Dental Office Overhead Breakdown and Budget Tips

Most businesses are looking to reduce their costs as they try to recover the ground they lost during the covid-19 pandemic, since making more revenue seems to be a very difficult alternative to be successful in 2021. This focus applies to any type of business and dental offices aren’t the exception. 

But which costs could you realistically reduce? And how can you reallocate your budget to maximize every dollar that you spend? 

Here is a quick guide on how the overhead cost of your dental office breaks down, and some tips to help you make a better budget.  

Overhead Breakdown

The overhead costs associated with any dental office are as follows:

Staff 

Staff is by far the largest overhead cost. This includes the salary of all employees, workers compensation, payroll taxes, as well as medical insurance. On average a dental office spends around 30% off their income on staff, while the ideal figure would fall somewhere around 15 to 20%. 

Now, the idea is not to have an understaffed operation, because even if this measure does indeed help your business attain that ideal 15% staff cost figure, you can be sure that your total revenue will be reduced due to poor service and overworked staff. 

Instead, the way to go is to provide your staff with training so they can be much more efficient at their jobs, and on top of that they can learn how to be on the lookout for opportunities for your business. This can be as simple as calling patients every six months to offer them to book a cleanup appointment. 

Another way you can reduce your staff costs is by taking advantage of services such as hiring a live receptionist instead of having one in the clinic.  

A live receptionist is also able to help you book appointments, manage your calendar, and provide your patients with stellar customer service. 

Rent

Although rent is the second largest cost for a dental office, there isn’t much you are able to do to reduce it. What you can do is to make sure that you are using your rented time efficiently. This includes making sure that your whole day is booked intelligently, double-booking appointments that seem uncertain, and eliminating patients who miss more than a few appointments. 

Equipment

Large equipment purchases and their respective loans must be assessed intelligently in order to pay them back on time and not incur in any sort of penalties or extra costs. 

Marketing

Marketing is a necessity if you are looking to attract more patients and grow your revenue. So reducing your marketing costs can hurt your bottom line in the long run. Instead a better idea is to make sure that your marketing budget is used in the way that will bring more patients to your clinic. 

In today’s world this means having an easy to navigate website that uses search engine optimization to rank high on search engines. Another powerful marketing tool you should be taking advantage of is social media marketing. Paying for online ads is also much more cost effective than putting up an ad in the local newspaper. 

Miscellaneous costs

There are of course many other costs associated with running a dental office, and although you will definitely want to look at these closely to determine if you can find savings opportunities, the real impact will come from your most expensive costs which are staff, rent, and marketing. 

About Andrés Sanjose

Andrés Sanjose is a writer and editor based in Guatemala. He previously lived in Berlin for 10 years where he witnessed the birth and amazing evolution of the Virtual Office phenomenon, while working as a freelancer in the german capital. He is very interested in what the future holds for this exciting industry and loves to write about it.