For many Canadian dental practices, managing expenses is a critical part of ensuring long-term profitability. While it’s natural to look for ways to cut costs, not all expenses are created equal. Some—like rent—are fixed and outside your control. In these cases, the best way to reduce your expense-to-revenue ratio is often to increase revenue, rather than focusing solely on cutting costs.
Below, we’ll explore how practice owners can evaluate key expenses, identify areas of improvement, and understand which costs are actually healthy indicators of growth.
1. Fixed Costs: Why Increasing Revenue Is Key
In Canada, rent is one of the largest fixed costs for most dental practices, especially in high-demand urban areas. Since negotiating a lease reduction is rarely feasible, your best strategy is to increase production and revenue. As your revenue grows, fixed costs like rent naturally make up a smaller percentage of your income, improving profitability without drastic expense cuts.
2. Wages and Staffing Efficiency
Employee wages are another significant expense for Canadian dental clinics. While these are semi-fixed, it’s important to regularly evaluate whether your staffing levels align with your patient volume:
- Are you overstaffed for your patient appointment load?
- Are team members being utilized efficiently during scheduled hours?
- Are roles clearly defined to prevent overlapping responsibilities?
Monitoring your wage-to-revenue ratio can help ensure that staffing remains sustainable without compromising patient care.
3. Lab Fees: An Expense Linked to Growth
In Canadian dentistry, lab fees are an expense you actually want to see increase. Higher lab costs typically indicate that patients are accepting more comprehensive or complex treatment plans—such as crowns, bridges, and dentures—which are key drivers of revenue growth. Instead of cutting lab expenses, focus on case presentation and patient education to support treatment acceptance.
4. Dental Supplies: Keep This Under 6% of Revenue
For general dental practices in Canada, dental supplies should typically remain at or below 6% of revenue. If your supply costs exceed this:
- Track your purchasing habits. Monitor order patterns to eliminate unnecessary or duplicate purchases.
- Standardize your ordering process. Create a set shopping list to maintain consistency across team members and locations.
- Compare suppliers. Practices should periodically review dental supply vendors to ensure they’re receiving competitive pricing and taking advantage of bulk discounts.
Maintaining discipline in supply ordering helps prevent small, unnoticed costs from impacting your bottom line.
Smart Spending for Dental Practices
Managing expenses effectively is about striking the right balance between cost control and revenue growth. Instead of simply cutting costs, dentists should focus on evaluating expenses strategically, ensuring that every dollar spent supports efficiency, productivity, and overall practice health.
Improving your expense-to-revenue ratio requires intentional action: monitoring controllable costs like wages and supplies, optimizing team productivity, and regularly reviewing your financial performance. When paired with strategies to increase revenue, this approach creates a solid foundation for long-term profitability.
By maintaining this balance, you can strengthen your bottom line, reinvest in your practice, and position your clinic for sustainable growth and continued success in a competitive Canadian dental market.
