Factors That Influence the Value of Your Practice

We are frequently asked the same question during a Dental Practice Appraisal: “My practice bills ‘this’ amount annually—what do you think it’s worth? Most of the time, I simply smile and respond with a question of my own: “What do you believe your practice is worth?”

The answers usually fall into two categories—either significantly overestimated or somewhat underestimated—depending on the doctor’s familiarity with the market. Some practitioners stay informed, while others are unaware of their practice’s true value. Those less familiar with the market are often surprised when we estimate a higher value than they expected during a dental practice sale. The real concern, however, lies with those who anticipate unrealistically high valuations that don’t align with market conditions or financial realities.

In the upcoming articles, I will walk through the reasoning behind each factor that impacts your practice’s value. Ultimately, value is tied to net income after all expenses are covered. For example, if two practices each generate $1 million in production, it doesn’t mean they share the same value. If Practice 1 yields $300,000 in net income and Practice 2 yields $375,000, then Practice 2 is clearly more valuable and more appealing to prospective buyers.

Hygiene: More impactful than many realize

Many are unaware that hygiene production plays a major role in determining a dental practice for sale’s value. The higher the hygiene production, the more attractive and valuable the practice becomes. On average, hygiene production typically accounts for about 28% to 33% of total production. We have assessed practices with hygiene levels as low as 18% and others as high as 58% (which is remarkable).

Generally, a hygiene production rate exceeding 40% is viewed as a significant advantage and a key contributor to overall value. This level often indicates a well-educated and compliant patient base. It also suggests that the practice can continue generating revenue even when the owner is on vacation. Additionally, such practices tend to have schedules booked several months in advance—usually 4 to 6 months—offering consistent stability for a new owner. When ownership transitions, the hygiene team typically remains in place, resulting in minimal patient or staff loss and maintaining steady production levels.

Higher hygiene production equals greater growth potential

We recently sold a practice among dental practices for sale with total production of $950,000 for $1.8 million. The reason? Hygiene production made up nearly 56% of the total. This provides the new owner with a reliable income stream, enabling them to introduce additional services and procedures that were previously referred out. As a result, the practice holds stronger growth potential and continued value appreciation.

On the other hand, a practice with hygiene production below 25% often indicates a less engaged and poorly educated patient base. It also suggests that about 75% of production comes directly from the dentist, which may not be sustainable for a new owner. The current owner may be performing advanced or specialized procedures that the incoming owner may not replicate.

If your practice’s hygiene production is below 30%, it’s worth exploring ways to improve it. Enhancing patient education, increasing recall compliance, and investing in staff training can all lead to stronger hygiene performance—ultimately boosting your practice’s value. Practices with low hygiene production tend to be less appealing to investor dentists, reducing the likelihood of receiving multiple strong offers. Why is that? Dental procedures are more expensive to produce than hygiene services. Associate dentists are typically paid 40–45% of their production, while hygienists are usually compensated around 25–28%. This clearly shows how much more profitable a high-hygiene practice can be compared to one with lower hygiene output.

In our next blog, we will explore how your lease impacts the value of your practice.

Alan Rustom