Overhead Percentage?

[waxis]

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Hi all,

I have just recently graduated from Optometry school and will be starting work as an associate or "private contract worker" at an already established private practice clinic as soon as my licencing results come back.

I was wondering if anyone would be able to shed some light as to an appropriate level of remuneration.

Ultimately, what percentage of my gross billings/sales should I be able to keep as net profit (pre-taxes) and what percentage should I be paying to my contractor?

i've heard that I will ultimately be keeping in the range of 30-40%? this seems very low, but perhaps I have just been naive in not realizing the overhead costs of running a practice?

Any other tips so that I don't end up learning my lesson the hard way? Thanks again!

ac

 

[KHE]

Hi all,

I have just recently graduated from Optometry school and will be starting work as an associate or "private contract worker" at an already established private practice clinic as soon as my licencing results come back.

I was wondering if anyone would be able to shed some light as to an appropriate level of remuneration.

Ultimately, what percentage of my gross billings/sales should I be able to keep as net profit (pre-taxes) and what percentage should I be paying to my contractor?

i've heard that I will ultimately be keeping in the range of 30-40%? this seems very low, but perhaps I have just been naive in not realizing the overhead costs of running a practice?

Any other tips so that I don't end up learning my lesson the hard way? Thanks again!

ac

I'm not sure what you mean by what percentage you should be paying to your contractor, but in general the answer is zero. The majority of cases where someone is paid a percentage of income, it's a percentage that they keep and that's it. It makes little sense to say to someone "I'll pay you 30% if you pay me 10%"

The other issue to consider is whether any revenue generated from the sale of materials counts towards your production.

Lastly, is this a short term arrangement? If not, why are you being paid as a contractor and not an employee?

 

[eyestrain]

Yeah, this sounds like an employee setup to me, not an independent contractor.

 

[waxis]

Thanks for your input so far.

This will be a relatively short-term arrangement, hence the "contract worker" title. (ie, no benefits etc.)

I am sorry for not being clear.

The contract has specified that I will receive 50% of my laser eye surgery consults/follow up

I will receive between 30-40% for general exams and other exams/testing (ie contact lens, ortho-k etc)

and 20-25% of sales from contacts and glasses.

I am really just hoping to have an industry "standard" or benchmark so that I may approach my negotiations with a bit more tact and knowledge ahead of time.

Thank you all again!

ac

 

[KHE]

Thanks for your input so far.

This will be a relatively short-term arrangement, hence the "contract worker" title. (ie, no benefits etc.)

I am sorry for not being clear.

The contract has specified that I will receive 50% of my laser eye surgery consults/follow up

I will receive between 30-40% for general exams and other exams/testing (ie contact lens, ortho-k etc)

and 20-25% of sales from contacts and glasses.

I am really just hoping to have an industry "standard" or benchmark so that I may approach my negotiations with a bit more tact and knowledge ahead of time.

Thank you all again!

ac

There is no industry standard unfortunately. If that is what you have been offered, then I would say that it is on the generous side. However, you didn't clear up the issue of you "paying your contractor" What is that all about? Are you being charged some sort of rent?

 

[waxis]

oh no no. I am not paying any rent. that was my mistake in communicating. I simply meant the money that is received from the patient, what cut should the owner of the practice be getting and what cut should I be getting.

thanks for all of your input. do feel free to add or comment on anything else with regards to partnering etc. I am quite new to this whole field and any input from veterans in the trade would be welcomed graciously!

regards,

ac

 

[drbizzaro]

Hi all,

I have just recently graduated from Optometry school and will be starting work as an associate or "private contract worker" at an already established private practice clinic as soon as my licencing results come back.

I was wondering if anyone would be able to shed some light as to an appropriate level of remuneration.

Ultimately, what percentage of my gross billings/sales should I be able to keep as net profit (pre-taxes) and what percentage should I be paying to my contractor?

i've heard that I will ultimately be keeping in the range of 30-40%? this seems very low, but perhaps I have just been naive in not realizing the overhead costs of running a practice?

Any other tips so that I don't end up learning my lesson the hard way? Thanks again!

ac

are you leasing out an establishment? is this a cosco setup? or an optometrist who has opened up a bunch of locations and is letting you work at one short term (and essentially making you pay him a a fee to use his place, and also making you pay him per exam)?

it sounds like you are working for someone, therefore looking at gross sales would mean more to the owner.... if you are the owner of the whole place, you look at gross numbers to calculate how much you need to pay out, and then find your net

 

[drbizzaro]

oh no no. I am not paying any rent. that was my mistake in communicating. I simply meant the money that is received from the patient, what cut should the owner of the practice be getting and what cut should I be getting.

thanks for all of your input. do feel free to add or comment on anything else with regards to partnering etc. I am quite new to this whole field and any input from veterans in the trade would be welcomed graciously!

regards,

ac

depends on which state you are in.... tell us which state, and we can give you a more accurate number...

also, owners usually will not partner with a new grad very fast... think about a scenario where you owned your own practice... would you want a new grad to be your partner, or keep him/her as an associate as long as you could?

the numbers you quoted were high in general, so they're fine