This article originally appeared in the Fall 2026 issue of EquiManagement. Sign up here for a FREE subscription to EquiManagement’s quarterly digital or print magazine and any special issues.
While business courses are becoming more common in veterinary college curricula, many early-career veterinarians have limited knowledge of the financial realities of a veterinary business. Understanding how the revenue they produce for the practice contributes to the fixed expenses of the business can give doctors insight into how their total compensation is determined.
Veterinary practices typically have five major expense categories:
- Cost of professional services (COPS).
- Employee costs.
- Administrative costs.
- Collection costs.
- Facility and equipment costs.
Average percentages of total revenue have been established for both ambulatory and hospital-based equine practices for each of these broad categories. In the chart below, the benchmarks Marsha Heinke, DVM, CPA, and John Chalk, CPA, reported in 2020 and 2025, respectively, help explain where practices spend their revenue.
| EXPENSES | 2020 Heinke Ambulatory | 2020 Heinke Ambulatory w/Hospital | 2025 Chalk Composite of Ambulatory & Hospital |
| COPS | 29.30% | 24.30% | 28.10% |
| Payroll & Employee | 46.70% | 47.20% | 41.00% |
| Administrative | 4.40% | 4.40% | 5.33% |
| Collection | 1.20% | 1.20% | 2.10% |
| Facility & Equipment | 6.70% | 12.20% | 7.44% |
| TOTAL | 88.30% | 89.30% | 82.20% |
| EBITDA | 11.70% | 10.70% | 17.80% |
The row labeled EBITDA is the Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a business’s profit. Importantly, all principal and interest on any loans must be paid from EBITDA in addition to interest and taxes. Any remaining funds are the practice owners’ return on their investment.
If we break down the average 45% for payroll and employee costs, about 25% is for veterinarian compensation and benefits, and the remaining 20% is for nonveterinarian staff costs. Some small practices maintain very few nonveterinary staff members and can reduce the percentage of their revenue spent on this expense, thereby increasing their profit. What we can see is for every $100,000 in revenue production by a veterinarian, there is about $25,000 available for salary and benefits.
In the 2025 AVMA Graduating Senior Survey, the average salary in the U.S. for a new graduate entering an associate position without an internship was about $95,000. The average cost of benefits is about $12,000, for a total of $107,000. The amount of revenue production by that new associate would need to be $428,000 to support this outlay. Usually, it takes a year or two for a new associate to begin to produce this amount of revenue, and in the meantime the additional expense comes directly from the practice’s profit.
For early-career veterinarians to earn appropriate and increased professional wages, they must be able to produce adequate amounts of revenue for the practices at which they work. This means pursuing additional training to gain clinical skills, developing routines to increase efficiency, embracing new technologies, and utilizing technicians whenever possible to increase their capacity to see more clients.
Related Reading
- The Business of Practice: Performance-Based Compensation
- How to Institute Performance-Based Compensation in Your Equine Practice
- The Business of Practice: What Current Economic Indicators Mean for Veterinarians
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