Dental Practice Valuation Rule of Thumb: Don’t Sell Yourself Short (Literally)

Let’s Get One Thing Clear: Your Practice Isn’t Just Worth a “Rule of Thumb”

Okay Doc, listen up. Let’s talk about the dental practice valuation rule of thumb…

You built your practice from scratch.
You hired, fired, invested, and put in years of blood, sweat, and bitewings.

Now someone’s telling you the value of your life’s work is:

“60% to 80% of your annual collections.”

Wait, what?

That’s like valuing Tesla based on how many steering wheels they sold last year.
Makes no sense.

This old-school “rule of thumb” is everywhere, and yeah, it’s kinda helpful… if you’re looking to undervalue yourself.

“If you’re not tracking real metrics like EBITDA and recurring revenue, your valuation is stuck in 1997.”
— Jordon Comstock, Membership Revenue Evangelist

So let’s break this down, Jordon Comstock style — and show you how to blow past those weak formulas with recurring revenue and membership-based valuation growth.

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What the “Rule of Thumb” Really Says

Here’s the classic dental practice valuation rule of thumb:

• Your practice is worth 60% to 80% of your gross annual revenue

• So if you bring in $1M/year, you’re worth $600K to $800K

Cool.

But what if your net profit is 20% and you’re up to your molars in PPO write-offs and inconsistent cash flow?

Or better yet — what if you’ve got $25K in monthly recurring revenue from a thriving membership program?

Think your value is still stuck at 0.6x collections?

Hell no.

Let’s upgrade your thinking.

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The Real Metric Buyers Care About (Hint: It’s NOT Collections)

Smart buyers — DSOs, groups, PE firms, and even solo dentists — don’t just ask, “How much did you produce last year?”

They want to know:

• How profitable are you?

• What’s your cash flow?

• Do you have recurring revenue?

• Can your systems run without you?

That’s where EBITDA comes in.

What’s EBITDA?

Earnings Before Interest, Taxes, Depreciation, and Amortization

It’s just a fancy way of saying:

“How much profit does this practice actually generate?”

And that’s what most valuations are based on these days.

Here’s the new-school math:

So if your practice has $300K in EBITDA, and you’ve built systems, growth, and recurring revenue?

You’re looking at:

5x = $1.5M valuation
8x = $2.4M valuation
10x = $3M+ potential

Forget the 0.6x of gross rule. That’s a yard sale price tag.

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Why Membership Revenue = More Valuation

Now this is where it gets juicy.

Recurring revenue from a BoomCloud™ membership program boosts your valuation like crazy.

Here’s why:

Predictability

Buyers love predictable cash flow. MRR (monthly recurring revenue) from memberships means money shows up every month, even if you’re not drilling.

Retention

Membership patients stick around 3–5x longer than PPO coupon clippers.

Higher Revenue Per Patient (RPP)

Clean Financials

BoomCloud™ tracks:

• MRR (Monthly Recurring Revenue)

• ARR (Annual Recurring Revenue)

• Churn rate

• Member count

• Revenue per member

This means when a buyer comes calling, you’ve got the data to justify your asking price — and then some.

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Case Study: How Dr. Tony Boosted His Practice Valuation by $900K with BoomCloud™

Dr. Tony had a solid, 3-op practice doing $1.2M/year in collections.
Classic fee-for-service mix with some insurance stragglers.

But he was burned out, wanted to sell in 18 months, and didn’t want to accept the “0.7x” valuation BS.

So he called us.

Here’s what we did:

• Launched a $39/month membership plan

• Included 2 cleanings/year, exams, and 15% off treatment

• Promoted it via email, front desk, and website pop-ups

12 months later:

• 378 active members

• $14,742 MRR

• $176,904 ARR

• EBITDA increased by $240K

• Practice sold at 7x EBITDA = $1.68M valuation (vs. $800K without the membership plan)

Dr. Tony got to walk away with an extra $900K because of predictable recurring revenue.

That’s the BoomCloud™ effect.

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Want to Sell Your Practice Someday? Start Here.

Here’s how to boost your valuation starting now:

✅ 1. Launch a Membership Plan with BoomCloud™

• Recurring revenue

• Higher patient retention

• Better RPP

• Instantly boosts practice value

Click here to book your BoomCloud™ demo

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✅ 2. Cut Low-Reimbursement PPOs

Every PPO you drop is a step toward higher profit and higher value.

Use BoomCloud’s PPO Loss Calculator to see exactly what you’re losing.

Calculate your PPO losses here

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✅ 3. Increase Case Acceptance

Membership patients trust you more, accept more treatment, and don’t ask “Is this covered?”

That equals higher revenue, better cash flow, and bigger EBITDA.

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✅ 4. Track the Right Metrics

BoomCloud™ gives you:

• Member count

• MRR / ARR

• Revenue per member

• Churn rate

• Net growth

So when that buyer shows up? You’re not guessing — you’re showing them the money.

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✅ 5. Clean Up Your Financials

• Reduce overhead

• Delegate admin

• Automate billing with BoomCloud™

• Track profitability per service

• Add higher-margin treatments (whitening, aligners, implants)

This all adds up to higher margins, which = higher valuation.

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Tools to Help You Boost That Valuation

• BoomCloud™ — membership platform for dentists

• BoomCloud™ PPO Loss Calculator

• BoomCloud™ Membership Plan Launch Kit

• Dental Economics: Valuation Tips

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TL;DR — Your Practice Is Worth More Than You Think

Forget the “60–80% of collections” rule.

That’s old-school thinking in a new-school market.

Instead:

✅ Build recurring revenue with BoomCloud™
✅ Track real business metrics like EBITDA and RPP
✅ Cut low-paying insurance plans
✅ Offer better care to loyal patients
✅ And boost your valuation by hundreds of thousands (or more)

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Want to Build a Practice That’s Actually Worth Something?

If you’re looking to:

• Sell in 3–5 years

• Exit rich

• Or just build a more profitable, freedom-focused business…

Then start with a membership plan.

Schedule a demo of BoomCloud™ here

Let’s build a practice that isn’t just busy — it’s valuable.