Starting a home daycare is perfect if you love kids and you want to explore your entrepreneurial side. After you’ve researched daycare requirements for your state, and determined the best space in your house to care for children, now comes the difficult part — establishing your daycare rates.
Knowing exactly what to charge for daycare services can be tricky; and a lot of factors influence how much you charge, such as the going rates in your area.
Understandably, you don't want to overcharge, as it'll be harder to get clients. But at the same time, you want to earn your worth.
There are no hard and fast rules; but the following tips can help you establish fair rates for your daycare.
#1 How Much do you Need to Earn a Week?
Before establishing your daycare rates, determine how much you need to earn each week. If you need $500 a week, you’ll need to earn at least $100 a day from your daycare business. Take into consideration the cost to provide food for the kids in your care. Therefore, if you anticipate a food budget of $50 a week, you'll need to bring in $550 a week to hit your target income.
#2 Compare Rates in Your Local Area
As a home daycare provider, you may not charge as much as a daycare facility. Average daycare fees vary by location. But typically, you can charge anywhere between $100 and $150 per child, per week. Therefore, if you need to earn $550 a week (to cover your income and food costs), you need a minimum of five children with each set of parents paying about $22 a day, per child.
#3 Establish Full-time, Part-time and Drop-in Rates
You can choose the type of care you provide, plus you can decide your rate for each type of care. For example, some daycare providers charge different rates based on how long a child remains in their care. You might charge full-time parents $22 a day, but part-time parents $15 a day.
Of course, this is your business; therefore you're free to set the rules. And like some daycare providers, you may not offer part-time rates. Some providers charge a flat fee per day, regardless of whether a child is in care for three hours or eight hours.
For parents who need drop-in care on an as-needed basis, such as stay-at-home parents, you can charge a higher rate, such as $35 per day.
#4 Establish Late Fees
There are late payers with any type of business — daycare is no exception. Therefore, you’ll need to establish a late fee policy.
Determine when daycare fees are due; and for parents who do not pay on time, you might charge a $10 late fee (for every day that you don’t receive a payment).
Additionally, you can charge a late fee for parents who pick up outside daycare hours. In this case, some providers charge a dollar per minute. If daycare closes at 6 p.m., and a parent doesn’t pick up until 6:10 p.m., that's a $10 charge.
Also, you need a policy in place for return check fees. If a parent bounces a check, you might charge a $30 fee.
#5 Don’t be Afraid to Raise Your Prices
Daycare providers periodically increase their prices to keep up with increasing costs. Similarly, you may have to increase your prices on occasion — perhaps in $5 increments once a year, or every other year. Always give your clients a 30 days notice.
What other tips can you offer for determining daycare rates? Please comment.
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