A lot of factors go into the profitability of any business. First, you consider the industry, the type of clients, the materials and startup equipment, product or service prices, etc. It is no wonder why the NADL reports a typical Burbank Dental Lab’s profit margin to be around 5 to 10%.
The profit margin of dental laboratories is affected by a wide range of factors. In fact, not many dental laboratories hit the 5% mark. The overall profit realized is sometimes shaved away by seemingly small drops of actions and wastage that, in the end, culminate into thousands of dollars in losses.
For example, studies show that an average dental lab technician is only active and on the job 55% of the time. This means that despite resuming early and closing late (another problem with overtime), they spend 45% of the time on less productive tasks. These less productive tasks could range from time spent doing remakes to filing cases, looking for cases, or moving case files across the dental lab. In fact, a huge chunk of time is lost waiting for QC or looking for missing information on lab slips.
All of the time invested in those value-added services add up at the end of the month, leading to a huge pay to the technicians while the laboratory itself bleeds. There’s also a huge consideration for extra time or overtime invested by lab technicians. An hour yesterday, today, and tomorrow may not seem like much. However, paying out overtime at the end of the month shows a significant accumulation that threatens the laboratory’s pockets.
Another sensitive area where dental labs are losing money is material management. Sure, humans make mistakes. However, these mistakes can be costly, especially when remakes have to be done more frequently. In instances where mistakes and milling have become a common occurrence, the wasted materials add to the production cost and reduce revenue coming in. From another perspective, it puts the machines and equipment at a deficit as they are now underperforming, meaning they are bringing in less money due to human error.
These avenues where drips occur, human errors, overtime, value-added services cutting into productive time, wastage, and increased production costs all threaten revenue generation and significantly drive down earning potential. Dental labs may be able to significantly influence their profit margin when these drips and leaks are plugged in to improve productivity and efficiency.
Common Dental Lab FAQs
How much money do dental labs make?
The average profit made by dental labs depends on various factors. Some of the key factors include the type of services offered, the size of the dental lab, its location, and staff capacity.
Dental lab technicians, however, have a more uniform national pay. For a clear understanding of what a dental lab could be making, the top percentile often earns an average of $58,500 per annum, while the 25th percentile makes about $30,500 per annum. The mid-range earners are often between the range of $40,000 and $47,000 per annum.
What does a dental lab technician do?
Dental lab technicians are trained professionals who use traditional and digital techniques to make an impression on patients’ teeth. They also handle the molds and create dental crowns, dentures, bridges, and other dental appliances. They are trained to work as assistants to dentists, making sure that their specifications are honored.
Unlike dentists, dental lab technicians have minimal contact with patients.
Are dental labs profitable?
The profit margin of dental labs ranges between 5 and 10%, according to NADL. However, the economics of the entire business depends on the management practices in place.
For example, data reports that an average dental lab operates at a 145 or lower operating profit. Another study revealed that 90% of dental labs were lower or in the same earning bracket. Those who have significantly boosted their earnings and turnovers have employed strategies to cut down on wastage and performance problems.
The main reason behind the low turnover experienced by dental labs can be attributed to the cost of the materials, tools, equipment, and software they use. Increasing technology and material cost coupled with wastage can easily erode their profit margins.
Can a dentist open a dental lab?
This depends on the specific law guiding the dentist’s practice. There is an increasing trend whereby dentists open their dental laboratories or hire dental technicians to handle certain needs. This creates more employment opportunities and allows dentists to work more closely with their technicians to improve patient’s oral health and experience.