Trying to determine how much to bill patients for dental work can be quite a challenge because there are so many state- and office-related variables to consider. However, there are a few ways in which you can calculate actual dental costs and use this information to set prices that are fair for patients – while still being profitable for you. Below is a little information on how to go about calculating the right prices if you are afraid that you might undercharge for your dental services.
1. Calculate your Per-Procedure Cost
The first step you’ll need to take in order to determine the cost of dental procedures is to calculate how much your practice pays for each procedure. This will involve more than just figuring out the cost of items such as waste disposal and dental tools. Calculating these costs should also include the expected time for the procedure, as well as the number of employees that are involved with performing it. It is necessary to determine a per-person hourly rate and apply that when determining your labor cost. This will provide you with an estimate regarding how much your time and that of your employees is really worth.
2. Determine what it Costs to do Business
After setting your per-procedure cost, you will need to determine the cost of doing business from day to day. What does it cost to rent your practice space? How much do utilities cost? What are the costs of waiting room and office supplies? Are you a New York dental practice or in the middle of America? Both of those would have vastly different costs associated with the space to rent out. Although these can sometimes be classified as hidden costs because they aren’t directly linked to specific procedures, they should still be counted as essential expenses. While doing this, it is also a good idea to look at ways to reduce other costs. For example, you can do away with the charge on financing and perform credit checks by using SimplePay. This system provides patients with an easy way to pay for their treatment, without you having to outlay costs to provide a line of credit.
3. Decide on your Profit Margin
All businesses are in operation to make a profit. Your dental practice needs to work in the same way if you want to stay in business. After determining an hourly per-procedure rate and figuring out what each hour of running your practice costs, you can determine a baseline cost for each of your procedures. This is the amount that would only cover the essential needed to perform the procedure and nothing else. From there, you will be able to see how much of a profit should be added to the total. While this figure is also largely set by competitors in the immediate vicinity, you should also consider the number of times you perform a specific procedure, as well as the overall level of expertise you provide to your patients.
A workable formula to determine a practical cost schedule for your dental work comes down to your tools, accessories, the cost of doing business and how much profit you would like to make. While this can change based on the area you work in and your competitors, it does serve as a good starting point.