Broker Tip – Managing Cost of Goods Sold (COGS) and Lay Help Payroll

The two largest expenses in a veterinary practice are Cost of Goods (COGS) and lay help/paraprofessional payroll.

  • COGS includes drugs, supplies, and lab costs. We like to see COGS below 30% of practice gross revenue.
  • Payroll (including wages, pension, health insurance, and other benefits) is best if kept to 25% of practice gross revenue.

Every percentage point higher than these benchmarks lowers profitability and sales price.

Run this exercise on your practice to see where your percentages are and you might see areas that have room for improvement.

Tip by Dr. Kurt Liljeberg and Bret Halishak of Total Practice Solutions Group – Great Lakes.

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