How Much Dental Practice Owners Make
By Cecil Staton, CFP®
How Much Dental Practice Owners Make
By Cecil Staton, Arch Financial Planning
As a financial advisor for dentists at Arch Financial Planning, I am often asked about the financial outlook for dental professionals, particularly those considering dental practice ownership. The dental industry in the United States is a dynamic and rewarding field, and understanding the potential earnings can help you make informed decisions. In this blog post, we’ll explore the average income of dental practice owners, including general dentists, associate dentists, and dental specialists. We’ll also discuss factors that influence earnings, such as years of experience and the type of dental services provided.
Understanding the Landscape: General Dentists vs. Associate Dentists
The American Dental Association (ADA) provides valuable insights into the earnings of dental professionals. According to recent data, the average dentist’s salary varies significantly based on whether the dentist owns a practice or works as an associate.
General Dentists
General dentists who own their own practice tend to earn more than their counterparts working as associate dentists. This difference in income is largely due to the ownership of the practice, which allows for control over gross billings and overall revenue. Generally, dental practice owners can expect to pay themselves a salary of $120-$160,000 and upwards of $200,000 or more as an S-corp distribution with an established practice. The numbers could be much higher depending on factors such as location, years of experience, the procedures they do, and the number of new patients they attract.
Related Reading: Dentist Compensation Models
Associate Dentists
An associate dentist, who typically works under the umbrella of a private practice owner, earns less on average than the typical practice owner. The average dentist’s salary can range from $120,000 to $180,000. However, we’ve talked to associates who earn less than $150,000 and more than $400,000. While they may not have the same earning potential as practice owners, associate dentists benefit from fewer administrative responsibilities and the ability to focus solely on providing dental care. Many employ dentists and buy or start a practice to earn beyond the average dentist’s salary.
Related Reading: How To Buy A Dental Practice
The Impact of Experience on Earnings & Profit Margin
Years of experience play a crucial role in determining the average income of dental professionals. Dentists with extensive experience and a solid patient base can charge higher service fees. For instance, a general dentist with over 20 years of experience can see an annual income significantly higher than the average, often surpassing $250,000.
Pediatric Dentists and Dental Specialists
Specialization is another factor that influences earnings. Pediatric dentists and other dental specialists, such as orthodontists and oral surgeons, often have higher earning potentials. These specialists typically undergo additional training and provide specialized dental services, allowing them to charge premium rates. Pediatric dentists, for example, can earn an annual salary ranging from $220,000 to $300,000, while other specialists can see even higher figures.
Placing Implants & Case Acceptance
Dentists who achieve higher case acceptance rates and specialize in placing dental implants often see incomes significantly higher than the average. This is because these dentists can provide high-value services that attract patients willing to invest in comprehensive dental care. High case acceptance means that more patients agree to and undergo recommended treatments, boosting the practice’s revenue. Additionally, dental implants are a lucrative service due to their complexity, skill requirements, and higher fees than standard procedures. As a result, dentists who excel in these areas can substantially increase their annual income, often surpassing the earnings of their peers who do not offer these specialized services.
Related Reading: How Dentists Can Maximize Income
Dental Hygienists, Dental Assistants, and Payroll Costs
Maintaining a busy schedule for your dental hygienists and keeping staff payroll costs below 30% of collections. Ideally, closer to 20% of your collections can significantly boost your practice’s income. Keeping hygienists occupied with a steady stream of patients ensures a consistent flow of revenue from routine cleanings, periodontal treatments, and other preventive services. Efficiently managing payroll costs, one of the largest expenses in a dental practice, directly impacts your bottom line. By optimizing staff productivity and controlling payroll expenses, you can improve your practice’s profitability, freeing up resources for reinvestment or personal income. This strategic approach enhances operational efficiency and maximizes financial returns, contributing to a higher overall income for the practice owner.
Revenue and Earnings in Private Practice Ownership
Owning a dental practice offers substantial financial benefits but comes with challenges. Private practice owners must manage overhead costs, including staff salaries, equipment, and office maintenance. Despite these expenses, the potential for higher gross billings and annual revenue makes ownership attractive.
The typical dental practice can expect to have collections of $800,000 – $1,500,000 for a solo practice. A practice with associates should seek to add at least $750,000 of collections per full-time associate.
Typical Overhead of Dental Practices
Dental practice overhead typically ranges between 50-70%, with the average settling around 60%. This overhead includes expenses such as staff salaries, supplies, rent, utilities, and other operational costs. Consequently, the average dental practice owner takes home approximately 40% of their top-line revenue and collections. However, this 40% take-home pay is not entirely disposable income, as it must also cover practice loan repayments and other personal financial obligations. Despite these deductions, a well-managed practice can still provide a substantial income, though careful financial planning and expense management are essential to ensure long-term profitability and financial health.
Related Reading: Average Dental Practice Overhead
Solo Practice vs. Group Practice
The income potential of a solo practice versus a group practice can vary significantly, and the choice between the two depends on a young dentist’s career goals and preferences. In a solo practice, a dentist has complete control over business decisions and can potentially earn a higher income due to retaining all profits after expenses. However, this comes with greater administrative responsibilities and financial risks. Conversely, a group practice offers the advantage of shared overhead costs, collaborative support, and a more balanced work-life schedule, though individual earnings may be lower due to profit sharing among partners. For a young dentist, joining a group practice or dental support organization (DSO) can be an excellent starting point, providing mentorship, reduced financial burden, and an opportunity to build clinical skills and patient relationships without the immediate pressures of business ownership. As experience and confidence grow, transitioning to or establishing a solo practice can then be considered to maximize income potential and professional autonomy.
Related Reading: Selling Your Dental Practice To A DSO
Related Reading: How Much Do Dental Practice Sell For
Student Loans & Owner Dentists
For most young dentists, not aggressively paying off student loans and instead utilizing income-driven repayment plans is often a strategic financial decision. Dentists can lower their monthly payments by opting for income-driven repayment, freeing up cash flow to invest in owning a dental practice. Prioritizing dental practice ownership can dramatically increase their income and wealth over time, as practice owners typically earn more than associate dentists. Additionally, owning a practice allows dentists to build equity, enjoy tax benefits, and exercise greater control over their professional environment. The increased earnings and financial benefits associated with practice ownership can outweigh the interest accrued on student loans, making it a more effective long-term financial growth and stability strategy.
Buying Real Estate As A Dental Practice Owner
Buying real estate for your dental practice can significantly enhance your income and provide valuable tax incentives, but it’s not a prerequisite for a successful practice. Owning the property allows you to build equity over time, potentially leading to substantial long-term financial gains. Additionally, you can benefit from tax deductions related to property ownership, such as mortgage interest, property taxes, and depreciation, which can reduce your taxable income. However, leasing space can also be a viable and flexible option, allowing you to allocate more resources to other critical aspects of your practice, such as advanced equipment, staff training, and marketing. Ultimately, buying or leasing should be based on your financial situation, practice goals, and long-term vision. Both approaches can support a thriving dental practice, provided they align with a well-considered financial strategy.
The Best Way Forward
Owning an existing practice can be a lucrative option for dental professionals considering the best way to maximize their earnings. However, thorough financial planning and analysis are essential. At Arch Financial Planning, we specialize in helping dental professionals navigate the complexities of dental practice ownership. We provide tailored advice to ensure you make informed decisions aligning with your financial goals.
Related Reading: Retirement Plans for Dentists
Conclusion
The dental industry offers many earning potentials, with practice ownership presenting the highest financial rewards. General dentists, pediatric dentists, and dental specialists all have opportunities to achieve substantial incomes, particularly with years of experience and a strong patient base. By understanding the financial landscape and leveraging the expertise of a dental-focused financial advisor, you can make strategic decisions that enhance your professional and financial success.
If you’re considering dental practice ownership or want to optimize your earnings as a dental professional, reach out to Arch Financial Planning. We’re here to guide you every step of the way.
For more personalized advice on managing your dental practice’s overhead, feel free to contact me at Arch Financial Planning. Together, we can achieve your financial goals and secure the future of your practice.
Arch Financial Planning is a dental-focused financial advisor that helps dental practice owners nationwide. Be sure to read our guide and hire the right team of advisors who can assist with building and selling the practice you’ve built to empower your retirement plan.
Related Reading: Tax Consequences of Selling Your Dental Practice
Author: Cecil Staton, CFP® CSLP®
I'm a fee-only financial advisor for dentists serving clients nationwide.
I left the large financial institutions to start my own RIA. I did it so people could pay for real planning and not just an agenda to sell a hidden product. As a fiduciary, Arch Financial Planning, LLC was built on that promise by delivering non-cookie-cutter plans that provide solutions to achieve their goals.
Who do I serve?
Typical: Dental practice owners
Goals: Pay off student debt, start/sell a practice, and grow their wealth
Location: Virtually anywhere in the U.S.
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