Building a Profitable Daycare Business

How to Calculate Your Childcare Center's Price

Calculating the price to charge for childcare services

The average charge for child care at a center across the United States is $212 per week. Keep in mind this charge can vary widely from State to State. At a whopping $688 per week, Washington D.C is one of the highest charges for child care. Among the lowest average charge for a State is Mississippi at $153 per week.

Research the area you are opening your daycare to see what the competition is charging. Be careful not to fall into the trap of being the cheapest option. It is best to calculate your costs then charge according. The U.S. Department of Health and Human Services considers 10 percent of a family’s income affordable child care, but parents are ultimately spending much more, on average. Parents should be expecting to pay between 16-26% of the household income toward care for their children. Do your research and calculation to put yourself in the best financial position from day one.

How to Calculate Your Childcare Center's Price

First, research the charges of other daycare businesses in your area. Obtaining prices can be difficult as many daycare businesses do not publicize their price structure. Some facilities will give pricing information over the phone. Be friendly when you call and keep your questions to a minimum. As a last resort, you can recruit a friend with children to schedule a tour to gather the information. Personally, I never felt a reason to hide our pricing. We listed it on our website. Listing our child care prices cut down on the number of inquisitive phone calls, especially the ones from other daycare businesses.

Now that you have the high, low, and average charge for your area, it's time to calculate your pricing structure.

Employee cost will be your most significant expense. A general rule in a for-profit childcare center employee expenses should amount to 50-60% of your income. The net income after your employee expenses will cover other costs such as rent, food, supplies, and of course, the owner's profit. Your State's child per provider ratio will also play a roll in this calculation. Check with your local child care licensing agency.

Childcare pricing calculator

Calculator Key

Age Range - The age range of children in the classroom

Wage - Enter the amount your paying daycare teachers. This is the gross hourly wage you are paying your childcare teacher. Include the taxes, insurance or any other costs you pay

Hours - The number of coverage hours. Generally nine because a class still needs covered when a teacher takes a lunch.

Total Pay - This is the total amount you'll need to pay for the employee

Ratio - Enter your state ratio. The child to teacher ratio allowed by your local government.

Daily Rate - The amount you plan to charge a parent for the number of hours in the third column

Gross - The gross income from a classroom at the state approved ratio

Net Revenue - This figure is the net profit after paying your employee.

Do I charge per day, week, or month?

How you set up your child care center's pricing structure largely depends on the clientele you are targeting and the local job market. If your new child care business is located near a large employer with set shifts, then it may be to your advantage to match those weekly work hours and charge accordingly. In Las Vegas, where we opened our first 24/7 childcare facility, we found it best to charge per day to accommodate the ever-changing shifts of casino workers. Doctors, Nurses, First Responders, and employees at large 24/7 department stores need this flexibility also.

You'll need to have clear credit policies for cancelations when charging for a week or month in advance. Provide this information upfront on the registration paperwork to avoid confrontations. Clearly spell out how far in advance a parent needs cancel their scheduled care to receive an account credit. I would avoid offering actual refunds to simplify your bookkeeping.

Additional Childcare Business Articles

hiring childcare teachers

Tips for Finding, Hiring and Keeping Qualified Childcare Employees

Running a business in childcare can be rewarding, knowing that you are molding extremely delicate young people into future responsible adults. The hardest part, though, is finding just the right kind of teachers, and retaining them for…
read more »

Hiseeu 8CH 1080P

Top 3 Security Camera Systems for a Daycare

Improved camera technology and faster WIFI router speeds has made purchasing and installing a security system in your daycare much easier. Larger hard drives allow you to record up to 90 days of 24 hour of high quality HD video. New wireless…
read more »

childcare play

How Daycare Children Benefit from Play

The primary benefit of play is physical development. Play avails the opportunity for a child's body and minds to develop. Through group games, children can enhance their neuro-muscular activities providing exercise for different parts of…
read more »

Childcare teacher and parent

Expectations of a quality daycare center

Parents in need of daycare services will most likely look first at the daycare providers near them or on the commute to their workplace. They will then compare the programs on how beneficial the center will be to the early development of…
read more »

Childcare Business Advice

Opening, Running, and Growing a Childcare Business

It was never my dream to be in the business of looking after children. It was, however, the dream of my step-daughter. I had many years of experience running an extensive verity of companies. When an opportunity presented itself to her to step into a daycare space that had been vacant for two years, I was all in to make it happen. Over the years we have learned a lot about managing, marketing, financing, and enjoying the childcare business. Childcarebiz.com was created to share that knowledge.

This site is owned and operated by Childcare Business Advice. Childcare Business Advice is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com. Childcare Business Advice also participates in other affiliate programs. Childcare Business Advice is compensated for referring traffic and business to these companies.

© Childcare Business Advice All rights reserved • powered by iMprivacy policy