Should owner compensation be included in overhead?

No. Owner compensation is the result of the calculation, not an input: you calculate overhead excluding your own draw or salary, and what remains after overhead is your gross earnings before tax.

How often should overhead be recalculated?

At least quarterly, and immediately after any significant cost change: a rent increase, a new hire, a lab price revision. A six-month-old number means you are pricing treatments against a cost structure that no longer exists.

Does overhead percentage change with practice size?

Generally yes. Larger practices spread fixed costs (rent, software, admin staff) across more collections, which tends to lower the overhead percentage as a practice scales, though the transition itself (adding a chair, hiring ahead of demand) can temporarily push overhead up before it comes back down.

How does overhead percentage relate to the hourly chair cost?

Overhead % tells you whether the practice as a whole is healthy. Hourly chair cost tells you, in currency, what one hour of clinical time actually costs: that's the number you need to price a single visit or treatment. Same cost structure, seen at two different levels: aggregate for the practice, granular for the chair.

Dental practice overhead: the ADA benchmark and the number it doesn't give you

The ADA says dental practice overhead runs 60-65% of collections. Every article stops there. It won't tell you what a single chair-hour actually costs. That's the number you need to price a visit, not just diagnose a problem.

What overhead is and how to calculate it

Overhead is everything that leaves the practice before it reaches your pocket: staff, clinical supplies, lab fees, rent, equipment, software, marketing, insurance. It excludes owner compensation. That is the result of the calculation, not an ingredient in it.

Overhead % = (Total operating expenses ÷ Collections) × 100

Example: a practice collecting €850,000 with €527,000 in operating expenses runs a 62% overhead [(527,000 ÷ 850,000) × 100]. The remaining 38% covers owner compensation, debt service and profit.

The ADA benchmark

According to the American Dental Association (Health Policy Institute), average dental practice overhead runs 60-65% of collections. It's the figure nearly every article on this topic cites, and the closest thing to an industry-wide reference point that exists.

For a category-level view, Dental Practice Insider's compilation of ADA HPI data breaks the total down as follows:

Midpoint of each category's benchmark range, % of collections — source: Dental Practice Insider, compiled from ADA HPI 2024 data

Staff is consistently the largest single category across every source that breaks overhead down, roughly a quarter to a third of collections on its own, which is why it is usually the first place to look when overhead runs high.

The bridge almost no article makes

Knowing your overhead is at 68% tells you there is a problem. It doesn't tell you what a single chair-hour actually costs, the number you need to know whether you are pricing a given visit or treatment correctly. For that, you need to go one level deeper: read how to calculate the hourly cost of a dental chair.

How to bring overhead down

Renegotiate your lab price list — annually, not only when an increase arrives. Always benchmark against at least one alternative supplier.
Review materials and inventory incidence — fragmented ordering and excess stock usually weigh more than the unit price of any single product.
Track schedule saturation — an underused chair spreads the same fixed costs over less production, pushing overhead up without any actual cost increase.
Recalculate overhead every quarter, not only at year-end close — a problem spotted eight months late is a problem that has already eaten a year of margin.

Frequently asked questions

Do you know your actual hourly chair cost?

EUSTAK reads your lab and supplier invoices and automatically calculates overhead and hourly cost for every chair in your practice, without any manual entry.

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