Dental Lab Fees as a Percentage of Production: What the Benchmark Is and How to Audit Yours
Lab fees should run 8-10% of production in a restorative-heavy general practice. If you're mostly hygiene and fillings with few crowns, 5-7% is normal. Above 12% and you're either overpaying your lab or underpricing your crowns.
Here's the math on a $1M practice. At 9% you're spending $90K a year on lab work. At 12% it's $120K. That $30K gap usually isn't more dentistry, it's the same units at worse prices.
How to measure yours
Pull 12 months of lab invoices and divide by gross production for the same period. Use production, not collections, because that's what the benchmark is built on. Don't use one quarter. A big implant case or a denture run will skew any 90-day window.
Then break it down by unit. A single-unit zirconia crown should cost you $120-180 from a domestic lab, $60-100 offshore. PFMs run similar. If you're paying $220 per unit, you're funding your lab's nicer customers.
The three-line audit
Take your top 10 lab codes by spend and check three things.
First, per-unit price against two competing lab quotes. Labs rarely lose accounts over 10-15% price moves, so ask. Most will match a written quote rather than lose the volume.
Second, remake rate. Anything over 3-4% is costing you chair time twice, and chair time is the expensive part. A cheap lab with a 8% remake rate is not a cheap lab.
Third, case mix. If your crown volume is high and steady, single-visit milling starts to pencil. We ran the break-even math on that in our CEREC in-office milling ROI piece: it usually takes 25-plus units a month before ownership beats the lab invoice.
What to do if you're above 10%
Consolidate first. Splitting 300 units a year across three labs means nobody gives you volume pricing. Pick one primary lab, negotiate a tier, keep a second lab only for specialty work.
Then reprice. If your crown fee hasn't moved in 3 years but your lab bill has, the spread is coming out of your margin. Lab fees are a cost of goods, and they behave like the rest of your supply spend. We covered the same audit-and-consolidate play for consumables in the supply cost benchmark.
One caveat: specialty practices run different numbers. Surgical and ortho-heavy offices carry different cost structures, and the bands in our COGS by specialty breakdown are the better reference there.
Check the percentage once a quarter. It drifts quietly, and it's one of the few overhead lines you can move 2 points in a single phone call.
