Ask ten dental owners what their overhead is and you will get ten numbers calculated ten different ways. One includes the associate. One includes the owner's car. One counts rent paid to the owner's own real estate LLC at double the market rate. One is on a cash basis in a year they bought $140,000 of equipment and expensed it. Then all ten compare their number to "the benchmark," which itself comes from a consultant who calculated it an eleventh way.
Overhead benchmarks are useful. They are the fastest way to spot a category that has drifted. But they only work if you understand what is inside the number and you normalize your own books before you compare. This post gives you both: the category ranges commonly used for general practices, and a step-by-step method for reading your own P&L against them.
Key takeaways
- Total overhead for a general practice is commonly quoted around 60% to 65% of collections, with well-run practices often in the mid to high 50s. Treat these as rough industry conventions, not precise data.
- Benchmarks almost always exclude owner-dentist compensation. Associate pay is usually tracked separately too. Mixing either into "overhead" makes every comparison meaningless.
- Staff costs are the largest category and the one that most often explains a high total. Lab and supplies come next.
- Before comparing, normalize: strip out personal expenses, adjust owner-occupied rent to market, and separate depreciation and debt service from operating costs.
- A percentage can look bad because collections are low, not because costs are high. Always check the dollar figures alongside the ratio.
Where overhead benchmarks come from (and why they disagree)
There is no single official overhead benchmark for dentistry. The American Dental Association's Health Policy Institute runs the Survey of Dental Practice, which tracks dentist income, gross billings, and expenses over time. Its recent findings are mostly about direction rather than category targets: HPI has reported that practice expenses have been growing faster than practice revenues, a pattern it describes as margin compression. In its update on 2023 data, for example, HPI reported expenses growing faster than revenues while general dentists worked more hours than their pre-pandemic averages. You can read HPI's summaries on the ADA's dental practice research page.
The category percentages you see in articles and consultant decks mostly come from dental CPA firms and practice management consultants, who build them from their own client bases. That is valuable data, but each firm's client mix is different (more urban, more fee-for-service, more startups, more multi-doctor), and each firm classifies expenses slightly differently. So the ranges below are a synthesis of commonly cited figures, not a single source, and they will not match any one firm's list exactly.
The trend matters as much as the level. Industry surveys continue to report overhead rising for most practices. The 2025 Dental Economics and Levin Group annual practice survey, for instance, reported that a majority of respondents saw overhead increase and ranked rising overhead and declining insurance reimbursement among their biggest challenges. If your overhead percentage has been flat for three years while fees and wages rose, that is worth understanding too.
Overhead benchmarks by category
The table below shows approximate ranges for a general practice, expressed as a percentage of collections (not production). These exclude owner-dentist compensation and, in most formulations, associate compensation. They are rough, typical ranges that vary by region, practice size, payer mix, and whether the practice owns technology like in-house milling.
| Category | Approximate range (% of collections) | What usually pushes it higher |
|---|---|---|
| Team wages, payroll taxes, and benefits (non-doctor) | 24% to 28% | Overstaffing for the schedule, high-cost labor market, hygienists paid well above production, low collections |
| Dental supplies | 5% to 7% | No formulary, multiple vendors, waste, heavy implant or specialty procedure mix |
| Laboratory fees | 6% to 9% | High crown and prosthetic volume, premium labs, remakes; lower if milling in-house |
| Rent and occupancy | 5% to 8% | High-cost market, oversized space, below-capacity operatories, above-market related-party rent |
| Equipment leases, repairs, and maintenance | 1% to 4% | Aging equipment, recent technology purchases on lease |
| Marketing and advertising | 1% to 5% | Startups and growth phases, competitive markets, paid search |
| Office, software, and administrative | 2% to 4% | Overlapping software subscriptions, paper-heavy processes |
| Professional fees, insurance, bank and card fees | 2% to 4% | Legal disputes, high card-processing rates, underinsured risk transferred to premiums |
| Total overhead | Roughly 58% to 65% | Any of the above, or simply low collections |
One widely cited framework from a dental CPA, published in Dental Economics, suggested keeping total overhead at or below 60% of collections, with employee costs around 24% to 26% (and not above 28%), supplies near 6%, lab near 8%, and rent in the 5% to 6% range, leaving roughly 35% to 40% for doctor compensation and profit. Other firms publish slightly different targets. The spread is why you should use these numbers to find outliers, not to grade yourself to the decimal.
The most common misreading: an owner compares "total expenses on the tax return divided by collections" to a 60% benchmark and panics at 78%. The tax return figure usually includes associate pay, the owner's own payroll if they are an S corporation paying a salary, depreciation, interest, and personal items. None of those belong in the benchmark comparison until you separate them out.
What goes in overhead and what does not
Before you can compare anything, you need a consistent definition. The version most benchmarks use looks like this:
| Include in operating overhead | Keep separate (do not include) |
|---|---|
| Non-doctor staff wages, payroll taxes, health insurance, retirement match for staff | Owner-dentist salary, draws, distributions, and owner retirement contributions |
| Supplies, lab, rent at market rate, utilities | Associate dentist compensation (track as its own line, as a percentage of that associate's collections) |
| Equipment repairs, operating leases, software | Principal and interest on practice acquisition loans |
| Marketing, office supplies, professional fees, insurance, card fees | Depreciation and amortization (review separately; cash-basis owners often confuse capital purchases with operating spend) |
| Continuing education for staff | Personal and discretionary items run through the practice |
Some firms put associate pay inside overhead and adjust the benchmark upward to compensate. That is a valid choice, but only if the benchmark you are comparing against was built the same way. When in doubt, keep associates separate: it lets you see whether an associate is profitable on their own.
How to normalize your P&L before comparing
This is the part most owners skip, and it is the part that makes the comparison worth anything. Work from your accrual-basis P&L if you have one, or ask your CPA for it. A cash-basis P&L can swing wildly with the timing of big purchases.
- Start with collections, not production. Benchmarks are percentages of collections. If your P&L shows gross production, use net collections from your practice management software instead. (If you are unsure what the difference is, our KPI guide walks through collection rate.)
- Remove all doctor compensation. Owner salary, owner payroll taxes and benefits, and associate pay come out of overhead and go into their own section.
- Adjust related-party rent to market. If you own the building through a separate entity and charge the practice rent, replace that figure with what a third-party landlord would charge for comparable space. Above-market rent inflates overhead; below-market rent flatters it.
- Strip out personal and discretionary spending. Vehicles, family cell phones, travel that is mostly vacation. Your CPA may classify these legitimately for tax purposes, but they distort operating comparisons.
- Separate capital from operations. A $90,000 CBCT expensed under Section 179 is not operating overhead for that year in any meaningful sense. Pull depreciation and large capital purchases out and look at them separately. Our Section 179 guide explains why these numbers get lumpy.
- Remove one-time items. A legal settlement, a one-off buildout repair, or a signing bonus should be noted and set aside.
- Group what is left into the categories in the table above and divide each by collections.
Do this with twelve months, not one. A single month is distorted by payroll timing (three pay periods in some months), lab bills that lag cases, and supply orders that land in bulk. Use a trailing twelve months, or the last full calendar year, and compare year over year.
Worked example: reading one practice's overhead (hypothetical)
Hypothetical example. A single-doctor general practice collects $1,100,000 a year. The owner reports "overhead of 74%" because the tax return shows $814,000 of total expenses. Here is what normalizing reveals:
| Line | As reported | Adjustment | Normalized |
|---|---|---|---|
| Total expenses on return | $814,000 | ||
| Owner W-2 salary and payroll taxes | Remove $130,000 | ||
| Depreciation (new chairs and sensors) | Remove $62,000 | ||
| Interest on acquisition loan | Remove $28,000 | ||
| Rent to owner's building LLC ($96,000) | Market rent is $72,000: remove $24,000 | ||
| Vehicle, personal travel, family phones | Remove $18,000 | ||
| Normalized operating overhead | $552,000 (50.2%) |
The practice is not running at 74% overhead. On a normalized basis it is around 50%, which is lean. Now break that $552,000 into categories:
| Category | Dollars | % of $1.1M collections | Read |
|---|---|---|---|
| Team wages, taxes, benefits | $291,000 | 26.5% | Within range |
| Supplies | $64,000 | 5.8% | Within range |
| Lab | $55,000 | 5.0% | Low: check whether the doctor is referring out crown and bridge or milling in-house |
| Rent (market-adjusted), utilities | $84,000 | 7.6% | Upper end: is the space underused? |
| Everything else | $58,000 | 5.3% | Lean: possibly under-investing in marketing |
The story here is not "cut costs." The story is a practice with decent cost control whose rent percentage hints at empty operatories, and whose low marketing and lab figures may mean it is not growing. The fix is more likely on the revenue side. That is the kind of conclusion benchmarks are good for, as long as you normalize first.
Reading each category: what a high or low number usually means
Staff costs
This is the category that most often drives a high total. Before you conclude you are overstaffed, check three things. First, is the percentage high because the dollars are high, or because collections are low? A fully staffed office running a half-empty schedule looks "overstaffed" on paper when the real problem is scheduling. Second, is hygiene covering its cost? Hygienist compensation relative to hygiene production is its own analysis, covered in our hygiene profitability guide. Third, are benefits growing faster than wages? Health insurance renewals can quietly add points to this line.
Lab and supplies
These are variable costs that should move roughly with production. If they are rising as a share of collections while production is flat, look for remakes, price creep from a single vendor, or a shift in procedure mix. A practice doing more implants and clear aligners will run higher lab and supply percentages and can still be highly profitable, because the fees are higher too. Compare the category to the procedures that drive it, not just to a generic benchmark.
Rent and occupancy
Occupancy is mostly fixed, so its percentage falls as collections rise. A high rent percentage is often a capacity problem (too few productive hours per operatory) rather than a lease problem. If you are negotiating a renewal or considering a move, the lease terms chapter of our real estate track covers the terms that drive total occupancy cost, and lease vs. buy covers the related-party rent question.
Marketing
A low marketing percentage is not automatically good. It can mean the practice is living on a referral base that is slowly shrinking. Look at new patient counts over the last three years before celebrating. Our separate post on how much to spend on marketing goes deeper on budgeting by practice stage.
Fixed vs. variable: the break-even view
Percentages hide an important structural fact: some costs are fixed (rent, base salaries, software, insurance) and some are variable (lab, supplies, card fees, some hygiene pay). That split determines how much of each additional dollar of collections you keep.
Hypothetical example. Suppose a practice's fixed costs are $420,000 a year and its variable costs run about 16% of collections (lab, supplies, card fees). Each additional dollar collected contributes about 84 cents toward fixed costs and profit. The practice breaks even, before any doctor pay, at about $500,000 of collections ($420,000 divided by 0.84). Every dollar above that is contribution to doctor compensation and profit, which is why a practice at $1.4M can show a far better overhead percentage than one at $900K with a nearly identical cost structure.
This is also why a percentage alone can lead you astray. A practice that adds a fourth hygiene day may see staff costs rise in dollars but fall as a percentage, because the new production covers the added wage and contributes to fixed costs. Cutting that day to "improve overhead" would do the opposite.
Common mistakes when benchmarking overhead
- Comparing to a benchmark built differently. If the source included associate pay in overhead and you did not, you will look falsely lean.
- Using production instead of collections. Dividing by gross production makes every percentage look smaller, especially in PPO-heavy practices with large write-offs.
- Cutting the wrong costs. Slashing marketing or hygiene hours can improve this year's percentage while shrinking next year's collections.
- Ignoring the trend. One year at 63% tells you little. Three years rising from 57% to 63% tells you a lot.
- Treating specialty practices like GPs. Oral surgery, orthodontic, pediatric, and periodontal practices have different cost structures. Use specialty-specific benchmarks from a CPA who serves that specialty.
- Believing a seller's low overhead. If you are buying, unusually low overhead can mean expenses are being paid elsewhere. Our acquisition guide lists this as a red flag for a reason.
Monthly overhead review checklist
- Pull an accrual-basis P&L and net collections for the trailing twelve months
- Separate owner and associate compensation into their own section
- Adjust related-party rent to market and remove personal items
- Pull depreciation, interest, and one-time items out of operating overhead
- Calculate each category as a percentage of collections
- Compare each category to last year and to the approximate ranges above
- For any outlier, check dollars first: is the cost high, or are collections low?
- Write down one action per outlier category and review it next month
When to bring in your CPA
You can do the first pass yourself. But the classification decisions (what counts as owner compensation in an S corporation, how to treat a related-party lease, how depreciation is being taken) have tax consequences, and a dental-specific CPA will have their own benchmark set built from comparable clients. Ask your CPA for a benchmarked P&L once a year at minimum. If they cannot produce one, that is useful information about whether you have the right CPA. Tax treatment and expense classification should always be confirmed with your own CPA rather than taken from a general article.
Putting it to work
Overhead benchmarks are a flashlight, not a report card. Normalize your books, calculate each category against collections, and look for the one or two categories that are out of line. Then ask whether the fix is on the cost side or the revenue side, because more often than owners expect, it is revenue.
For the next step, read Financial Management for Practice Owners in our operations track for how to read the full P&L monthly, and our guide to the KPIs worth tracking for the operating numbers that sit upstream of overhead. If you are evaluating a practice to buy, how dental practices are valued shows how normalized overhead feeds directly into price, and the PPO write-off calculator helps you see how fee schedules shape the collections side of the ratio.
Educational content only. It is not legal, financial, tax, or clinical advice. Prices and ranges are approximate and vary by region, condition, and year. Verify current rules with your state dental board and qualified professionals. ChairsideSource is not affiliated with any manufacturer, the ADA, or the DAT.