How Much Should Rent, Staff, and Marketing Actually Cost

What percentage of collections should rent be? The occupancy-cost ceiling for a healthy practice
Practice owners obsess over the wrong expenses with impressive consistency. The supply bill gets audited monthly. The rent — a larger number, locked in for ten years, compounding annually — gets glanced at once, on signing day, and never questioned again.
Thinking in percentages is the fix, and few people preach it better than Andy Austin of Nashville Dental Inc., the family-owned distributor now in its fourth generation since 1905. When he joined us on the Dentelligentsia podcast, he laid out the working ranges for every major line of a practice budget — and the rent range is the one we want to sit with, because it’s our lane and because it’s the one you only get to set every decade.
The percentage map
Austin’s ranges, from watching hundreds of practices across nine states. Supplies: five to six percent of the business — and, in his best line, deserving exactly that share of your attention: “The people that struggle spend 70% of their time fussing at their kids over a light switch that’s 3% of their life.” Staff: 22-28%. Marketing: 2-3.5% of collections for an established practice — and around 8% for a startup’s first 18 to 24 months, dialed back deliberately once the patient base is built. His cautionary tale is unforgettable: a million-dollar practice in America’s fastest-growing city spending $1,800 a year — a sign at the baseball field and a Yellow Pages ad. “Nobody knows you exist. There’s your problem.”
The rent line: low-to-mid teens of overhead
For facility costs, Austin wants the low-to-mid teens as a share of overhead. Run that against typical practice overhead and it lands total occupancy — rent plus the pass-throughs — in the mid-single digits to roughly 8% of collections. Startups run hotter in the early years, before collections catch up to the space; a mature practice should settle comfortably into that band.
The math has a hard edge, in his words: if a third of your overhead is going to the landlord, no amount of production fixes it — you chose the wrong space. And here’s what makes rent unlike every other percentage on the map: staff costs can be restructured this quarter, marketing can be re-aimed next month, supplies renegotiated with a phone call. Rent is set once, escalates by contract, and holds for ten years. Every other line is a dial. Rent is poured concrete — which is why the negotiation deserves professional weight, and why the size decision behind it (too much space is just rent with no job) matters as much as the rate.
The percentage nobody calculates: your PPO contracts
Austin’s most haunting example isn’t an expense at all — it’s revenue leakage. “A PPO contract you signed at 27 can follow you until you’re 45. No wonder you’re struggling — you’re getting the lowest reimbursement rate for a crown in the state.” Insurance participation decisions made in year one, under sign-everything desperation, quietly discount decades of dentistry. Like the lease, it’s a document that outlives the desperation that signed it — and both deserve periodic renegotiation.
Percentages need a banker’s audience
One more Austin story about what disciplined numbers buy. A doctor went to lenders alone and got approved for $600,000 — “which today gets you half a chair and a flashlight.” Nashville Dental pulled her into their business-planning process: production history, cash-flow projections, the format underwriters actually evaluate, plus the assembled team of lender, contractor, and real estate. The same doctor qualified for $1.2 million — and bought the practice and the building, cash-flowing from day one. Same borrower, different preparation. The percentages aren’t just for running the practice; they’re the language that unlocks capital.
His companion advice for new grads is blunt: do not buy the $85,000 car with your first paycheck, because for the first two or three years, “the first two years of your dental practice are actually you” — your personal credit and your personal guarantee are the business.
Hear the full conversation with Andy Austin of Nashville Dental on the Dentelligentsia podcast — site selection (parking first, neighbors second), a zoning horror story, why the last three years before a sale carry most of your valuation, and the case for investing during the down years.
And if the occupancy percentage is the one that’s off in your practice — or about to be set for the next ten years — talk to us before you sign. Tenants and buyers only.

For more on our interview with Andy Austin, check out our article, “How Much Should Rent, Staff, and Marketing Actually Cost Your Practice? A Distributor’s Percentages.”

And follow Andy Austin on Linked In or check out the Nashville Dental, Inc. website.