How Canadian dental labs build a fee schedule
A dental lab fee schedule starts from what each product costs to make. Here is how Canadian labs build one, with GST/HST and the federal plan in mind.
By the Tusko team
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A fee schedule that works is built from the inside out. It starts with what each product costs your lab to make, and ends with a page a practice can read in a minute.
In Canada, two outside rules shape it as well. One is how GST and HST apply to dental work, and the other is how the federal dental plan treats lab fees.
This guide goes through the steps in order. It gives no dollar figures, because yours depend on your costs and your market.
A fee schedule, built from the inside out
A flow of six steps for building a fee schedule: work out what each product costs, decide what each fee includes, set the fee above the floor, show how tax applies, publish and date the schedule, and review it every year.
Work out what each product costs
Materials, bench time, outside work, remakes, delivery and overhead. The total is your floor.
Decide what a fee includes
Say what is in the fee, and what is charged on top.
Set the fee above the floor
By what the work is worth, what you want to be known for and what patients can be reimbursed.
Show how tax applies
Ask your accountant how each product and extra is treated.
Publish it, and date it
Send it to every practice, and announce a change ahead of time.
Review it every year
Against your costs, your remake log and the time each product takes now.
Start with what each product costs
A fee set by looking at another lab’s list is a guess. Work out your own cost for each product first.
| Cost | How to work it out |
|---|---|
| Materials | What goes into one unit, including what is wasted |
| Bench time | The minutes each step takes, times what that hour costs you |
| Outside work | Anything a milling centre or partner lab charges you |
| Remakes | Your own remake rate, spread across every unit |
| Delivery | Courier or driver cost for each case |
| Overhead | Rent, equipment, software and admin, shared across your monthly cases |
Time each product for a week before you trust the minutes. What a crown is thought to take and what it takes are seldom the same.
Include the remake line. A lab that remakes one case in twenty-five is making twenty-six for the price of twenty-five.
The total is your floor for that product. A fee below it loses money on every case, however busy the lab looks.
Decide what a fee includes
Many arguments about an invoice are about extras nobody mentioned. Settle them in the schedule.
For each product, say what is in the fee and what is charged on top.
- Model work, for a case that arrives as an impression
- Implant parts, and how they are priced
- A custom shade visit
- A try-in stage
- A rush
- Delivery outside your normal area
- A redesign after the Rx changes
Keep the list of extras short. Every one is a line a practice has to check on its statement.
Where you can, fold a common extra into the fee. A crown fee that includes the model is easier to quote than a fee plus a model charge.
Set the fee above the floor
Cost gives you the floor. Three more things decide how far above it the fee sits.
What the work is worth to the practice. A crown that seats without adjustment saves chair time. A lab that delivers that can charge for it.
What you want to be known for. A lab that leads on front teeth prices that work with confidence, and keeps routine work competitive.
What your practices’ patients can be reimbursed. A fee far above what plans treat as usual puts the practice in a hard spot with its patients.
Look at other labs’ lists last, as a check. If yours is far off on one product, find out why before you change it.
Offer more than one grade of a product only if the difference is real. Two names for the same crown at two prices is hard to defend.
How GST and HST apply
Tax treatment depends on what the item is. The CRA’s memorandum on medical and assistive devices covers two categories a lab sells every day.
“A supply of artificial teeth (e.g., dentures, crowns and bridges) is zero-rated.”
Canada Revenue Agency, GST/HST Memorandum 4.2
The same memorandum says a supply of an orthodontic appliance is zero-rated too.
It adds a test for crowns. A crown generally qualifies when it replaces 50% or more of the anatomical surface of the natural tooth.
That leaves questions for some of what a lab makes. Ask your accountant how each of your products and extras is treated, and get the answer in writing.
Provincial sales taxes have rules of their own. Check those for each province you ship to.
Then show the treatment on the schedule. A practice’s bookkeeper should not have to guess which lines carry tax.
The federal dental plan
Some of your practices’ patients are covered by the Canadian Dental Care Plan. Its guide has one paragraph on lab fees.
The Dental Benefits Guide says the plan “will reimburse reasonable and customary laboratory fees”.
It can ask the practice for the lab’s invoice, and it can adjust the amount.
A published schedule helps the practice here. It shows that the fee on an invoice is the one you charge everyone.
So does an itemized invoice. CDCP and lab fees covers what the plan says and what a practice may ask you for.
Discounts and special terms
A discount is a fee too. Treat it with the same care.
- Write the rule down. A volume discount with a stated threshold is fair to everyone.
- Apply it the same way. Two practices with the same volume should pay the same.
- Give it an end date. An introductory rate that never ends becomes the real fee.
- Never discount to settle a complaint. Fix the problem, and use your remake policy for the case.
One-off deals are hard to remember and harder to explain. A year later, nobody knows why one practice pays less.
Publish it, and date it
A schedule works when practices can find it and trust it.
Put four things beside each product: what it is, what the lab fee includes, the fee and the turnaround in working days.
Print the date it took effect on every page. Send it to each practice, and give it to new ones before their first case.
When it changes, say so ahead of time. Give the new date, the new fee and one sentence of reason.
A practice that hears about an increase from its statement feels ambushed. The same increase, announced, is ordinary business.
Keep the old versions. When a practice queries a fee from last spring, you need the list that applied then.
Review it every year
Costs move, and a schedule that sat still for three years is out of date.
Once a year, sit down with four things.
- Your material and wage costs, against last year’s.
- Your remake log. A product with a high remake rate costs more than its fee suggests.
- The time each product takes now. New equipment may have changed it.
- What practices asked for that is not on the list.
Find the products that lose money. Each needs a higher fee, a cheaper process or a decision to stop offering it.
Ask two or three practices what confuses them on the list. The answer is often about wording, and wording costs nothing to fix.
Dental lab KPIs worth tracking every week covers the numbers that feed this review.
A schedule is a promise, and the invoice is where it is kept. The two should use the same words for the same things.
Invoicing and statements for dental labs covers the invoice itself and how to get it paid.
Clear fees are part of why practices stay. How dental labs keep practices sending cases covers the rest.
Tusko does not set a lab’s fees. It keeps the Rx, the dates and the messages on one case that the lab and the practice both open.
See how it works for labs.
Do dental labs charge GST or HST on crowns?
The CRA’s memorandum on medical and assistive devices says a supply of artificial teeth, such as dentures, crowns and bridges, is zero-rated. Other items a lab sells may be treated differently, so confirm each line with your accountant.
Should a lab publish its fees?
Yes, to the practices it works with at least. A dated, written schedule lets a practice predict an invoice, and it shows that a charge is your usual one if anyone asks.
How often should a lab raise its fees?
Review them once a year against your costs. When they need to change, give practices written notice, the date and the reason. Small, regular changes are easier to accept than a large one after years of none.
How should a lab price a rush?
As a stated extra, with a rule for when you can accept one. A rush that is free becomes the normal way to send work, and it takes time from every other case.
Sources
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