Today I thought I would talk a little bit about why you need a Pricing Strategy for your Family Child Care (FCC). I say strategy, but really its more of a pricing policy for getting paid what you are worth. Spoiler Alert: it’s actually not going to lead to a rate of pay that is anywhere near what you are worth. What it will do is get you into the habit of charging a FAIR rate of pay and hopefully give you a sound base to build your business on. Here are 10 Reasons Childcare Providers Need a Pricing Strategy.
10 Reasons Providers Need a Pricing Strategy
1. KNOW WHAT DO YOU ACTUALLY MAKE
It’s a good idea to know what you make. Sounds too basic to even need to be said right? But for many providers, until we can see it in black and white, our pay is a bit of an unknown. It’s the same for your clients. They see the lump sum that is paid either weekly or monthly and thinks, wow, that’s a lot of money.
But is it?
I was in the dark too. It wasn’t until I broke down that a weekly payment of $150.00 was actually only an hourly rate of $3.33, did I realize what my rate was. I mean, that was what I was getting paid for 9 hours a day, 45 hours a week. That’s almost a third of the minimum wage here in California.
Having a pricing strategy will reveal your true rate of pay. Not just currently, but also for planning for the future.
2. REMOVES FEELING UNCOMFORTABLE CHARGING
It seems as providers sometimes we feel some sort of guilt about charging for our services. We love caring for kids and somehow we feel like we are charging for caring. This is not quite the right mindset.
While it is true, if a provider does not truly love kids, the business will probably not be successful. If the provider does not maintain a good business plan their business will most almost certainly fail. That’s why we must realize …
3. IT’S OK FOR YOUR BUSINESS TO MAKE MONEY!
“You’ve got a hobby, not a business.”
Say this with me, “It’s ok for my business to make money!”. As Pamela Skaist-Levy and Gela Nash-Taylor, founders of Juicy Couture, said in their book The Glitter Plan, “working for yourself is supposed to be fun, but don’t forget you are in it to make money. If you don’t, you’ve got a hobby, not a business”.
4. TAKE YOUR BUSINESS SERIOUSLY
The first step to getting others to take your business seriously is for YOU to take your business seriously. Again, having set business policies for your childcare gives credibility to your clients. Developing a pricing strategy is a great place to start.
5. PAY YOUR BILLS
If you don’t get paid, how can you pay anyone? Once you hire an assistant, you are responsible to pay them and pay them on time. If you don’t, they will probably leave your employ very soon. Would you stay if you couldn’t pay your bills?
When you know if your income will meet your needs or not, you are better able to address an insufficiency and raise your rates if you need to. Having a pricing strategy gets you closer to consistent income expectations.
6. YOU WON’T BE DUPED
Believe me, when I say, clients will ask to accept and gladly pay you much less than the very insufficient $3.33 I stated above. In their minds, you are almost equivalent to a babysitter and after all, you are just sitting around all day.
WHAT?! WRONG! (all caps)
You are a childcare professional who has dedicated their love for children into a business to care for other’s children.
I’m I, right or what?
Having a pricing strategy lets clients know that you are aware of the value of your knowledge, expertise and what you have to offer.
7. ACT LIKE YOU’RE A BIG SHOT
What I mean is, if you were a bigger center you would have to have sound business practices. Your overhead and payroll would be significantly more and therefore bad business practices could be catastrophic.
Why should you be any different?
I routinely will tell parents that “I care for their child, but my business is my baby.” You have worked hard to build your business. It is worth looking after.
FACT: Most preschools and daycare centers charge nearly three times more than FCC’s.
8. HELPS RUN YOUR BUSINESS EASIER
If you have a pricing strategy (policy) in place you won’t have so much chasing to do. When I started my business, I remember at the end of most weeks when it came time to collect the tuition, many parents would either tell me they forgot or ask me how much they owed. If I didn’t have an answer, it just delayed payment even longer.
If you have a standard rate & policy down on paper it is much easier to shoot them a text message or email reminder the day before and avoid the habitual “late’s”.
9. KEEPS YOU IN BUSINESS
It is so important for you to realize that as child care providers we provide a much-needed service. If you are not there to do your job, parents can’t go to work and do their job.
Ok, maybe that is a bit of an overstatement, I suppose parents would find another child care option. But, what I want you to see is that you provide a very needed service to your clients. Most parents are seeking Quality Child Care, which means a childcare that will be in business next week, next month and probably next year. Having a pricing strategy ensures that you stay on top of the income of your business. By doing so you are giving the potential of longevity to your business.
One of the main considerations in a pricing strategy should be where it places your business in relation to your competition. Are you on the higher end or the lower end? You need to know this.
In an upcoming post, I will give you a step-by-step process for how to develop your pricing strategy. What it should include and how you can use it to gain a competitive edge for your business.
One more thing; having a pricing strategy in place will help you set a bare minimum rate. Why is that important? Who want’s that!
Well, being equipped with the knowledge of what you are actually charging will help you resist over-discounting. You will probably avoid giving too much of a discounted rate even when pressed by a potential client.
There are 10 reasons why a childcare provider should consider having a pricing strategy. Having a policy will highlight and help your businesses income now and in the future. Do you have a strategy for pricing your childcare rates? Do you think it would help? Please leave your answer in a comment below.