COST OF REMAKE

[Jmvisa]

Hi every one.
I have heard a couple of times, that for every crown that a laboratory has to remake, it has to fabricate 7 units to recover the loss. Is that true? how did they come up with that number? I recognize that deep knowledge of the financial part of what it takes to run properly a dental laboratory is one of my greatest weakness and therefore for my lab, I used to believed that basic accounting would do. For that reason i will attend the next NADL university, in the mean time I wanted to explore this question.
Thank you

 

[PCDL]

Here is a basic breakdown.

1 remake at no charge- cost to your lab is the cost of producing the crown. (if you want to include lost profit, you can, but it only makes things look worse) Lets say that crown is a ZR crown, and it costs you $75 to produce (material and labor). You are now in the hole for $75. To recoup that $$$, you will have to eat into the profit of your next few crowns, until the $75 is made up. To get a profit, you will have to stretch that out, because the last few crowns will have no profit, they are serving to reduce a debt.

Sooo... $75 and you sell them at $100 (easy math). You have to do the following 3 crowns to break even ($25 profit on those 3 crowns services the debt). Then, from there, you start making $$$ again, but the margin is lower, because you are paying off that debt still (on the 4 units, 1 remake and 3 at no profit). After a while, the profit rises back up. The smaller the margin on your work, the longer it takes to break even.

of course, the key here is you know how much $$$ it costs you to produce something! Thats the biggest hurdle. Material, Labor, Overhead. All need to be factored in.

 

[Marcusthegladiator CDT]

We remade two crowns since September.

 

[sidesh0wb0b]

i believe the national average is around 8 crowns to make up for one remake. if i can get my hands on that article i will post it here.

basically, the expensive part is the labor....of course materials cost a few extra bucks too, but that employee (even if it is YOU) eats up valuable dollars in time. the average crown takes about 8 hours of labor to create though we break it up into 7-12 working days due to idle time for burnout, setup, firing, etc. so instead of the tech making a crown for profit, you end up eating up labor hours for the remake. each laboratory is going to be different but generally speaking 8 crowns finally offset the material, labor, hassle costs of a remake. how you handle it with the client is the part that keeps laboratories above water IMHO!

 

[Jmvisa]

Thank you Guys, I would like to see that article if you find it sidsh0wb0b.

 

[JohnWilson]

Another benefit of CAD/CAM is that there is less direct labor in the unit and once you pay for your equipment your profit margin is larger as well. ASSUMING your ROI heads off the dwindling price structures on the restorations you are producing.

OH YEAH and the fact that you have less internal remakes as well

 

[jthacke3]

There are some other variables as well that apply to different labs. If you are a budget lab that operates on razor-thin profit margins, remakes can really cut into your bottom line but you usually have fewer remakes due to lower expectations. If you sell $300+ units, its easier to absorb the costs of remakes due to higher profit margins. However, when crowns are that expensive, the expectations for results are much higher also and so are the remakes. Its like McDonalds vs Flemmings steak house--you are less inclined to return a 99 cent hamburger because your expectations were low to begin with. However if you order a $50 steak, you expect perfection and you are more likely to return it if it is undercooked.

There are several ways to look at the cost of remakes depending on what suits your needs and what you are trying to measure. One way is the actual direct cost of materials, labor, and shipping/delivery costs associated with the case or another way is looking at the OPPORTUNITY COST of the remake. Opportunity is the value of goods and services you could have produced using the same amount of time and resources to produce a revenue-generating case rather than a remake.

If your lab is at full capacity, opportunity cost is more of a true measure of remake cost--and it will usually scare you to death. If you are at less than full capacity, I would be more inclined to measure with direct cost. If you multiply your sales price by your profit percentage, that will tell you how many units it takes to recover the cost of the remake. (i.e. $125 sales price x 20% profit = $25. That means you need to make 5 crowns at full fee to recover your loss). The higher your profit percentage, the faster you can break even.

Jim Thacker
Utah Valley Dental Lab

 

[Sevan P]

Another benefit of CAD/CAM is that there is less direct labor in the unit and once you pay for your equipment your profit margin is larger as well. ASSUMING your ROI heads off the dwindling price structures on the restorations you are producing.

OH YEAH and the fact that you have less internal remakes as well

I still get remakes in cad cam, mainly Doctor error, poor prep does not want to adjust the opposing or prep, poor impression. But with a few clicks of the mouse a new crown is started and less hands involved as well.

 

[disturbed]

cost of remake varies.

doing it right the first time...priceless.

i never remake for free. unless its my fault.

1 1/2 years since last remake. and i charged for that one...

 

[ztech]

Not often that I agree with disturbed, but all cases I complete are to the master cast. If the case doesn't fit in the mouth, a new impression and opposing must be returned and I credit materials from the remade crown. I then charge full price for remake. I have headache fees included in all anterior work and adjacent units over 3.

 

[dmonwaxa]

ztech...Would you please explain your headache fees.thanks

Not often that I agree with disturbed, but all cases I complete are to the master cast. If the case doesn't fit in the mouth, a new impression and opposing must be returned and I credit materials from the remade crown. I then charge full price for remake. I have headache fees included in all anterior work and adjacent units over 3.

 

[adamb4321]

cost of remake varies.

doing it right the first time...priceless.

i never remake for free. unless its my fault.

1 1/2 years since last remake. and i charged for that one...

How did the Client react? UK Dentists are mostly of the opinion that nothing's ever their fault which is frustrating to say the least.

Typical case, gold inlay made for a new client, imp and margins seemed ok, returned to us with a new new imp which looked like the first. inlay fits on the original die and onto solid model perfectly so I returned model for Dr inspect/die trim. Dr phones me " hmm, I think I need to do electrosurgery but my unit is faulty. Credit my account for this case"

Me "thank you, but I really don't do work for free, I'll credit the return of the gold and as a goodwill gesture only charge for the alloy when we eventually re-make the inlay"

Dr "I've sent you a lot of work, I'm taking my business elsewhere"

On this case we've collected and dropped off the work twice from a surgery 50 mile away, poured two sets of models, and made one inlay. And the Dr wants it for free....
Oh, and a lot of work was 5 gold inlays in about a six week period.

 

[JohnWilson]

How did the Client react? UK Dentists are mostly of the opinion that nothing's ever their fault which is frustrating to say the least.

Typical case, gold inlay made for a new client, imp and margins seemed ok, returned to us with a new new imp which looked like the first. inlay fits on the original die and onto solid model perfectly so I returned model for Dr inspect/die trim. Dr phones me " hmm, I think I need to do electrosurgery but my unit is faulty. Credit my account for this case"

Me "thank you, but I really don't do work for free, I'll credit the return of the gold and as a goodwill gesture only charge for the alloy when we eventually re-make the inlay"

Dr "I've sent you a lot of work, I'm taking my business elsewhere"

On this case we've collected and dropped off the work twice from a surgery 50 mile away, poured two sets of models, and made one inlay. And the Dr wants it for free....
Oh, and a lot of work was 5 gold inlays in about a six week period.

I think you handled the situation in a very professional manner and the fact that this client was trying to strong arm you is even more reason to stand strong to your policy and don't let their problems become yours.

 

[Tom Moore]

We all need to be very glad our dentists don't send us a bill for their cost of a remake that is our fault. That would have us working for nothing a long time. There is a balance and its not if but when a remake is necessary. I do not charge for remakes but am in charge of who gets to be my customers.

No one gets 30 day open billing from me anymore. They earn their right to credit. I don't want to work for and office that can't put the work on a credit or debit card or send a check with the work. This is not 1980.

 

[disturbed]

i do not compete with the labs that can afford to do remakes for free. i can't. no point and click crowns here. not joining the race to the bottom. my abilities are not limited by the software i have,or every other person with a mill has....

 

[user name]

I like my money as much as anyone, but I also understand psychology to some extent. I don't need to make a single crown to recover the cost of a remake, because when I set my prices I understand that there might be a couple fails this year. The cost is built into the prices the Doctors are paying me for all the successful work. Keeping a Doctor happy doesn't mean you will get walked on.

 

[Tom Moore]

I like my money as much as anyone, but I also understand psychology to some extent. I don't need to make a single crown to recover the cost of a remake, because when I set my prices I understand that there might be a couple fails this year. The cost is built into the prices the Doctors are paying me for all the successful work. Keeping a Doctor happy doesn't mean you will get walked on.

You hit it right on the head. This takes all the confrontation and hard feelings out of a remake. Remakes are a cost of doing business and are easier to work into the price of every crown. Like I said its not if but when as it deals with remakes and your right it should be in the price of every unit you sell like insurance.

 

[adamb4321]

Remakes are an emotive subject, how the surgeon approaches the problem often sets the tone of how we react as techs. A phone call from the surgeon to discuss the issue before the case is returned takes the sting out of it whilst having the case come back with out warning with "REMAKE" scrawled over the ticket in 9inch caps tends to make my blood pressure rise

 

[araucaria]

How did the Client react? UK Dentists are mostly of the opinion that nothing's ever their fault which is frustrating to say the least.

Typical case, gold inlay made for a new client, imp and margins seemed ok, returned to us with a new new imp which looked like the first. inlay fits on the original die and onto solid model perfectly so I returned model for Dr inspect/die trim. Dr phones me " hmm, I think I need to do electrosurgery but my unit is faulty. Credit my account for this case"

Me "thank you, but I really don't do work for free, I'll credit the return of the gold and as a goodwill gesture only charge for the alloy when we eventually re-make the inlay"
Dr "I've sent you a lot of work, I'm taking my business elsewhere"

On this case we've collected and dropped off the work twice from a surgery 50 mile away, poured two sets of models, and made one inlay. And the Dr wants it for free....
Oh, and a lot of work was 5 gold inlays in about a six week period.

Good response, but the reaction of the doc is no surprise and I'd close the account together with a final bill for all work carried out . I'm tired of these bully types who think they have the power - even if I'm short on cashflow I'll not bend on principles. (and 5 inlays looks like he's cherry-picking labs for bottom prices!)imo

 

[araucaria]

We all need to be very glad our dentists don't send us a bill for their cost of a remake that is our fault. That would have us working for nothing a long time. There is a balance and its not if but when a remake is necessary. I do not charge for remakes but am in charge of who gets to be my customers.
No one gets 30 day open billing from me anymore. They earn their right to credit. I don't want to work for and office that can't put the work on a credit or debit card or send a check with the work. This is not 1980.

agree with the principle of not charging when you've approved who your customers are. I'm generally ofrtunate that most of my clients make great efforts to do their part of the treatment to a high standard, and go further than most. So it's only accasional situations when casual work produces problems, and new clients (esp if fresh from school!)