Cost · 6 min read
A dental practice should spend 25% to 30% of net production on its team. A number outside that band is a question worth asking, not a verdict.
A dental practice should spend 25% to 30% of net production on its team. That is the benchmark. The harder question, and the one most owners are actually asking, is what to make of it when their own number sits above the band.
Staffing is the largest line on a dental P&L, so it draws the eye first when profitability slips. It is also a ratio, which means it can move for reasons that have nothing to do with what anyone is paid. Here is how a CFO reads it: what it measures, what belongs in it, what a healthy number looks like for a practice like yours, and how to tell which half of the fraction moved before drawing a conclusion.
Total team compensation should run 25% to 30% of net production. That range comes from the practice benchmarking published by the Academy of Dental CPAs and the National Society of Certified Healthcare Business Consultants, and it has held steady for years.
The band is wide for a reason. A practice with a deep hygiene department carries more payroll than a restorative-heavy solo office, and both can be well run. A useful way to hold it: 25% is lean, 30% is the number you should be able to explain, and anywhere in between is normal.
The precision matters because the line is big. On a practice producing $1,000,000 of net production a year, one percentage point is $10,000. That is not a reason to panic at 31%. It is a reason to know the number rather than guess at it, and to watch the trend rather than any single month.
If you want a quick read on where you stand, our free Dental Practice Benchmark Scorecard checks staffing, overhead, and clinical cost against healthy dental ranges in about two minutes.
The formula is one line:
Total team compensation ÷ net production, for the same period.
Team compensation is wages plus employer payroll taxes plus benefits. The part that trips practices up is the bottom of the fraction, so it is worth being exact about which number goes there. A dental practice produces three different figures that all look like revenue:
Use net production. Every overhead percentage on your P&L should sit on that same base, so they can be read against each other and against the benchmarks.
Take a single practice in a single month. July was a normal month clinically, but two large insurance payments slipped into August.
| Net production in July (after write-offs) | $148,000 |
| Cash collected in July | $118,000 |
| Team compensation paid in July | $41,000 |
Done correctly, on net production: $41,000 ÷ $148,000 = 27.7%. Inside the 25% to 30% band. Nothing to investigate.
Done on collections instead: $41,000 ÷ $118,000 = 34.7%. Well above the band, and it looks like a payroll problem.
Same month. Same team. Same paychecks. Same dentistry delivered. The only thing that differs between those two numbers is which figure went on the bottom.
27.7% is this practice's staffing percentage. The 34.7% is not a staffing percentage at all. It is a measure of how quickly this practice's payers happened to pay in July, which is a real thing worth watching, and it belongs in a cash flow conversation rather than a payroll one.
This is the single most common way a healthy practice talks itself into a staffing problem it does not have. It is the same distortion that runs through any KPI calculated on a cash basis, and it is why the difference between production and collections is worth settling before you read any ratio at all.
Even with the right denominator, one month is noisy. Payroll lands on a fixed calendar and production does not, so a month with three pay dates will push the ratio up for reasons that have nothing to do with cost. Read staffing on a trailing three month or twelve month basis, and compare it to your own trailing average as well as to the band.
A staffing percentage that looks wrong is often not wrong about the spending. It is wrong about the boundaries. Staffing covers the full cost of every non-owner, non-associate team member:
Owner compensation belongs somewhere else. Your salary, guaranteed payments, and distributions are not team cost. They sit in owner compensation, where they can be added back when someone values the practice. Left inside staffing, they inflate the ratio and hide what the team actually costs.
Associate compensation belongs somewhere else too, for a different reason. Associate pay is usually a production split, so it moves with revenue rather than with headcount, and blending it in changes what the ratio means rather than nudging it. It also carries no published benchmark, because the right number depends on the split arrangement rather than on any industry norm. Give it its own account and read it on its own terms.
Two smaller boundaries worth checking. Temporary and agency clinical staff belong in staffing, not in professional fees, or a practice covering a leave will look artificially lean. And uniforms, continuing education, and team meals are culture spending rather than compensation, so they stay in their own accounts. A standardized dental chart of accounts is what holds these lines in place month after month instead of leaving it to whoever codes the payroll entry.
A ratio has a numerator and a denominator, and either one can move it. When staffing climbs, the instinct is to look at the numerator, because that is the half with names on it. It is worth checking the other half first, because it is cheaper to check and it is frequently where the movement is.
The numerator moves when you add a position, raise wages, add benefits, or run overtime. Those are visible decisions and you generally know you made them.
The denominator moves more quietly. Net production falls when the schedule has holes, when a fee schedule has not been updated in a few years, when write-offs grow because payer mix shifted, or when treatment is diagnosed and never scheduled. None of that feels like a change to the practice, and all of it raises the ratio.
Some of this is market conditions rather than anything happening in your office. Through early 2026, industry data has shown production per doctor running roughly flat while practice costs, particularly supplies, continued to rise and reimbursement rates did not keep pace. The ADA Health Policy Institute describes the combination as a fiscal squeeze on dental practices. A ratio can drift upward in that environment without anyone in the building doing anything differently.
Which is the point. A staffing percentage above the band tells you to go find out what happened. It does not tell you what happened.
The 25% to 30% band describes a general practice. Read your number against your own model before you read it against the industry:
Staffing also sits inside total overhead, which should land between 55% and 65% of net production. If staffing is at the top of its band while overhead is still healthy, the picture is probably fine. If both are running hot, the line by line read of your P&L will tell you more than the staffing number will on its own.
The American Dental Association treats managing revenue and expenses as an ongoing part of running the practice rather than an annual exercise. A staffing ratio you see once a year at tax time is history. One you see every month is a decision you can still make.
P.S. Reciprocity Accounting separates owner, associate, and team compensation correctly every month, so your staffing percentage measures your team and not a coding decision. See how we can help your practice.
25% to 30% of net production, covering wages, payroll taxes, and benefits for every non-owner, non-associate team member. Treat 25% as lean and 30% as the figure you should be able to explain. Read it on a trailing basis rather than judging a single month.
No. Owner compensation is its own category, because it reflects a distribution decision rather than a team cost, and it gets added back when a buyer or lender values the practice. Including it inflates staffing and obscures what the team actually costs.
No. Associate compensation is usually a production split, so it moves with revenue instead of headcount, and it has no published benchmark of its own because the right figure depends on the split arrangement. Blended into staffing it makes the ratio rise in your strongest months, which tells you very little. Give it a separate account.
Net production. Collections move with insurance payment timing, so a staffing ratio built on them swings for reasons unrelated to payroll. Net production is the same base your collection ratio uses, which keeps your percentages comparable to each other.
Most often the denominator moved. Net production falls when the schedule has gaps, when fees have not been updated against rising costs, or when write-offs grow with a shift in payer mix. Payroll timing contributes too, since a three-paycheck month lands against one month of production. Check the trailing average and the production side before concluding anything about the team.