Summary
This guide walks through how to calculate your dental practice overhead percentage the right way, where the big buckets typically run, and the one recurring cost most managers never break out on its own: financing and merchant fees.
Overhead is the most quoted and least understood number in a dental practice. Every manager knows the rough percentage they’re “supposed” to hit, but far fewer can name every cost rolled into it — and that is exactly where margin quietly leaks. You can’t lower a number you haven’t fully accounted for.
This guide walks through how to calculate your dental practice overhead percentage the right way, where the big buckets typically run, and the one recurring cost most managers never break out on its own: financing and merchant fees. It’s a companion to our guide on Understanding Dental Practice Profit Margins: A Manager’s Guide.
How to calculate your overhead percentage
The formula is simple; the discipline is in doing it monthly rather than once a year, so trends surface while you can still act on them.
- Total all operating expenses for the period — labor, supplies, lab, occupancy, equipment, marketing, software, merchant and financing fees, and admin costs.
- Divide total operating expenses by total collections for the same period.
- Multiply by 100. That is your overhead percentage.
Run it every month and chart the trend. A single month can be noisy — a big equipment purchase, a slow collections cycle — but three or four months in a row tell you the truth about where your costs are heading.
The big buckets — and where they typically run
Most of your overhead sits in a handful of categories. Knowing which are fixed and which are negotiable tells you where effort actually pays off.
- Staff and labor — usually the largest single bucket, and largely a function of scheduling discipline relative to demand.
- Dental supplies and lab fees — highly negotiable and frequently over-spent; small percentage gains here add up fast.
- Occupancy and equipment — largely fixed in the short term, so lower-leverage month to month.
- Merchant and financing fees — variable, recurring, and almost never itemized. This is the focus of the rest of this guide.
The overlooked line item: financing and merchant fees
Most overhead guides stop at rent and supplies. But every time a patient finances treatment, the practice pays a fee — and the size of that fee depends entirely on which partner you use and how their pricing is structured. Because it’s buried in transaction statements rather than itemized on the P&L, it escapes the scrutiny applied to nearly every other cost.
Two structural factors quietly inflate it. First, promotional 0% APR products often carry the highest merchant fees, because the patient’s interest is being subsidized by the practice. Second, complex rate sheets — where fees vary by credit tier, term, and the promotion selected — make the true cost almost impossible to forecast or manage.
Simpler structures are easier to budget and, increasingly, cheaper. Sunbit uses two straightforward pricing tiers, one for prime borrowers and one for subprime, with prime merchant fees as low as 1.9% regardless of what financing plan a patient chooses. Predictable pricing turns financing cost from a mystery line into a managed one.
Action: itemize your financing fees
Pull last quarter’s merchant statements. Add up total financing fees paid, then divide by the number of financed cases to get a true “cost per financed case.”
Compare that figure against a simple two-tier pricing model. For many practices, this single exercise surfaces the largest unmanaged variable cost on the entire P&L.
Five overhead levers you can pull this quarter
- Renegotiate supply contracts and consolidate vendors to earn volume pricing.
- Audit software subscriptions for overlap and unused seats.
- Right-size scheduling so labor hours track patient demand.
- Reduce accounts receivable carrying cost — see our guide on reducing A/R with third-party financing.
- Switch to simpler, lower financing pricing — and start measuring cost per financed case.
Lower overhead is a margin decision, not a spreadsheet exercise
The practices that protect their margins don’t just track overhead; they interrogate it, line by line, and refuse to let any cost stay invisible — especially the recurring ones. Financing fees are the clearest example: manage them like the variable cost they are, and you recover profit on every financed case for as long as you operate.
Curious what your practice pays per financed case? Sunbit’s two simple pricing tiers make financing cost predictable — with fees as low as 1.9% on the lowest tier. See how Sunbit compares →
Frequently asked questions
What is a good overhead percentage for a dental practice?
Most general practices target overhead in the 60–75% range, leaving a 25–40% margin before owner compensation. The right figure depends on specialty, location, and payer mix, so the most useful benchmark is your own overhead trend over the past several quarters rather than a single industry number.
How do I calculate my dental practice overhead?
Total all operating expenses for a period — labor, supplies, lab, occupancy, equipment, marketing, software, merchant and financing fees, and admin — then divide by total collections for the same period and multiply by 100. Do it monthly so cost trends surface early.
Are patient financing fees part of overhead?
Yes. Merchant and financing fees are a recurring operating cost, but because they’re reported at the transaction level rather than as a single P&L line, most practices never break them out. Calculating your cost per financed case is the fastest way to surface this hidden overhead.
Why do 0% APR financing offers cost the practice more?
Promotional 0% APR products typically subsidize the patient’s interest by charging the practice a higher merchant fee. The patient sees 0%, but the practice absorbs the cost on every financed case — which is why simpler, transparent pricing is often cheaper overall.
*Fees as low as 1.9% apply to the lowest pricing tier only and are subject to qualification. Loans are made by Transportation Alliance Bank Inc. dba TAB Bank, which determines qualifications for and terms of credit.