Price vs. Value: What to Think About When You are Buying a Dental Practice

Purchasing a dental practice is a life-defining moment, so of course if you’re looking to buy, you want to make sure you are getting good value for your money. The important thing to keep in mind, however, is that getting a “good value” involves more than just getting a good price.

Price will always be a consideration in any major investment, but don’t let yourself get overwhelmed by sticker shock to the point where you’re obsessing about getting the “right” price and scrutinizing every dollar. Ultimately, what you pay is going to be driven in large part by market forces, and as long as you’ve enlisted credible, experienced professionals to guide you through the appraisal process, you can be reasonably assured of getting a fair market price. So remember there are other considerations that are just as important to take into account when determining a practice’s value.

When you are buying a dental practice you are not just a buyer of goods, but a business owner acquiring a valuable asset—and that means that while cost is a big consideration, the potential return on your investment is just as important, if not more so.

What you’re really buying when you buy a practice is an economic engine, and it’s your human capital that fuels that engine. And the value of that human capital is ultimately determined by the value of your time. Which means the only true measure of how good an investment a practice is, is how well it can enable you to maximize the value of each hour you spend there.

This is another reason I usually favor a transitioned approach to buying into a practice. When buying outright through a broker, most people are going to run into a ceiling that limits the investment they can make (for most dentists that reality tops out at around $400,000 to $500,000). But if you’re willing to put in the time and steadily work your way into ownership while growing the value of your time, affordability becomes much less of an issue, and suddenly those practices with supercharged economic engines are within reach.

In the end, long-term revenue potential should be a primary driver of your decision. So if you’re looking to buy, do yourself a favor and take the long view when comparing practices. Don’t compare dollar to dollar on list prices; compare economic risk to overall value and growth possibilities. That way, you are much more likely to look back on your purchase as a great deal.