How to Consider Raising Daycare Rates Post-Pandemic

I don’t know if you’ve been under a rock, but if not you’ve probably noticed that prices are going up for everything. Gasoline is up and so are used cars. I even heard a report of a ketchup shortage that might be looming. With everything including smashed tomatoes on the rise, should we be raising our daycare rates too?

Today I thought we would put on our CEO hats and at least consider raising our daycare rates post-pandemic.

And yes, I definitely realize how difficult the last year has been on all of us. Not the least of which for the “essential” childcare providers. But let’s try to look at this from a business perspective and see if there are indicators that point toward the need to raise your daycare rates.

Should Providers Consider Raising Their Rates Now?

Raising Daycare Rates

Demand is High

First of all, like I said prices are going up on everything. We might think that corporations are just simply trying to recoup the pandemic-related losses they were hit with last year. But according to CNN, when demand is up so are prices. Right now the demand for goods has really rebounded which is why we have seen the rapid rise in prices.

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When it comes to childcare demand is also high. Most likely due to so many childcare providers having to close their doors during the COVID crisis. Many for good. What that means is daycare spots will be more limited, at least for a while.

Here’s an article that talks about Child care insecurity many parents are experiencing.

CONSIDER THIS: You might want to raise your daycare prices because the demand for those spots is high right now.

Related Reading:

Seeing Stipends

Raising Daycare Rates

Adding to this is the fact that many parents are seeing stipends as a part of COVID-19 rescue packages. Here in California, teachers successfully negotiated for a childcare stipend before they returned to the classroom last month.

And of course, last week the federal government began the child tax credit payments which will mean an average of $423 monthly for parents.

CONSIDER THIS: Stipends could mean that parents would be able to afford an increased childcare rate right now.

Raising Daycare Rates

Local Trends

What are other childcare facilities doing? It might be worth investigating.

Tom Copeland says, “… providers’ rates should reflect the quality of their care. If you think your quality is comparable to local child care centers, then your rates should approach their rates.”

CONSIDER THIS: If nearby childcare businesses have increased their rates that might be an indication that you should follow suit.

Rates Roundup

Let’s consider a poll I ran last month where most childcare providers reported earnings of $5.00/hour or less. Now weigh that with the fact that many were paying their assistant at least $15/hour. What a disparage!

And what that really means is for the most part providers have been underpaid for a while. Long before the crisis.

CONSIDER THIS: Have you been in business for a while? When was the last time you raised your rates? Those are valid indicators that you might want to increase your rates.

What If My Clients Push Back?

Raising Daycare Rates

Many providers have concerns around client retention if they raise their rates. But again let’s look at it a little differently.

Annual inflation is typically anywhere from 1.9 to 2.3%. So if you had a practice of raising your daycare rates annually by 1-2% it would make a difference in being able to keep up with rising costs of food & supplies.

CONSIDER THIS: Do you evaluate your rates annually? Have your rates kept up with annual inflation rates? Have you considered an automatic annual rate increase?

Related Reading:

What If You Raise Your Daycare Rates?

When it comes to whether you should consider raising your daycare rates the fact that we have just come out of a pandemic should not necessarily be the deciding factor.

So what if you did raise your rates? What would that mean for you and your business?

  • Would it mean you could hire additional help?
  • Would it mean you could expand your services?
  • Could it mean you would get closer to accomplishing the goals you have for your business?

The real determining factor for raising your daycare rates has more to do with where your business is and where you want it to go. That is something we should look at every year, not just after a bad one.

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