Dentists want a number, and the honest answer is “it depends.” But you can understand the ranges and, more importantly, how to judge whether a specific price makes sense.
How are dental practices priced?
Two rules of thumb dominate the conversation: a percentage of annual collections, and a multiple of earnings (often expressed as EBITDA or “adjusted” earnings). Both are useful shorthands and both can mislead, because they compress a lot of nuance into a single number.
Why earnings matter more than collections
Two practices with identical collections can be worth very different amounts if one has much higher overhead. The figure that drives real value is what’s left after paying a market-rate salary for the dentistry being done and covering true operating costs. That’s the money available to service debt and pay you as an owner.
| Practice A | Practice B | |
|---|---|---|
| Annual collections | $1,000,000 | $1,000,000 |
| Overhead | 55% | 70% |
| Owner earnings (after market salary) | Higher | Lower |
| Supportable price | Higher | Lower |
How do you know if a price is fair for you?
A fair price is one the practice’s earnings can support while still paying you well and leaving room for taxes and debt. That’s a personal calculation, which is why two buyers can reasonably reach different conclusions about the same practice. Learn the mechanics in how to value a dental practice.
Frequently asked questions
Ranges vary widely by region, specialty, profitability, and market conditions, so a single percentage is misleading. Focus on earnings after a market salary and real overhead rather than a rule of thumb.
No. A higher price can be justified by higher, more durable earnings. Price only means something relative to what the practice produces for you.
Founder & Financial Planner · Investment Adviser Representative · Series 63 & 65
Ian McGinnis is the founder of Dental Wealth Partners and a fee-only financial planner dedicated to dentists. As an investment adviser representative (Series 63 and 65), he built the firm to give dentists coordinated, fiduciary advice across their practice, taxes, investments, retirement plans, and long-term goals — the whole picture in one strategy. A graduate of Belhaven University, Ian previously worked at Davis Private Wealth, MML Investors Services, and Northwestern Mutual, and is based in the Jackson, Mississippi area. He is the author of The Wealthy Dentist and hosts the Smiles & Cents podcast.
Keep reading
- How to value a dental practiceThe main methods used to value a dental practice, what drives value, and how buyers and sellers should think about the number.
- How to buy a dental practice: a financial due-diligence guideThe financial due diligence every dentist should do before buying a practice — testing the price, modeling cash flow, and preparing for lenders.
- Financing a dental practice purchase: what lenders wantHow dental practice loans work, what lenders look for, and how to prepare so you get better terms on your practice purchase.