Research the area where you are opening your daycare to see what the competition charges. Be careful not to fall into the trap of being the cheapest option in town. It is best to calculate your costs and then charge according. The U.S. Department of Health and Human Services considers 10 percent of a family’s income an affordable price for childcare, but parents are ultimately spending much more, on average. Parents should be expected 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 childcare prices reduced the number of inquisitive phone calls, especially the ones from other daycare businesses.
Now that you have your area's high, low, and average charges, it's time to calculate your pricing structure.
Employee costs will be your most significant expense. A general rule in a for-profit childcare center is that 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 childcare provider ratio will also play a role in this calculation. Check with your local childcare licensing agency.
Childcare pricing calculator
Age Range - The age range of children in the classroom
Wage - Enter the amount you are 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 to be covered when a teacher takes 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 that is 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 .
|AGE RANGE||PAY ($)||HOURS||TOTAL PAY ($)||RATIO||DAILY RATE ($)||GROSS ($)||NET REVENUE ($)|
|6 Weeks - 9 Months|
|9 Months - 2 Years|
|2 Years - 3 years|
|3 Years +|
|4 Years +|
|5 Years +|
|TOTAL||Total Pay||Daily Total|
Do I charge per day, week, or month?
Your childcare center's pricing structure largely depends on your target clientele and the local job market. If your new childcare business is located near a large employer with set shifts, it may be advantageous 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 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 to cancel their scheduled care to receive an account credit. I would avoid offering actual refunds to simplify your bookkeeping.