Thriving Childcare

How To Know If Your Childcare Rates Are Too Low

Your Childcare Rates Are Too Low

It’s the question most childcare owners are faced with at some point, how to know if your childcare rates are too low? But then we get afraid that if we raise our rates we will lose clients or lose money in the end. BTW that is rarely the case. But when you are in a position where you have been charging too little money for a while it can be really scary to tell your clients that your rates are going up. In this post, I’m going to give you 4 of the best clues to know if you for sure should raise your daycare rates.

4 Clues To Know If Your Childcare Rates Are Too Low

As I said above, raising childcare tuition rates can sometimes it can be a really scary feeling. But I have found that those feelings rarely bare out to be valid. Still, I know how it feels to go through something like that so today I want to cover 4 big clues to being confident and knowing if your childcare rates are too low.

Your Childcare Rates Are Too Low
Photo by Jackson Simmer on Unsplash

As a daycare owner, it can be difficult to determine whether or not your rates are too low. However, there are a few key indicators that can help you determine if it’s time to increase your rates.

1. You Are Feeling Overworked

One indicator that your rates may be too low is if you are consistently at or near capacity. If you are consistently filling all of your spots and have a waiting list, it may be time to increase your rates. This is because you are likely leaving money on the table by not charging more for your services.


2. You Are Over-Enrolling Because You Need The Money

Another indicator that your rates may be too low is if you are struggling financially. If you are consistently running at a loss or are not able to pay your bills, it may be time to increase your rates. This is because you need to make enough money to cover your expenses and make a profit.

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Your Childcare Rates Are Too Low
Photo by Alexander Mils on Unsplash

3. If Your Skills or Experience Has Advanced

Have you attended a workshop, or completed some child development training or classes? If you have, your skill level and experience have advanced. Which means your rates should probably increase as well.

Remember, even if you haven’t received any formal career development, just by being in business another year you are more experienced than you were the year before. This means your business and clients are benefitting from your additional experience.

4. You Are Starting To Resent How Much You Earn

I specifically remember when this happened to me. I had a client who indicated that due to her newly divorced status, she was struggling with the tuition fees. In an effort to help her and retain the client, I offered her a reduced rate. What I failed to do was to put an expiration date on that rate.

A short time after that, my client shared that she had just purchased a new home. Immediately, I remembered that she was still paying a reduced tuition rate and I realized my mistake.

The Best Time To Increase Your Rates

When it comes to when to increase your rates, it may seem like the best thing to do so at the start of a new enrollment period or the start of a new calendar year. But actually, according to Tom Copeland that post-holiday period might not be the best time.

September is generally a good time to raise rates, because this is often when children begin school and you may need to fill an opening.

Tom Copeland

He says, “Don’t raise your rates in April (when tax bills are due) or December (when holiday expenses can be a burden).* September is generally a good time to raise rates because this is often when children begin school and you may need to fill an opening.

Leveling Up

It’s important to note that when you increase your rates, you should also be looking to improve the quality of your service. This could be in the form of hiring more experienced staff, providing more activities and educational opportunities for the children, or improving the facilities. These improvements will help justify the rate increase to your clients and help to retain them.

See how artificial intelligence can help you set your daycare rates!

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Know If Your Childcare Rates Are Too Low

If you are not sure if its time to raise your childcare rates, here is how you can know:

  1. You Are Feeling Overworked
  2. You Are Over-Enrolling Because You Need The Money
  3. If Your Skills or Experience Has Advanced
  4. You Are Starting To Resent How Much You Earn

So if any of those 4 things speak to you, I want to encourage you to confidently increase your rates. Don’t be afraid that doing so would be a mistake. The only mistake that you could potentially make here is continuing to work for less than you are worth.

Overall, determining whether or not your daycare rates are too low can be challenging, but by keeping an eye on capacity, financial performance, and the competition, you can make an informed decision. And when it comes to when to increase your rates, the best time is in September, while also improving the quality of your service.


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Adrienne Bradley Thriving Childcare

Hey there, I'm Adrienne. I help daycare providers like you create businesses they love!

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