I paid a CPA $750 for a year-end review. Then $1,500 for a "financial assessment" from a dental consultant. Both times I got a PDF that told me my overhead was high. No breakdown. No benchmarks. No idea where to start.
So I built the tool I wanted. But to do that, I had to answer a question that surprisingly doesn't have a clean public answer: what should each overhead category actually be, as a percent of collections?
This is my answer — based on ADA Health Policy Institute data, dental CPA benchmarks, and what I see running my own practice every month.
The number everyone knows — and misuses
"Keep overhead under 60%." You've heard it. It's true. It's also almost useless on its own. Knowing you're at 64% tells you nothing about where the problem is. Staffing? Supplies? Lab? Rent? Each has a completely different fix.
You have to break it into categories and compare each one to a benchmark. That's what this post does.
Important: All percentages are based on net collections — what you actually deposited, after write-offs. Not gross production. If you're heavy PPO, your collections are materially lower than your production, which makes every overhead % look worse. That gap is its own problem worth tracking.
The benchmark table
Two tiers: startup (0–3 years) and established (4+). Startups run higher across the board — that's not a problem, it's just reality. You haven't negotiated your lease, built vendor relationships, or filled your schedule yet.
| Category | Startup (0–3 yrs) | Established (4+ yrs) | What it means when you're over |
|---|---|---|---|
| Staff Payroll wages, taxes, benefits |
32% | 30% | Overstaffed, hygiene underbooked, or comp hasn't been reviewed |
| Dental Supplies clinical consumables |
6% | 5% | Never price-shopped — brand loyalty costs 15–20% premium |
| Lab Fees | 8% | 7% | Single vendor, no competitive pressure on pricing |
| Marketing ads, website, referral |
6% | 4.5% | Under 2%: choking new patient flow. Over: track ROI by channel. |
| Facility rent, utilities, insurance |
10% | 7% | Lease not renegotiated, or not producing enough per op |
| Software / IT | 1.5% | 1.2% | Subscription creep — audit it once a year |
| Business Insurance | 1.5% | 1.5% | Re-shop every 2–3 years |
| Professional Fees CPA, legal |
2% | 1.5% | One-time fees spike this — look at the trend, not one year |
| Merchant / Card Fees | 1.5% | 1.5% | Over 2.5% — time to negotiate your processor rate |
The five that actually move the needle
Five categories make up 85–90% of your overhead. Everything else is noise. Start here.
1. Staff payroll — biggest line, biggest lever
Usually 30% of collections — bigger than rent and supplies combined. When you're over, it's almost always one of three things: too many people for your production volume, a hygiene schedule that isn't full, or compensation that crept up while collections stayed flat. The fix is rarely cutting pay. It's growing production per chair.
2. Dental supplies — the easiest win
Most practices overpay 15–20% because they've never price-shopped. Benchmark is 5%. If you're at 7–8%, almost all of it is recoverable. Get competing quotes from Patterson, Schein, and Benco. Switch gloves and masks to house brand. See the full dental supply cost playbook →
3. Lab fees — the one you can actually negotiate
Target is 7%. If you're over, you either have one lab with no competitive pressure, or a high crown/bridge mix that's legitimately driving costs. One is a phone call fix. Ask your lab for an itemized fee schedule, get one competing quote, and use it as leverage. Most labs will move 10–15% rather than lose a loyal account. See the complete lab fees guide →
4. Marketing — where most practices are quietly bleeding
Benchmark is 4.5% for an established practice. Most I've seen are running under 2%. That's not being conservative — it's slowly strangling new patient flow. At $30–60 per new patient call via Google Ads, every dollar you're not spending is a patient you didn't get. A practice at $800K spending 1.5% on marketing is leaving serious production on the table.
5. Facility — hardest to change, still worth knowing
You can't renegotiate a lease tomorrow. But knowing where you stand tells you two things: whether your next renewal conversation is coming at a good time, and whether you're producing enough per operatory to justify the space you're paying for. At 10% facility overhead, the question isn't just "can I cut rent" — it's "am I filling my chairs?"
What about your own compensation?
Owner comp is excluded from overhead — but it's the most important number in the report. Target is 30%+ of net collections (35%+ for mature practices). If you're taking home less than that, you're working for your expenses. That's the actual problem.
S-corp owners: Don't just look at your W-2. Add your distributions. That combined number is what needs to hit 30%+. Your payroll line alone will almost always look low.
Does practice age matter?
A lot. A startup at 68% overhead isn't a crisis — it's expected. That same number in a 12-year practice is a real problem. Here's how I read it:
- Startup (0–3 years): Under 65% is good. 65–72% is expected. Over 72% — start digging.
- Established (4–10 years): Under 58% is best-in-class. 58–63% is fine. 64–70% is a warning. Over 70% is urgent.
- Mature (10+ years): Same thresholds — but at this stage anything above 58% is an addressable opportunity, not just a benchmark miss. You should have the vendor relationships and referral base to do better.
How to use this right now
Pull your last 12-month P&L. Calculate each category as a percent of net collections. Compare to the table above. Circle everything more than 1 point over benchmark. That's your list.
Then rank by dollar impact, not percentage. Two points over on a $1.5M practice is $30K. Two points over on a $400K practice is $8K. Same percentage, very different priority.
Most practices have $30–80K in recoverable overhead sitting in 2–3 categories. It's been there for years. Not because no one cared — because no one ever showed them the specific number.
See how your practice stacks up
Upload your P&L and get a category-by-category benchmark report — every line item compared to the 2025–2026 standards above. Built by a dentist-owner, not a consultant.
$149 · Delivered in under 5 minutes · No contract