Cost · 10 min read
55% to 65% of net production. If your number looks nothing like that, check what you divided by before you change anything.
A healthy dental practice runs total overhead at 55% to 65% of net production. That is the band. The harder question, and the one that actually costs owners money, is why your own number never seems to match the one you just read somewhere else.
Overhead is a fraction. Change what goes in the top, or change what you divide by, and the same practice in the same year produces answers almost 40 points apart, every one of them defensible. That is where the money goes: owners benchmark a number computed one way against a target computed another way, and then cut something that was never the problem.
The range is published in the practice benchmarking report produced jointly by the Academy of Dental CPAs and the National Society of Certified Healthcare Business Consultants. It is a paid report and the data behind it is not public, which is worth saying out loud rather than dressing up. The edition we work from carries 2024 data, and the publisher's own product page warns that some specialties carry very small samples. Treat it as the best available line-item benchmark in dentistry, not as a census.
The denominator is net production, and that is not a detail. Every ratio we publish uses the same base, because a set of benchmarks measured against different denominators cannot be added up or compared to each other.
Inside that band, the categories that carry almost all of the weight are already benchmarked individually:
| Staff payroll | 25% to 30% |
| Clinical cost (lab plus supplies) | 10% to 14% |
| Everything else (occupancy, marketing, insurance, admin, depreciation, interest) | the remainder |
You can check your own lines against the full set in our free Dental Practice Benchmark Scorecard, which takes about two minutes.
Your own compensation is not overhead. This is the single most common error in a self-computed number, and it is not a close call. Overhead is what it costs to run the practice before the owner gets paid. What is left after overhead is the owner's return. Put your own salary and distributions inside overhead and you have built a number that can never tell you anything, because it moves every time you change how you pay yourself.
The American Dental Association states the mechanism plainly in the glossary to its own practice survey: "In incorporated practices, shareholders' net income is included as a practice expense." That single sentence explains why the ADA's own published expense ratio for solo general practice owners sits at 94.4% of collections and why quoting it as an overhead benchmark is a category error. We will come back to it below, because a skeptical reader will find that number.
The rest of the boundary, in order of how often it goes wrong:
None of this holds by memory. It holds because the chart of accounts puts each of those in one place and keeps it there, month after month.
Here is why benchmarking overhead from a search result is close to useless. The ADA publishes its Survey of Dental Practice as a free spreadsheet, so this is arithmetic anybody can repeat. Take the average solo general practice owner, 2025 data:
| Gross billings per dentist (fees charged) | $1,062,180 |
| Practice expenses, excluding the owner's own salary | $600,520 |
| Owner's net income | $207,520 |
| Implied collections (expenses plus owner income) | $808,040 |
Now divide the same $600,520 of expenses three ways:
Notice what that third measure is doing. Put owner pay inside the numerator and the ratio can only ever land near 100%, because a practice distributes most of what it collects. Run it on our own arithmetic above and it lands at exactly 100%.
Same year, same survey, and on the first two the same practice. 38 points of spread, and not one of those numbers is wrong. They answer three different questions, and only the first two are even in the neighborhood of what a benchmark band means.
Two disclosures, because they matter and because a good reader will go looking. The first two ratios are ours, derived from the ADA's published averages, and the ADA does not publish them. And the survey drew 1,113 responses from 59,951 dentists, a 1.9% response rate, weighted for oversampling and nonresponse. It is the best national estimate available for dentistry and it is still an estimate.
Read those two side by side and it looks like the healthy band is fantasy. It is not. They are measured against different bases, and the distance between the bases is the whole story.
Gross billings are fees charged at your full schedule. Net production is what is left after contractual write-offs come out. Collections is what actually landed in the account. Each base is smaller than the one before it, so the same dollar of expense produces a bigger percentage every step down.
On our own arithmetic from the ADA figures above, roughly 76% of what the average solo practice billed turned into money. That gap is not a collections failure, and it is not the collection ratio, which measures against net production after write-offs are already removed and should run 98% to 100%. The gap is the contractual write-off, and its size is a function of your payer mix, not your front desk.
So the rule is short. Before you compare your overhead to anything, find out what the other number was divided by. If the source does not say, you cannot use it.
The ADA has published practice expenses as a percentage of collections for 2002 and then annually from 2010. That series runs across all dentists rather than general practice alone, and across those 17 readings the figure sits between 95.2% and 99.6% and shows no trend at all. It is the same measure as the 94.4% above, on a wider group. A reader who finds that table concludes overhead is not rising and that the whole conversation is manufactured.
That table includes shareholder salaries, and it covers incorporated practices, which is the only place a shareholder salary exists. A practice that pays out nearly everything it collects will report a ratio near 100% forever, in a good year and a bad one, because the owner's pay absorbs whatever is left. The number is flat by construction. It is measuring distribution, not cost.
The evidence that overhead is genuinely under pressure looks different and it is less comfortable. In the 2025 Dental Economics and Levin Group annual practice survey, 58% of practices reported overhead rising, by an average of 4.5%, while average production per doctor was statistically flat year over year at $1,001,807 against $1,004,178. Costs up and production flat is a rising ratio by arithmetic, with nothing changing in how anyone works.
In order, and the order is the point.
1. Check the denominator before the numerator. An overhead percentage rises just as easily from soft production as from heavy spending, and the two call for opposite responses. Pull 12 months of net production and look at the trend before you look at a single expense line, and pull it on accrual, because cash basis makes overhead swing for reasons that have nothing to do with cost. If production is flat or falling, the ratio is reporting a revenue problem and you are about to answer it with a cost decision, which will make the practice worse.
2. Then work the categories by size, not by irritation. Staff payroll is 25% to 30% of production and everything else is a fraction of that. A 2 point miss on payroll is worth more than eliminating an entire small category, and owners reliably spend their attention in the opposite order because the small categories are the ones that feel wasteful.
3. Check your fee schedule before you cut anything. If your fees have not moved in three years while wages and supplies have, every ratio in the practice is being measured against a base that is too low. No amount of expense discipline fixes that, and it is the cheapest thing on this list to correct.
What you should not do is chase the band for its own sake. A practice at 67% with rising production and a full schedule is in better shape than a practice at 58% that got there by running short staffed. The percentage is a diagnostic, and a diagnostic that you optimize directly stops being a diagnostic. Overhead sits on the practice scorecard next to production and collections for exactly that reason.
P.S. Reciprocity Accounting computes your overhead the same way every month, against net production, with owner pay outside it, so the number you compare to a benchmark is actually the same measurement the benchmark used. See how we can help your practice.
55% to 65% of net production, with the owner's own compensation excluded. Below 55% is uncommon. When we see it, it is usually a strong fee schedule or a practice running short staffed. Above 65% is worth diagnosing, starting with production rather than with expenses.
No. Overhead is the cost of running the practice before the owner is paid, and what remains after overhead is the owner's return. Including owner pay produces a ratio that moves whenever you change how you pay yourself, which makes it useless for comparison. This is the most common reason a self-computed overhead figure comes out near 90%.
Only the interest portion. Principal repayment is a balance sheet movement, not an expense, so it never appears in an expense ratio. Subtracting the full monthly bank draft is one of the most frequent errors in an owner-computed number, and on a practice acquisition loan it can move the result by several points.
Before you accept that you have a gap, run one test. Divide your total expenses twice, once by net production and once by collections. If the two answers come out close, your write-offs are small and the comparison is fair. If they are 15 or 20 points apart, the target you are failing was almost certainly measured on the other base, and what you have is a payer mix question rather than a spending question. Most published overhead figures never state their denominator, and one that does not state it cannot be used.
On its own the number does not say. A practice at 70% with production growing and a fee schedule updated this year is in a different position from a practice at 70% that arrived there while production slid, and the band cannot tell those two apart. Read your own trailing 12 months before you read the benchmark. The direction of travel carries more information than the level does. The band tells you whether to look; your own trend tells you where.