What Is Cost Allocation in a Dental Practice?
Cost allocation is the process of assigning business expenses to the correct areas of a dental practice — such as associates, treatments, or chairs — so that profitability can be measured accurately.
It ensures that costs are matched to the revenue they help generate, rather than being lumped together as general overhead.
Why Cost Allocation Matters for Dental Practice Owners
Without proper allocation, financial reports may look healthy on the surface while masking:
- Associates who produce revenue but consume more costs than they generate
- Treatments that appear profitable but carry hidden lab or material expenses
- Chairs or surgeries that run at low utilisation once fixed costs are applied
Example:
- A £1,200 implant case looks profitable until you allocate:
- £400 lab bill
- £300 associate fee
- £150 proportion of nursing, chair time, and utilities
→ True net contribution = £350, not £1,200
- £400 lab bill
Cost allocation makes it clear where the profit really comes from — and where leaks occur.
Common Types of Cost Allocation in Dentistry
| Allocation Type | Example | Purpose |
| By Treatment | Lab costs, materials linked to procedures | Shows contribution margin |
| By Associate | Pay % and support costs per dentist | Evaluates true associate profitability |
| By Chair | Rent, nursing, utilities split per surgery | Tracks utilisation efficiency |
| By Department | Hygiene vs. private dentistry vs. NHS | Supports service-line reporting |
How DentPulse Automates Cost Allocation
| Feature | Function |
| PCPT™ (Profit Centre Performance Tracker) | Allocates costs to each chair to show per-hour profit |
| Apex™ | Links associate costs with their production and pay |
| Treatment-Level Allocation | Automatically applies labs and materials to treatment profitability |
| EEE™ (EBIT Efficiency Engine) | Consolidates allocation into accurate net profit reporting |
DentPulse removes the guesswork — ensuring every pound of cost is assigned and every profit leak is visible.
DentPulse Tip™
“If you don’t allocate costs, you don’t know your real profit.
You’re not running a dental business — you’re running blind.”
Related Glossary Terms
- Contribution Margin – Profit after variable costs are deducted
- Associate Pay Structure – How costs of associates are structured and reconciled
- PCPT™ (Profit Centre Performance Tracker) – Chair-based cost allocation engine
- Fixed Expenses – Costs spread across the practice regardless of activity
- Variable Costs – Direct costs tied to specific treatments
Glossary Summary Table
| Term | Meaning |
| Cost Allocation | Assigning expenses to the right treatments, associates, or chairs |
| Purpose | Reveal true profitability by source |
| DentPulse Advantage | Automated allocation via PCPT™, Apex™, and treatment-level tagging |
