundry related to a specific service, catering ingredients, outsourced specialist fees, and other expenses that change with the number of services provided.

How the Marcon matrix is constructed

After the six indicators have been calculated, the result for each service is compared with the average for the selected group.

The comparison group should contain economically similar services. For example, diagnostic procedures should usually be compared with other diagnostic procedures rather than with accommodation packages or restaurant services.

Each indicator receives a binary code:

• 1 if the result is equal to or above the group average;
• 0 if the result is below the group average.

Each service is therefore represented by a six-digit code. One code may indicate that the service sells more frequently than average, has an above-average price, requires relatively high variable costs, and still produces a strong total contribution margin.

Six binary indicators theoretically create 64 combinations. However, because quantity, price, cost, and margin indicators are mathematically related, only 24 cells are considered feasible in the full matrix model.

Services with the same code occupy a similar economic position. This allows management to divide a large portfolio into homogeneous groups and apply different management actions to each group.

For day-to-day reporting, the complete code does not need to be shown to every manager. A dashboard may present a colour, an arrow, or a service category while retaining the underlying calculations for detailed review.

Which benchmark should be used?

Services should be compared within a meaningful group. Medical procedures, accommodation packages, catering services, and leisure activities usually require separate analysis because their prices, cost structures, and operating models differ.

Four practical Marcon matrix zones

For management reporting, the complete matrix can be simplified into four practical zones. This format makes the result easier to interpret.

• High sales and high profitability. These services are popular and generate a strong contribution margin. Management should protect service quality, maintain availability, and consider whether capacity can be increased without reducing standards.
• Low sales and low profitability. These services generate insufficient demand and weak financial results. Their price, cost structure, relevance, and strategic purpose should be reviewed.
• High sales and low profitability. These services support guest flow or workload but generate limited contribution margin. Management should examine discounts, material consumption, staff productivity, package pricing, and opportunities to increase the price.
• Low sales and high profitability. These services produce a strong margin per treatment but are purchased infrequently. The sanatorium should investigate awareness, medical recommendations, booking accessibility, scheduling, and inclusion in treatment programmes.

The matrix does not make the final decision automatically. A low-margin procedure may still be medically necessary, required within a treatment programme, or important for guest satisfaction.

Should every low-margin service be discontinued?

No. A service may have medical, social, strategic, or commercial value that is not fully reflected in its direct margin. Management should consider its effect on treatment outcomes, programme completeness, guest satisfaction, and sales of related services.

Full Marcon classification of services

The complete method divides portfolio items into six groups. The original group names are figurative, but each category reflects a specific relationship between scale and profitability.

White giants are services with strong sales volumes and a high total contribution margin. They are usually among the most important sources of operating profit.

Red giants are widely purchased services that cover their costs but provide a lower return than the strongest portfolio positions.

Blue dwarfs have a high contribution margin per unit but low sales volumes. They may require better promotion, stronger medical recommendations, or improved availability.

White dwarfs have potential but currently produce limited total contribution. They may include recently introduced services or offers with restricted capacity.

Satellites have limited demand and modest financial results. They usually require changes to pricing, positioning, cost structure, or delivery conditions.

Black holes absorb resources without producing an adequate contribution margin. Management should determine whether they are strategically necessary or should be redesigned or removed.

The full classification is more detailed than the four-zone version and is suitable for periodic portfolio reviews, budgeting, pricing discussions, and service development planning.

How often should the classification be recalculated?

Monthly analysis is usually sufficient for most sanatoriums. Weekly or more frequent calculations may be appropriate during the launch of new programmes, seasonal demand changes, or major price revisions.

Example of sanatorium service analysis

Consider four supplementary services. For simplicity, the example uses sales volume, price, variable cost, and contribution margin.

Therapeutic massage combines strong demand with a high total contribution margin. The main management task is to maintain quality, control therapist workload, and prevent a shortage of available appointment times.

Swimming pool visits have the highest sales volume but a relatively low margin per visit. Management should review membership discounts, utility consumption, staffing, occupancy limits, and opportunities for differentiated pricing.

Therapeutic mud treatment has a strong contribution margin per procedure but low demand. Possible causes include limited appointment availability, insufficient guest awareness, weak inclusion in treatment programmes, or an inconvenient schedule.

The oxygen cocktail provides a limited total contribution margin. However, this does not automatically justify discontinuation. It may increase the average value of a treatment package, support guest satisfaction, or complement other services.

Accurate analysis requires detailed information about each procedure provided. The SandSoft section on medical services and electronic medical records describes the registration of treatments by department, specialist, and appointment time. These records can support calculations of service volume and revenue.

Can services of different duration be compared?

Yes, but management should also calculate contribution margin per hour of specialist time or treatment room use. A service with a high margin per procedure may be less attractive if it occupies scarce capacity for a long period.

Why variable cost accuracy is critical

The main limitation of the Marcon matrix is the quality of the source data. If variable costs are incomplete or incorrectly allocated, a service may be assigned to the wrong group.

For example, the cost of a medical treatment should include medicines, disposable materials, and other resources directly consumed during the procedure.

A doctor’s full monthly salary should not automatically be treated as a variable cost if the employee receives a fixed salary regardless of the number of procedures performed.

Mixed costs require additional attention. Laundry, electricity, water, cleaning, and staff remuneration may contain both fixed and variable components.

The cost of the same procedure may also vary depending on the treatment programme, the amount of materials used, the duration, or the qualification of the specialist involved.

Where accurate actual costs are not yet available, the sanatorium may begin with standard variable costs. These standards should subsequently be compared with actual material consumption and staff time.

Should fixed costs be included in MCA?

No. Total contribution margin is calculated after deducting variable costs. Fixed costs are considered later when management assesses whether the total contribution generated by all services is sufficient to cover administration, property, infrastructure, and other fixed expenses.

Management decisions based on the analysis

The Marcon matrix identifies services that require management attention. It does not replace professional judgement.

When both demand and profitability are high, the sanatorium should determine whether capacity can be expanded. The limiting factor may be specialist availability, treatment room capacity, equipment, or material stock.

When demand is high but profitability is low, management should review price levels, discounts, material consumption, treatment duration, and staff productivity.

When profitability is high but demand is low, management should investigate why guests rarely select the service. Guests may be unaware of it, may not understand its value, may not receive a medical recommendation, or may find booking difficult.

When both indicators are low, the sanatorium should assess whether the service has a strategic or medical purpose. If it does not, possible actions include redesigning the offer, outsourcing part of the service, combining it with another programme, or removing it from the portfolio.

The method can also be applied to complete treatment programmes. In this case, management evaluates both the financial result of the package and the contribution of each procedure included in it.

Can the Marcon matrix support pricing decisions?

Yes. It identifies high-volume services with insufficient margins and high-margin services with limited demand. However, price changes should also consider demand sensitivity, competitor prices, guest expectations, and the perceived value of the service.

How to introduce regular service portfolio analysis

A one-time calculation only reflects the selected period. To manage the portfolio effectively, the Marcon matrix should become part of the sanatorium’s regular reporting process.

Management should first divide services into comparable groups. It should then establish consistent accounting rules for sales volume, revenue, discounts, refunds, variable costs, and package allocations.

After the indicators have been calculated, each service should be assigned to a matrix group. A management action should then be defined for services requiring attention.

Subsequent calculations should show whether a price change, promotional activity, process improvement, or cost reduction has moved the service into a stronger category.

The analysis should also be supplemented with operational indicators such as treatment room occupancy, specialist productivity, average procedure duration, repeat purchases, and guest satisfaction. The sanatorium KPI section provides examples of financial and operational indicators that can support a broader performance assessment.

Which reporting period is most appropriate?

The period should include enough sales to produce meaningful results and should account for seasonality. A month, quarter, or comparable seasonal period is usually appropriate. Rarely purchased services may require a longer analysis period.

Limitations of the Marcon matrix

The method is based primarily on internal quantitative data. It does not automatically measure treatment quality, health outcomes, guest feedback, strategic importance, competitive activity, or medical necessity.

It also provides a snapshot for a selected period. A service may remain below average while demonstrating consistent growth. Another may still appear strong while gradually losing demand.

Average values may also create misleading conclusions. If most services have weak profitability, performing above the average does not necessarily mean that a service meets the sanatorium’s required financial standard.

For this reason, the matrix should be supplemented with target margins, minimum profitability thresholds, trend analysis, guest feedback, medical outcomes, complaints, repeat visits, and competitor monitoring.

Can a new service immediately appear in a weak category?

Yes. New services usually have below-average sales during the launch period. They should be reviewed separately, taking account of promotional activity, launch costs, guest awareness, and the expected time required to reach planned demand.

Automating service analysis with SandSoft

The practical value of the Marcon matrix depends on the ability to obtain accurate sales and cost information regularly.

Where information is collected manually, the calculation quickly becomes outdated and requires considerable staff effort.

An automated system can obtain data from appointments, medical prescriptions, completed procedures, guest payments, materials consumed, package allocations, and staff records. It can then calculate quantity sold, average price, variable cost, contribution margin, and margin percentage.

A management report does not need to display the complete 24-cell matrix. It may show the service name, sales quantity, revenue, contribution margin, profitability, Marcon group, and recommended management action.

The figures should be recalculated automatically when the reporting period, department, medical profile, or service group changes.

The SandSoft overview of software for sanatoriums shows how accommodation, treatment schedules, medical procedures, catering, and related operations can be managed within a connected system. Combining these records creates the foundation for automated service profitability analysis.

What data is required for automated calculation?

The system should record the service name, quantity provided, actual selling price, discounts, revenue, standard and actual material consumption, variable staff costs, and other expenses that change with the number of procedures performed.

The Marcon matrix as a profit management tool

A sanatorium’s service portfolio should reflect guest demand, its medical profile, available resources, and financial objectives.

Portfolio decisions should not be based only on the preferences of managers or individual specialists. They should be supported by measurable operating and financial data.

The Marcon matrix moves the discussion from assumptions to evidence. It identifies services that are both popular and profitable, services that generate volume without sufficient margin, and services that have strong financial potential but require demand development.

The method does not provide an automatic decision to develop or discontinue a service. Its role is to identify the areas requiring management attention and provide a financial basis for further action.

Sanatorium automation with SandSoft combines service records, medical appointments, settlements, accommodation, and cost data. This makes it possible to calculate the Marcon matrix regularly and use its results for pricing, treatment programme development, capacity planning, and service portfolio management.