How to Raise Your Rates as a New Dental Practice Without Losing Clients
Learn practical steps to increase dental fees as a new practice, minimize patient attrition, and maintain trust with transparent communication.
Raising your rates as a new dental practice feels risky, but it is a necessary step to keep up with costs and build a sustainable business. The key is to do it strategically, with clear communication and a focus on value. This guide gives you a concrete plan to increase fees while keeping your patients happy and loyal.
Why You Need to Raise Rates
Dental supply costs rise 3% to 5% annually, and staff wages increase 4% to 6% per year. If you keep your fees flat, your profit margin shrinks. For a practice with $500,000 in annual revenue, a 5% rate increase adds $25,000 to your bottom line, directly offsetting higher expenses. New practices often underprice to attract patients, but staying too low for too long makes it harder to raise fees later. Plan to adjust rates every 12 to 18 months.
When to Raise Rates: Timing Matters
Choose the right moment to minimize friction. The best times are:
- At the start of a new year: Patients expect annual changes, and insurance benefits reset.
- After adding new services or technology: If you invest in digital X-rays or same-day crowns, you can justify a modest increase.
- When you have a full schedule: If you are booked out two weeks or more, demand is high, and patients are less price-sensitive.
Avoid raising rates during peak holiday seasons or right after a patient has had a large treatment plan. Give at least 60 days’ notice before the change takes effect.
How Much to Increase: Realistic Numbers
A typical rate increase for a dental practice is 3% to 7% per year. For a new practice, start on the lower end (3% to 5%) to avoid sticker shock. Here are example adjustments for common procedures:
| Procedure | Current Fee | New Fee (5% increase) |
|---|---|---|
| Exam (adult) | $75 | $79 |
| Cleaning (adult) | $95 | $100 |
| Composite filling (2 surfaces) | $220 | $231 |
| Crown (ceramic) | $1,200 | $1,260 |
These numbers are averages; your area may vary. Check your local market and adjust accordingly. If you are significantly below the 50th percentile for your region, you can raise 10% to 15% over two years, but do it in increments.
Step-by-Step Plan to Implement the Increase
Follow these steps to raise rates smoothly:
- Review your current fees against the ADA’s national averages and your local competition. Identify which procedures are underpriced.
- Decide on the increase percentage (3% to 7%) and the effective date. Give yourself 60 to 90 days for planning.
- Update your fee schedule in your practice management software. Ensure all codes are correct.
- Communicate with your team first. Train them on how to explain the change to patients.
- Notify patients in writing at least 60 days before the change. Use email or mail, and include a friendly explanation.
- Update your website and any printed materials with new fees.
- Implement the change on the effective date. Monitor patient reactions for the first month.
How to Communicate the Increase Without Losing Trust
Transparency is your best tool. Patients accept rate increases when they understand the reasons. Use these scripts:
- In-person or phone: “We want to let you know that starting [date], our fees will increase by [percentage] to keep up with the cost of materials and technology. We remain committed to providing you with the highest quality care.”
- Written notice: “As part of our commitment to quality, we periodically review our fees. On [date], we will adjust our fees by [percentage]. This allows us to continue investing in advanced equipment and staff training. If you have any questions, please call us.”
Avoid apologizing or making it sound like a burden. Frame it as a positive investment in their care.
Mitigating Patient Attrition: What to Expect
Even with good communication, some patients may leave. On average, a 5% increase results in 1% to 3% patient attrition, but this is often offset by higher revenue. To minimize loss:
- Offer a grace period: For existing patients, honor old fees for 90 days after the effective date if they schedule a follow-up appointment.
- Bundle services: Offer a discounted package for patients who prepay for cleanings and exams, locking in the old rate for a year.
- Emphasize value: Remind patients of your new equipment, continuing education, or extended hours.
- Follow up with at-risk patients: If a patient cancels or delays, call them personally to address concerns.
Handling Insurance and PPO Plans
If you participate in PPO plans, you cannot raise fees for those patients beyond the contracted rate. However, you can:
- Renegotiate contracts at renewal time. Ask for a 2% to 4% increase in reimbursement rates.
- Focus on fee-for-service patients: For these patients, you have full control over pricing.
- Consider dropping low-paying plans if they make up less than 10% of your revenue and cause losses. Run a fee analysis to see which plans are profitable.
Frequently Asked Questions
Q: How often should I raise my rates? A: Most practices raise rates every 12 to 18 months. Annual increases of 3% to 5% are standard and less noticeable than larger jumps every few years.
Q: What if a patient complains about the increase? A: Listen empathetically, explain the reasons (cost of materials, technology), and offer to discuss payment plans if needed. Most patients accept the change after a conversation.
Q: Can I raise rates for new patients only? A: Yes, you can set a new patient fee schedule that is higher than your existing patients’ rates. This is common and avoids alienating your current base. However, ensure the difference is not too large (max 10% to 15%) to avoid confusion.
Q: Should I raise all fees at once or selectively? A: Selective increases are often better. Raise fees for procedures where you are below market, and keep others stable. This reduces the overall impact on patients.
The Bottom Line
Raising rates as a new dental practice is not just acceptable; it is essential for long-term success. By timing your increase well, communicating transparently, and focusing on value, you can minimize attrition and improve profitability. Start with a modest 3% to 5% increase, give patients ample notice, and monitor the results. With a strategic approach, you can grow your revenue without losing the trust you have worked hard to build.