Overhead is one of those things that can creep up on you if you’re not paying attention. One minute, everything seems fine—then suddenly, you’re wondering where all your profits went. It’s tricky because there aren’t always obvious warning signs before overhead starts eating into your bottom line.
The reality is, that dental practice overhead isn’t just a cost—it’s what keeps your practice running. Your team, your equipment, your office space—it all plays a role in patient care. But when overhead gets too high, it can cut into your profits and make growth feel impossible.
So how do you know if your overhead is in a healthy range or if you’re overspending? That’s where dental practice overhead benchmarks come in.
Let’s break down the numbers so you can see where your practice stands and what adjustments might help keep costs under control.
Overhead Benchmarks for Small Dental Practices
Overhead can feel like a delicate balancing act for a small dental practice. With fewer employees and smaller patient volumes, every dollar spent on rent, supplies, or staff weighs heavily on the bottom line. Dentists should be cautious of letting even small inefficiencies snowball into major expenses. However, being overly frugal can backfire too as cutting corners on quality or staffing have negative effects in the long-run while providing temporary relief in the short-term.
The overhead for a small practice typically falls between 60% and 70% of collections. Anything creeping above 70% is a red flag, which means that you need to take action. On the other hand, if overhead dips below 60%, it’s worth checking whether critical areas, such as staff pay or technology upgrades, are being neglected.
Here’s a breakdown of common overhead categories for small practices, along with their benchmarking ranges:
- Rent and Utilities: 12%-15%
- Salaries and Benefits: 25%-30%
- Clinical Supplies: 5%-7%
- Marketing: 10%-15%
- Technology and Software: 2%-4%
- Miscellaneous (Insurance, Licenses, etc.): 5%-7%
If your numbers fall within these ranges, you’re in a good spot. But if any category balloons beyond its limit, it’s time to dig in and investigate. Keeping overhead in check is less about squeezing every penny and more about making smart, sustainable choices for your practice.
Note: When you are smaller you should have a larger focus on marketing spend. Once you build up a patient base this number will get smaller because of referrals, and reappointments of existing patients, along with a larger collections number.
Overhead Benchmarks for Medium-Sized Dental Practices
Medium-sized practices, with three to five operators, benefit from economies of scale but also face a heavier financial burden. As your team and patient load grow, costs like payroll and technology can skyrocket if not carefully managed.
The key is finding efficiency without sacrificing quality—streamlining workflows, leveraging group discounts, and ensuring staff productivity are essential. However, be wary of over-expansion; even medium practices can get stretched thin if expenses aren’t aligned with revenue.
For medium practices, the typical overhead percentage ranges from 55% to 65% of collections. If overhead climbs above 65%, it’s time to investigate whether inefficiencies, like overstaffing or excess supply orders, are draining your profits.
Conversely, if it’s below 55%, you might be underinvesting in critical areas like marketing, technology, or staff training. Striking the right balance is vital to ensure your practice grows without compromising operational efficiency or patient satisfaction.
Here are the common overhead categories for medium practices with their benchmarks:
- Rent and Utilities: 8%-10%
- Salaries and Benefits: 20%-25%
- Clinical Supplies: 4%-6%
- Marketing: 8%-10%
- Technology and Software: 3%-5%
- Miscellaneous (Insurance, Licenses, etc.): 5%-7%
If your overhead aligns with these numbers, you’re likely in good shape. You should just keep a close eye on staffing and supply costs, as these are common culprits for overspending in medium-sized practices.
With the right controls in place, you can optimize efficiency and maintain profitability as your practice scales.
Overhead Benchmarks for Large Dental Practices
Large practices are like well-oiled machines when overhead is managed properly. Because of its size, large practices can take advantage of bulk purchases and streamline processes to generate cost savings. However, they also face higher administrative expenses, compliance costs, and the complexities of managing larger teams. Scaling up requires maintaining quality across all locations while keeping a tight rein on spending.
For large practices, overhead typically falls between 50% and 60% of collections. Overhead above 60% may signal inefficiencies in administrative processes, ineffective cost controls, or underutilized resources.
If your overhead dips below 50%, review whether critical investments—like staff benefits, advanced technology, or marketing for expansion—are being overlooked. A healthy range ensures the practice remains profitable while supporting growth and patient satisfaction.
Here are the benchmark ranges for overhead categories in large practices:
- Rent and Utilities: 6%-8%
- Salaries and Benefits: 18%-22%
- Clinical Supplies: 3%-5%
- Marketing: 6%-8%
- Technology and Software: 4%-6%
- Miscellaneous (Insurance, Compliance, etc.): 6%-8%
For large practices, the devil is in the details. Administrative costs and compliance can quietly creep up, unless you frequently audit it.
Focus on leveraging your size to negotiate better rates on supplies and technology, ensuring every dollar works harder. When managed carefully, a large practice can achieve both profitability and scalability, setting a strong foundation for long-term success.
Need Help Figuring Out Your Dental Practice Overhead?
Overhead can be tricky—it’s not as simple as hitting a target percentage and calling it good. Benchmarks are a great guide, but they don’t tell the whole story. Even two dental practices of the same size can have very different overhead structures.
One might focus on high-end cosmetic procedures, while another runs a high-volume, insurance-based model—and those differences will naturally impact costs. Your overhead isn’t just a number; it’s a reflection of how your practice operates, what sets you apart, and where your money is actually going.
That’s why a customized approach is key. At Virjee Consulting, our dental CPAs specialize in helping practice owners understand their overhead inside and out. We’ll break down your numbers, pinpoint inefficiencies, and help you find the right balance between investing in your practice and protecting your profits.
Want to take control of your overhead? Head over to our Getting Started page, and we’ll be in touch within one business day.
Until next time.
