I’ve gotten lots of questions about how to set child care rates. Here are some rules of thumb and some “out of the box” ideas to help you improve your profits.
Of course, you need to start out by understanding what your competitors are charging. This is the basis for setting your rates. Research what centers and homes are charging in your area, and then do an annual check to keep up with trends.
I highly recommend that you set weekly rates and offer a small discount if people pay monthly. Getting monthly payments means less administration on your part, more stability, and it will improve your cashflow.
You should NEVER charge on an hourly or daily basis. That’s the mindset and approach of a baby-sitter and you don’t want to be thought of as that. Child care centers charge by the week and/or month, not by the day or hour.
Another rule of thumb is to try offering FEWER breaks on number of days. What this means is to offer one flat full-time rate for anything over 3 days / week, and one flat part-time rate for 3 days or less. So regardless of whether a child is in your care 4 or 5 days, the rate is the same. This is how Kindercare and others set their rates, and it will help your bottom line. It’s also easier to manage because you only have 2 rates per age group, not lots of different tiers.
Another rule that centers follow is to charge the most for the youngest children (infants) and reduce fees slightly as kids get older. This is because the ratios of kids to caregivers is smaller for infants than it is for pre-K. People are fairly used to this type of tiered pricing by age group, so even if you’re a home daycare provider, this strategy could help improve your profits.