What Does an Average Dental Practice Actually Look Like?
Go to where the puck is going to be, not where it is. — Wayne Gretzky
Why is it important to know the average numbers? Knowing what the average practice produces, and the expense ratios associated with it, gives you context for what is happening in your practice analysis. If you already own the practice and a particular number is way out of line, you probably can answer for yourself why that is the case. If this is a practice you are considering buying, you will want to delve further into that area — it could literally save you tens of thousands of dollars. We are not talking about hours in the library poring over numbers; just a quick, back-of-the-envelope calculation using the formulas in this series.
How big is an average practice anyway? How much should a practice sell for? If you google these two questions, you will find numbers all over the board. It can be extremely frustrating to see the lack of detail and to realize that the articles are usually just an advertisement for a broker or consultant.
According to the American Dental Association, the average general practice collected $770,700 in 2013 and resulted in a net income of $192,675 to the owner dentist. The same study showed that the average nonowner general practitioner earned $130,400.
Those numbers reflect an average overhead of 75 percent. It is possible that some dentists misunderstood the survey question and included total debt service in their overhead calculations, which would explain the higher percentage overhead. The ideal overhead should be around 60 percent before paying yourself and before debt service.
Editor Note: Click here for a current 2026 view and discussion of these expense ratios. Please note most coaches and consultants will disagree with these 2016 numbers as a goal. The intention is to show what is typically found in the average dental practice. But the concepts on valuation remain the same.
A note about production versus collections. For our purposes, I use these two terms interchangeably. The numbers you see in the financials delivered by the broker are collection numbers, and the expense ratios are based on total collections.
The following ideal ratios are based on surveys and the experience and research of many different dental consulting groups. The average practice collects 98 percent of what is actually produced, and around 25 percent of production comes from the hygiene department:
| Category | Percent of Gross |
|---|---|
| Gross collections | 100% |
| Hygiene production | 25% |
| General dentistry production | 75% |
| Salaries for hygienists | 9% |
| Salaries for staff | 17% |
| Payroll taxes | 2% |
| Employee benefits | 2% |
| Lab | 8% |
| Dental supplies | 6% |
| Occupancy costs | 8% |
| Office supplies | 1% |
| Legal and accounting | 1% |
| Telephone | 1% |
| Insurance | 2% |
| Advertising | 1% |
| Miscellaneous | 2% |
| Total overhead | 60% |
| Net operating income | 40% |
| Dentist compensation (30% of personal production, i.e., .75 × .30) | 23% |
| EBITDA (40% – 23%) | 17% |
In many cases, it is possible to improve on these expense ratios. Dental supplies will most likely be closer to 5 percent. High-grossing practices can have an occupancy cost as low as 2 to 3 percent. (Occupancy cost includes rent, utilities, and property taxes.)
The broker will most likely have the expense ratios of the target practice already calculated for you. How do the ratios compare to the average practice? If they aren’t close to average, check the fee schedule. A fee schedule that is unreasonably low — and can be raised — is often a diamond in the rough. Increasing revenues by raising fees goes right to the bottom line and erases a lot of expense ratio problems.
Determine how your practice compares to the average. Add up all the money currently spent on current staff members — salary, payroll taxes, insurance, uniforms, bonuses, everything for the year — and divide by the annual gross collections of the practice. This calculation takes just a couple of minutes. Compare that number to the average practice above. Do the same for each of the other expense categories. For occupancy cost, include rent, utilities, and property taxes, when applicable. You will find that the three big expense categories are salaries, lab, and occupancy cost.
Next up: in Part 4, we put these benchmarks to work and walk through exactly how to calculate what a practice is worth to you. Click here for a link to an updated 2026 discussion of expense ratios.