Daycare~ Raising Rates

[disneyofcourse]

Right now many people are watching every dollar they spend. Just make sure that you price yourself competitively for the market and make sure you explain in either a letter or in person that your rates will increase, reasons why and explain that you hope they understand that you would like to continue the same level of care.

On another note a friend of mine recently had to leave her daycare because of her raising rates every year by a dollar or two. However this year she raised rates $4-6 a day per child and requested everyone pay for a full week of normal childcare as her vacation fund. She has 4 children and had to drop the daycare. Just be careful of how much you raise your fees during this time.

 

[luvsmickeymouse]

Thank you all for the advise.

I'm in the suburbs of Chicago where daycare rates vary considerably depending on where you live. In my immediate area, the rates are running around $165 on the low side and over $200 on the higher side. If you go to the town just 1/2 mile from my house, the low rates are $200 with some close to $300. The town just south of us by about 6 miles is pretty close to those in my area.

Right now, I'm at $150.00. A couple of my mom's are public school teachers. I do not charge them for summer or school breaks to hold their spot where most, if not all of the others in our area do. Teachers here are pretty well paid here (I know that's not the case in all areas) and I know that they've gotten over 5% raises the last several years. The other mom is a corporate employee and she's made a comment to me that she "makes a very good wage". The company that she works for has not been hit by the economy and has not gone through any lay-offs. That being said, I know that no one likes to pay more for anything. I sure don't!

I think that I'm going to try a draft a letter explaining that it's been a long time since I've increased my rates. That my expenses (gas, utility bills, taxes, food, supplies...) are constantly going up and that I must make some adjustments. It really is a difficult decision because relationships have developed and it's so hard to separate the business from the friendship.

I think your increase is fair. I also think it is great that you do not charge during breaks to hold a spot. That benefit alone is worth the increase in price.

 

[ajk912]

I agree, $20 a week is a lot. This is an extra $80 a month expense you are springing on these families, potentially $1000 a year!!! This is not something to be springing on people, and DEFINITELY I would give more than 2 months' notice. That's a lot of money. I would maybe send out a letter saying that you are starting the new rates on January 1 so they can find different care.

I would not be happy for someone to give me an extra 480 a month bill, just like that. Not saying you don't deserve it, but maybe GRADUALLY give yourself a raise, not that much all at once.

 

[Kathi OD]

I think your increase is fair. I also think it is great that you do not charge during breaks to hold a spot. That benefit alone is worth the increase in price.

It seems to me families may not leave as others have indicated. With fees already at the low end of the scale, even with the increase, you might still be one of the best deals in town.

 

[C.Ann]

Just as the working parents have seen increases in their cost of living recently, I assume the OP has too.. She hasn't raised her rates in 3 years now - which I think is very generous considering the economic downturn we've all been experiencing..

While I understand those who are saying the parents may have a hard time with a $20 increase, what about the OP - and her financial obligations?

Extremely good day care is hard to find these days.. If the parents are satisfied with OP's care of their children, I would assume they would agree to the increase.. Who would place their children in the care of someone else just because they were "cheaper"?

OP: Several good options given here for how you can write the letter.. Pick the one that you find most appealing and go with that..

 

[Jennasis]

Just as the working parents have seen increases in their cost of living recently, I assume the OP has too.. She hasn't raised her rates in 3 years now - which I think is very generous considering the economic downturn we've all been experiencing..

While I understand those who are saying the parents may have a hard time with a $20 increase, what about the OP - and her financial obligations?

Extremely good day care is hard to find these days.. If the parents are satisfied with OP's care of their children, I would assume they would agree to the increase.. Who would place their children in the care of someone else just because they were "cheaper"?

OP: Several good options given here for how you can write the letter.. Pick the one that you find most appealing and go with that..

 

[ajk912]

Just as the working parents have seen increases in their cost of living recently, I assume the OP has too.. She hasn't raised her rates in 3 years now - which I think is very generous considering the economic downturn we've all been experiencing..

While I understand those who are saying the parents may have a hard time with a $20 increase, what about the OP - and her financial obligations?

Extremely good day care is hard to find these days.. If the parents are satisfied with OP's care of their children, I would assume they would agree to the increase.. Who would place their children in the care of someone else just because they were "cheaper"?

OP: Several good options given here for how you can write the letter.. Pick the one that you find most appealing and go with that..

You have to remember that daycare is VERY expensive, I don't think people are deliberately switching because it's cheaper it's just what they could afford. I remember at the last job I worked. I did make a GREAT wage..but I also had to put 3 kids in daycare. At the end of the month, I made about $400 after paying taxes and daycare. And I was ok with that at the time, because I was furthering my career. But if someone raised their rates $80 on me just like that..I make SO LITTLE as it is after paying the daycare rates..I would have to think long and hard if it's worth keeping my job at all. I have known many people (myself included) who just got fed up with the cost of daycare and quit their jobs. Yes, it's expensive to care for kids. But I just got frustrated after a while that the checks I were writing were triple what I was making when it was all said and done.

Anyway, hopefully this isn't the case with the OP's daycare business!

 

[C.Ann]

You have to remember that daycare is VERY expensive, I don't think people are deliberately switching because it's cheaper it's just what they could afford. I remember at the last job I worked. I did make a GREAT wage..but I also had to put 3 kids in daycare. At the end of the month, I made about $400 after paying taxes and daycare. And I was ok with that at the time, because I was furthering my career. But if someone raised their rates $80 on me just like that..I make SO LITTLE as it is after paying the daycare rates..I would have to think long and hard if it's worth keeping my job at all. I have known many people (myself included) who just got fed up with the cost of daycare and quit their jobs. Yes, it's expensive to care for kids. But I just got frustrated after a while that the checks I were writing were triple what I was making when it was all said and done.

Anyway, hopefully this isn't the case with the OP's daycare business!

I understand perfectly what you are saying - but - where is the consideration for the "job" the OP is doing? And whatever additional expenses she may have? Does anyone think she has been shielded somehow from taxe increases? The cost of food? The cost of medications? The cost of maintaining her home - so it's safe for the children to be there? Increases that may have come her way via her DH's job - such as gas to get back and forth to work; increase in health care premiums; possibly no raises or even a pay cut?

It just sounds to me as though the "working" parents (who are no different than the "working" OP who is taking care of their children) are under the impression that it's all about what "they" can afford - with no regard to what the "working" OP can afford.. See what I'm saying?

 

[kydisneyfans]

One of the PP's here, given the area and current cost, the $20 increase is not as bad as it would be around here. That is just over a 10% increase, not bad for a 3 year break. I would wait until Jan 1 though to accomodate those on the tax free plans through their employer.

 

[ajk912]

I understand perfectly what you are saying - but - where is the consideration for the "job" the OP is doing? And whatever additional expenses she may have? Does anyone think she has been shielded somehow from taxe increases? The cost of food? The cost of medications? The cost of maintaining her home - so it's safe for the children to be there? Increases that may have come her way via her DH's job - such as gas to get back and forth to work; increase in health care premiums; possibly no raises or even a pay cut?

It just sounds to me as though the "working" parents (who are no different than the "working" OP who is taking care of their children) are under the impression that it's all about what "they" can afford - with no regard to what the "working" OP can afford.. See what I'm saying?

Oh, I have no doubt in my mind that daycare providers work hard. And they deserve to be paid very well for what they do. No argument there. I just don't make enough at my job to be able to afford daycare, and because I have three kids, that means it's better move to not work. Soo, in my case, the dcp I was using was making X off me, but now they are making nothing. And it could work out well for them, if they stay full. But if they have empty spots, isn't some money better than no money? At least at my DH's work..in this recession, they are saying, "A dollar earned is a dollar we didn't have yesterday." Sorry, I am going off on a tangent here. Anyway, everyone has to run their own formula and see if raising prices is worth the risk of losing business.

 

[SandiH]

As a teacher, our tax free plan starts in October. I would want to know now if my rates were increasing. I think that the OP knows her clientele, the going rate for services and deserves to raise rates as she see's fit. I think a simple, straight forward letter to the parents what she needs to do.

 

[jen0610]

I always say, don't just look at the figure as a whole. Break it down.

She is looking to increase her rate by $20.00 per week.

I would guess, most of the kids she has in her day care, have parents working a 40 hour work week. With an estamation of it taking the parent a 1/2 hour to go from the day care place to their work place and vice versa, that is an additional 5 hours a week that the child is in day care.

If you take the increase, $20.00 and divide it by the number of hours the child is in day care, 45 hrs, that would reflect an increase of $0.44 per hour. After 3 years of no increase, that is not bad.

We live pretty much pay check to pay check. If we had to pay this increase, I could find a lot of ways to make up this difference. No more pop or snacks out of the vending machines. Instead of brand named food items, generic/store brand names. Instead of spending $20.00 every two weeks to get my nails done, I'd be doing them myself or not at all. If I smoked and I couldn't give up the habit, Generics instead of Brand names. Make my own coffee instead of Starbucks.

Sure there are going to be parents who will pull their kids to save a buck, but it doesn't mean that they are going to a better facility. My one girlfriend pays a heck of a lot more for day care for her two, then I would or could afford. But, she likes that they keep the kid to adult ratio below the state minimum and she is more than willing to pay a higher premium for this. There was a private home she looked into a couple of years ago, trying to save some money. Can highly recommened by another of her friends. Visited the provider. After her visit she told her friends she was nuts, if she thought that was quality child care.

 

[Christine]

I have no advice for you, just a few comments.

If I loved your services I would definitely stay with you but $20 a week ($80-$100 increase per month depending on the weeks in the month) is tough to take all at once. I'm sure you deserve it but some people are tightly budgeted and will have a hard time with this.

In the future, can I suggest that you do annual $5 per week increases or something to that effect. My daycare providers always did this. Every January, I expected that my rate would go up by a few dollars.

 

[dismom2005]

i always say, don't just look at the figure as a whole. Break it down.

She is looking to increase her rate by $20.00 per week.

I would guess, most of the kids she has in her day care, have parents working a 40 hour work week. With an estamation of it taking the parent a 1/2 hour to go from the day care place to their work place and vice versa, that is an additional 5 hours a week that the child is in day care.

If you take the increase, $20.00 and divide it by the number of hours the child is in day care, 45 hrs, that would reflect an increase of $0.44 per hour. After 3 years of no increase, that is not bad.

We live pretty much pay check to pay check. If we had to pay this increase, i could find a lot of ways to make up this difference. No more pop or snacks out of the vending machines. Instead of brand named food items, generic/store brand names. Instead of spending $20.00 every two weeks to get my nails done, i'd be doing them myself or not at all. If i smoked and i couldn't give up the habit, generics instead of brand names. Make my own coffee instead of starbucks.

Sure there are going to be parents who will pull their kids to save a buck, but it doesn't mean that they are going to a better facility.

ita

 

[Darcy03231]

I had an in-home daycare provider when my children we young that I loved. Havings said that $20/wk would have been hard for me to swallow. Her rates went up every year by $5/wk per child. While I understand that you haven't raised your rates in 3 years, that isn't your customer's fault. I would raise it $10 now and then $5/wk every year from now on. I also wouldn't hold spots for people over the summer without some kind of additional payment. Maybe that could help make up the $20/wk difference.

 

[newtodis]

Thank you all for the advise.

Right now, I'm at $150.00. That being said, I know that no one likes to pay more for anything. I sure don't!It really is a difficult decision because relationships have developed and it's so hard to separate the business from the friendship.

Hey OP - I've worked in child care for a number of years and don't think your increase is that substantial. Just give people enough time to plan ahead for it so they can make the changes they need to within their family. I'd announce it now before school starts back up (if you're able to get in touch with the other families) so you can "advertise" when school starts up again if you have spots to fill.

Also, if you don't want to raise the rate so drastically, can you say you'll no longer be providing things like meals or post a list of "supplies" parents can bring in? I would lean more towards something like that simply because I can usually buy stuff on sale or with a coupon to save myself the money as opposed to just giving out the money for someone else to purchase the item. That would help you to cover some of the costs you have (food, toys, games, whatever) without raising the rates as much. Maybe have a "donation day" or take donations to have a garage sale for the "daycare fund" where the families can either donate their items to the day care or to you to sell in a garage sale with the proceeds from the donated items going to buy stuff for the day care. (just a note - I would totally do this if we used a day care! it's a good excuse for me to get rid of the junk and you'd get to make the money and purchase what you need - just call a donation truck when you're finished and get a slip for your taxes for the donation!)

I always say, don't just look at the figure as a whole. Break it down.

If you take the increase, $20.00 and divide it by the number of hours the child is in day care, 45 hrs, that would reflect an increase of $0.44 per hour. After 3 years of no increase, that is not bad.

We live pretty much pay check to pay check. If we had to pay this increase, I could find a lot of ways to make up this difference. No more pop or snacks out of the vending machines. Instead of brand named food items, generic/store brand names. Instead of spending $20.00 every two weeks to get my nails done, I'd be doing them myself or not at all. If I smoked and I couldn't give up the habit, Generics instead of Brand names. Make my own coffee instead of Starbucks.

Sure there are going to be parents who will pull their kids to save a buck, but it doesn't mean that they are going to a better facility.

Very good post! You know your families OP - take the approach that will work best for them. If you're better off breaking it down day by day or hour by hour, go that route....if you can just be straight and say you're raising the rates, go that route. I'm guessing that you're going to see the parents, hand them the note and discuss it with them so I don't think I'd put a lot into the note - more into what I was going to say when I gave them the note (or skip the note altogether - maybe send out a remind a month before the rate increase??).

 

[chloelovesdisney]

You're running a business at less than the going rate in your area. Unless you are in a low income area, that is not an unduly large increase at all. October is enough notice that if they can't pay the new rate to find a new daycare center. My guess is since you checked and are raising it to a competitive rate, but not excessively high, they will stay with you.

You've been giving them all a discounted rate for probably the last two years.

The local daycare center by me is $500/week for an infant, with a waiting list. Price is relative to your location. My guess is you are way below the rates here, so I think you're a real bargain, others would think $200 is expensive but that price would thrill people around here to no end. You've done your research and know you are asking for a fair rate.

I do agree with the other poster who said from this point on you should raise your rates $5 or so every year, instead of doing a larger jump every few years.

Best of luck.

 

[HM]

Oh, I have no doubt in my mind that daycare providers work hard. And they deserve to be paid very well for what they do. No argument there. I just don't make enough at my job to be able to afford daycare, and because I have three kids, that means it's better move to not work. Soo, in my case, the dcp I was using was making X off me, but now they are making nothing. And it could work out well for them, if they stay full. But if they have empty spots, isn't some money better than no money? At least at my DH's work..in this recession, they are saying, "A dollar earned is a dollar we didn't have yesterday." Sorry, I am going off on a tangent here. Anyway, everyone has to run their own formula and see if raising prices is worth the risk of losing business.

Someone that has three children in need of daycare should really look into having a caregiver come to your own home. It will be less expensive (usually) and easier for you to have someone come to you than to transport three kids back and forth to daycare. The only hard part of it is doing the tax reports every three months so that you can pay their social security. I did this for two years with my kids.

 

[raysnkaysmom]

I assume you are providing lunch, snacks, drinks throughout the day. I think it is safe to soften the tone of your letter by saying something along the lines of...I strive to keep my rates affordable for the families in my daycare, however, it has been over three years since my last rate increase. Due to the increase in costs associated with providing quality daycare for your family, the weekly cost of care for your child will be increasing to $X starting on X date. I appreciate the trust you put in me to watch your child.

I think I would leave it at that. Then if anyone complains, be prepared to indicate that you compared your prices to other in home daycares and feel that the new rates are comparable to what others in your area are charging. Also, point out the increase equals $4 a day. This truly only helps cover the increased cost associated with feeding each child.

I agree with the PP $20 at once seems like a lot, but make sure you break it down for people. Also, $20 is different depending on the dynamics of your customers. If they are lower income, you might consider $10 this year and $10 next year unless you are ready for them to freak and bolt. If your customers are middle class or higher, $20 might irk them but not necessarily sending them scrambling.

Good Luck!

All this is good advice.
But...personally, I'd try $10 less... for them it won't be so hard to attack, but for you, you have several kids to pull from....

 

[Stacerita]

I don't think its that much of an increase. If I was happy with the care you were giving my DD and she was happy being there, then it would be worth the extra $20 to me. $20 a week would not force me to pull my child from somewhere that she is safe and well cared for.

I am a bit surprised at some of the responses stating how you shouldn't raise the price because of the economy and it not being fair to the parents. Bottom line is you are runnning a business. Its nice to be competitive with other day cares, but you don't have to be the lowest around either.

I think you are over due for an increase.