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Why Do Daycares Use Waitlists Instead of Raising Prices to Meet The Demand?
I've been looking into the pricing of daycares here in Seattle and one thing was surprising to me - for some reason all daycares have huge waitlists, with some parents reporting they've spent up to three years trying to get a spot. There are also "waitlist fees" if you want to get on the waitlist in the first place.
Now, the fact that there aren't enough daycares in major metropolitan areas is well known and this doesn't surprise me. But why would daycares choose to use long waitlists instead of just raising the prices until supply meets the demand? I mean, other service providers generally don't force you to wait in line for years and just vary the pricing based on the number of customers. So I was hoping that Daycare members could resolve my question and explain the reasoning behind such policies. Is it to ensure that no spots are ever vacant? Is it to avoid a backlash from angry parents? Is it to help out struggling parents who would be priced out otherwise? |
My waitlist is about 3 years, now. I charge what I need to earn to meet my financial obligations, keep an emergency fund and life insurance, take a couple of vacations per year and fund my IRA. It has nothing to do with whom is on the list. I also have no desire to earn more, more money = more problems in my experience. :lol: I love my life as it is.
My tuition rate is fixed, increases yearly (just like my clients' wages) and reflects inflation in my region. I am not sure what you mean by "vary the pricing based on the number of customers". It has nothing to do with the number of customers, that is a fixed number, too, set by my regulations. I did not choose it and feel it is low for my ability. |
With my daycare I was finding that most of my kids were starting to leave at 3 1/2 yrs old. How can you have a 3 year waitlist, wouldn't they be aged out by then? Or are they parents that are not yet pregnant?
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Originally Posted by lovemykidstoo: I also keep them until age 6. Redshirting is common here. |
Originally Posted by Cat Herder: |
Originally Posted by lovemykidstoo: I am also the only star rated family provider in town right now. |
Originally Posted by Cat Herder: |
Originally Posted by Myst_Seattle: It why they don't increase prices to hire more staff so they can enroll more kids? |
Apologies for not being clear enough. If there's a daycare like Cat Herder's where the waitlist is at 3 years, it should in theory be possible to keep increasing the price every year until the waitlist is at 6 months or less as more and more parents are being priced out of the daycare. But in practice daycares don't seem to do it or at least the ones in Seattle don't.
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Originally Posted by Unregistered: Why wouldn't those customers just choose a nanny service then? It seems to be the likely outcome of price gauging. |
Originally Posted by Unregistered: Daycare is a huge cost already for working parents so raising rates isn't going to be a benefit for anyone. Those with bigger wallets have more options but regardless my issue is that I am limited to x number of spaces and despite the fact that my wait list is also pretty lengthy, raising my rates isn't going to change the maximum capacity the state allows me to have. |
Originally Posted by Unregistered: |
Originally Posted by Blackcat31: |
Originally Posted by Ariana: I charge a higher rate than most in my area and I also have the longest wait list so where is the correlation? |
Originally Posted by Blackcat31: I charge pretty much the same as I did when I opened 10 years ago because there are so many providers charging bottom barrel prices for such a highly sought after service. They have the idea that cheaper will attract more clients. |
I will say though that the market might end up levelling itself out. As childcare becomes more lucrative more people will get into it and since you don’t need any real education or skills to do it (at least where I am) there is no deterrent to pursuing it, thus increasing supply and bringing down prices.
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Originally Posted by Ariana: Raising my rates simply because the demand is there isn't the answer. People can't afford to pay more than a certain amount. No matter what the supply and demand is. S/D doesn't always apply to the child care business. Theory is great but reality is more important. |
Originally Posted by Ariana: I disagree with this theory. There are tons of unlicensed legal and illegal offering services in my state for rock bottom prices, but this doesn't change what I charge nor how I run my business regarding anything else. I am full with a waiting list and run my program like a business. I am open less hours than most but still remain full. I charge 52 weeks per year but still remain full. I do what works for me to support my own family. As for education, I do have an AS degree, but business sense doesn't always come from a college. Life lessons with hard knocks along with a special mentor taught me alot! :) |
Originally Posted by Blackcat31: I had a mom interview and tell me my rates were too high for their budget. I said ok and sent them on their way. A week later she contacted me....they magically found the money. Why? Because the supply of quality care is low. |
Originally Posted by Ariana: |
The truth? Most of the providers here are legally unlicensed and don't have more than CDAs. They also don't want to do school prep. Who is going to pay high prices for that?
Many are also rude to parents and want (usually low paying) parents they can term left and right when they feel like pulling a hissy fit. |
Originally Posted by lovemykidstoo: |
Originally Posted by Ariana: |
Originally Posted by hwichlaz: |
Originally Posted by Annalee: |
Originally Posted by Ariana: |
Originally Posted by Unregistered: A degree does not make you better than anyone else. Paper isn't worth whatever is printed on it IF it isn't in conjunction with hands on experience and quality. SMH at some of the offensive statements I've read lately. |
Originally Posted by Blackcat31: Wait, wrong job site... :lol: Wait, no that seems about right. :ouch: If only parroting what the professor says for a solid A would just equate to hands-on skills and business management ability, gosh golly. :rolleyes: |
Originally Posted by Unregistered: My clients chose me because I speak more than one language & I did teach my daycare babes. I had a very multi-cultural childcare home for many years (I closed last year), so don't state something you don't know for a fact. I worked in the Legal field for 15 years before teaching & childcare |
Originally Posted by Blackcat31: It would price out some parents out of the daycare market, but at the same time it would help parents who have recently moved into the neighborhood and haven't had a chance to sign up for the waitlist three years ago. That's an issue faced by many of my parent colleagues who are new to Seattle. |
Originally Posted by Blackcat31: |
Originally Posted by Blackcat31: |
Originally Posted by LysesKids: |
Originally Posted by Myst_Seattle: The biggest issue in my area and the reason there is such a long waitlist is there are so many parents that want part time, sporadic care and want to pay only for the hours or days they use. That doesn't work well for a child care provider trying to earn an income themselves and while staying within ratios. My waitlist has actually grown more as I've charged more. Go figure. lol! I can't explain that logic so I don't even try. :) Originally Posted by Myst_Seattle: For me, it's about who FITS whatever opening I currently have. Does that make sense? So in reality a new family moving into the neighborhood and just signing on to the wait list might only wait 2 months for care verses someone on the list that has been waiting 3 yrs. Best fit trumps first on the list. Hopefully that makes more sense. |
Originally Posted by Unregistered: Originally Posted by Unregistered: ...and I am pretty sure that at the end of it all, the only thing listed on ones head stone is their date of birth and date of death. The rest isn't important. Especially if you truly believe a degree makes you better than anyone else. I have zero interest in running in circles around someone who simply types the words "I have a degree" and thinks they are worthy of a decent conversation. :rolleyes: Have a great night! |
Originally Posted by Unregistered: |
Originally Posted by Blackcat31: |
Originally Posted by Blackcat31: |
Originally Posted by Josiegirl: |
Originally Posted by Blackcat31: |
I had a union job and it was the best paying ECE job in my City by a very wide margin. People just starting were hired at $45,000 and that was 10 yrs ago. Plus benefits, sick time etc etc.
Every person I know who is in a union makes more than they would in the private sector. Too bad this interesting discussion has derailed into a pissing contest as usual :rolleyes: |
If you're not happy with your wages
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Just my comments:
1) While it's not at the top of my list of concerns for parents, I still worried about whether I was affordable. 2) I honestly wouldn't have wanted to be filled with dcfs that could only afford top prices because some of them feel very entitled and expect special for the high prices. 3) Wait lists aren't all they're cracked up to be. By the time their name came up, other dc had been found. This is from when I was lucky enough to accumulate several names so take that thought for what it's worth. 4) JMO, but experience with children, dedication, love and compassion play just as much of a role as your so-called book learning, certificates and education. :rolleyes: |
I don’t feel the need to do anything to shorten a waiting list. It’s just not a concern for me. I’ll just keep doing my job, and enrolling families that fit well here.
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The only thing unions help are themselves
The only benefit for the individual is a higher wage. But at who's cost? Unions are/were the downfall of the economy in my area They are/were the downfall of automakers. Unions help unions get rich but at who's expense? Unions have also wrecked the steel and textile industries and have helped drive manufacturing jobs overseas. They've ruined public education and cost tax payers billions of dollars and are bankrupting cities and states. (Wisconsin is a perfect example). If unions were so wonderful, why aren't child care providers flocking to join them? Why aren't child care providers shouting from roof tops how beneficial and helpful unions are to this profession? Unions have turned the American dream into a nightmare. |
Originally Posted by Josiegirl: Unregistered: A good licensed, educated teacher would never portray the self righteous, judgmental attitude you are displaying here. Good teachers have compassion for others, see worth in all people, teach children and young adults how to treat others and the world they inherit with kindness. I take pity on the ones who will be subject to your wrath. Originally Posted by Ariana: In regards to short term: The providers I know have 10 years or more under their belt. Myself included. |
I charge more for infants AND require full time Carr
I do this because it’s needed in my community AND spots are rare. Same way other places do it. Higher demand, less ‘product’ and less spots. |
Originally Posted by Josiegirl: |
Originally Posted by Mom2Two: Some parents might also find a daycare that's far from where they live, instead of being able to send their kid to the closest location. Some are only able to find a part-time option while they want a full-time option. None of this would be an issue if waiting lists didn't exist. |
Originally Posted by Myst_Seattle: |
Originally Posted by Myst_Seattle: I don't understand how you are coming up with these conclusions.... although it could be a simple misunderstanding in regards to parent perspective and provider perspective. But if you could explain how eliminating wait lists would fix the issues you mentioned I would appreciate it. :) |
Originally Posted by Myst_Seattle: I would bet good money that the lack of daycare in your area is due to licensing restrictions and mandated policies they inflict on their local providers. Many states make it near impossible to make a good profit with their ratio restrictions. On top of that, state representatives who have never stepped foot in a daycare impose statute after statute of mandated procedures that make this job dreadfully complicated. As a result, that drives providers out of business by the dozens. If you truly want to make a change in the daycare supply, write to your representatives. Let them know that the public (you) wants changes. That they should make this professional a priority and appealing to future providers by giving them resources they need and freedom in their business, instead of pushing them out in the name of “universal pre-k”. |
Originally Posted by LostMyMarbles: Originally Posted by : Originally Posted by : Originally Posted by : |
Your theory however does not work in all economic areas...:
As I have already said I charge a lot more than other area daycares do. (Almost double) Many of them have openings they can’t fill. I have a lengthy waitlist...a waitlist that has grown as my rates have grown. So how does your theory work when applied to me? The business of child care is not the same as The business of selling a product .... It’s also important to remember that most childcare providers are looking to make an income but they are not in this business so that they can rob hard-working parents |
Originally Posted by Blackcat31: Originally Posted by Blackcat31: |
In the $100,000/week example, sure, it eliminates the waiting list. But who did it help, besides the Bill Gates person and the daycare provider?
As others have pointed out, our maximum allowed ratios do not change, no matter how high we raise our rates. This whole concept of raising rates to eliminate waiting lists is just ludicrous. The parents sitting at home waiting for daycare would still be doing that even if I doubled or tripled my rates. |
Originally Posted by Rockgirl: 1. Yourself as the business owner, as your profit margins go up. This might additionally incentivize you to expand the daycare in the future. 2. Daycare employees (if there are any) might see an increase in salary 3. Parents will have more flexibility as they know wait times for daycare are short Originally Posted by Rockgirl: Originally Posted by Rockgirl: |
Originally Posted by Myst_Seattle: |
Originally Posted by 284878: This isn't an issue when it comes to other expenses: for example its fairly easy to find a property to buy/sell, although it's very expensive compared to the rest of WA state. And there aren't queues in IKEA for baby cribs or other child expenses :) |
I don't see the answer to the Seattle kind of dilemma as pricing the normal income family out of the dc possibility completely or leaving them with the lowest possible standard dc that can be afforded. I see the dilemma as being solved by increasing the # of available quality child care options. When states stop making the hoops so difficult to jump through and start giving providers more support, more respect, in regards to being in the profession then maybe the dilemma will improve. When they can gather funding to help pay the costs of dc(which is already exorbitant in some places) more than they do currently, then things will improve.
States have taken away financial support while increasing their regulations and requirements in recent years, making it more and more difficult for a provider to be able to stay in business or *want* to stay in business. Nothing burns a provider out more than constantly giving giving giving of their time and money to stay in regulation. :( |
Originally Posted by Myst_Seattle: Well, it sounds like you may be very passionate about this, my question is, outside of posting here, what is your next step to fix the problem that you are seeing? Others have suggested that you write the lawmakers, is that what you are planning on doing? |
Originally Posted by Myst_Seattle: Your supply and demand theory is seriously flawed when it comes to this particular issue (waitlist) and this industry. Let's pretend for a moment that Provider Amy does as you suggest and raises her rates- double what she currently charges. She lets everyone on her waitlist know that's what she's doing. Likely, nobody on her waitlist will drop because they are not currently paying her that rate until they enroll. They will wait to make that decision until they know if they have a spot. Provider Amy then lets her current clients know she's doubling their rate. For argument's sake, let's say 3/4 of them can't afford that and leave. Amy then goes through her waitlist only to find that 1 of them will pay double fees.... she's not making any additional profit with this new fee. She's lost 3/4 of her clients who used to pay reasonable fees and only gained one who pays more. She's now working TWICE as hard in the future to find those clients who will fill those premium $ spots, because those clients are few and far between. She also takes a higher risk when those clients leave for the inevitable name brand preschools (the spots will be vacant-making $0). While those spots are vacant- insurance and utilities are still due, licensing costs money and zero is being contributed to her retirement funds. Had she kept her reasonable fee, her clients likely stay longer in the long run (in-home typically costs less than centers and less than formal preschools), which means less turn over, less advertising, less effort and supplies used to fill vacant spots (that again- make $0). She would also be making a nominal fee from waitlists (IF she charges one) and again, working less to fill spots when children age out or leave. Job security. Sure, your waitlist may be gone but Provider Amy did not profit and works harder to find the $ in the haystack. You may think that "well, when the clients DO come, there won't be a wait for them". True. But Amy took a loss waiting for them. There are so many behind the scenes intricacies of this business that so many outsiders don't realize. |
Originally Posted by Snowmom: However your example is flawed as it represents a bad business practice. Real life businesses do this differently: 1. You start with a price of $100/week and a waitlist of two years 2. You keep the same price for existing customers but raise the price for anyone joining next year to $120 3. As you go through the waitlist it shortens and now your waitlist is 1.5 years long 4. Next year you raise your price for new customers by another 20% to $150 5. After going through the waitlist you've now shortened it to 1 year only and stop raising your fees That's how my local barbershop which suddenly became very popular did this. I still pay the same fee as I did a few years back, but new customers have to pay 50% more. They are now considering increasing the price even more, as they still have more customers than they can handle. An alternative option is to have a fee to skip the waiting list. So for say $5000 you'd get to be the first family to get offered a spot. That's how Disneyland works - if you stay at their very expensive hotels you get to skip some of the lines. This is also how airports work - if you buy a business class ticket you can skip the regular line to the security check. |
Originally Posted by Myst_Seattle: Real-life business owners do whatever they want. How long have you owned and operated your own business? |
Originally Posted by Cat Herder: I don't run a daycare myself but my family runs assisted living facilities so I'm well familiar with what service providers have to deal on a daily basis. |
Originally Posted by Myst_Seattle: |
Originally Posted by Rockgirl: All I'm asking is why daycare businesses follow an unusual pricing strategy. So far the answer seems to be "because daycares are extremely risk averse and prefer having very long waiting lists instead of trying to maximize their long term revenue". |
Have you ever worked overtime and had your check come out to less than if you just worked your normal schedule?
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Originally Posted by Myst_Seattle: |
Originally Posted by Snowmom: |
Originally Posted by Myst_Seattle: |
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Done.:rolleyes:
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Originally Posted by jenboo: |
Originally Posted by Myst_Seattle: |
Wait list are needed due to the child care need/ provider ratio. The are more children than providers. The only thing that could change that is birth control or more providers.
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Nope. The AVERAGE price of daycare in Seattle is $1200.
http://www.seattleschild.com/Cut-the-cost-of-childcare/ |
Originally Posted by e.j.: |
Originally Posted by tandow: |
The average Boeing employees makes $125,000 a year. There are 80,000 employees in the Greater Seattle region.
Microsoft? $207,500. 42,000 employees. Amazon? $159,000. 25,000 employees. (including employees in their fulfillment centers that are in places like Renton and Dupont) Google? $200,500. They're not even CLOSE to being one of the Seattle metros top employers, with only 98,000 employees worldwide. The average NET salary in Seattle is $69,000. Basically what you're saying is that we need to raise our prices so that only the wealthy are entitled to quality childcare. Nevermind that we have years of experience, and actually know what we're talking about. If someone offered me $5000 to get off my waitlist I'd laugh in their face. I don't want parents that think they can "buy" me. My policies are mine, and they're set for a reason. Entitled parents in the beginning typically end up being problem parents while using your services. They want it when they want it, no matter how you or the other parents of children in your care are affected. But you be stubborn and stick to your guns.... your OPINION on this is obviously worth more to you than our experience. |
In the beginning, I wanted to stay up with this thread just because it interested me but now I'm thouroughly:confused:and going:eek:.
"What does any of this have to do with the price of beans in China?" as my grandfather used to say:lol: |
Originally Posted by tandow: Originally Posted by tandow: Originally Posted by tandow: Originally Posted by tandow: |
Originally Posted by Myst_Seattle: So basically parents can buy their way to the front of the line? That's really sad. :( Originally Posted by Myst_Seattle: Haven't you read the venting thread here? If not, I suggest you do. Almost every single post involves a provider trying to help a child/family and not wanting to term them for fear of failing them. If it was all about the money and only the money kids would be termed every time some one else came along and offered a $1 more a day for the spot. Lastly you never answered my question about how waitlists actually work..... Waitlists are not first on the list gets the spot like most places. Wait lists that operate that way might benefit from your theory but in reality it's BEST fit gets the open spot. So the Smith family might only spend 3 days on a wait list before getting a spot even though the Jones family has been on the list for 3 years. No matter how much money the Jones family pays if they aren't a good fit, they aren't going to be first pick. |
Originally Posted by Myst_Seattle: But yes, some of the adult tantrums we've witnessed or endured are not worth any amount of money. I am more business geared than most providers but even I have my limits and I've termed families that have certain behaviors and attitudes simply because I value myself and my self worth MORE than I value my bank account. There will be no U-Haul trucks following my funeral procession. I'd rather make a difference in someone's life than earn an extra $ or two. ;) In the child care business it isn't black and white like it might be in other businesses. |
Originally Posted by Blackcat31: Originally Posted by Blackcat31: |
Originally Posted by Myst_Seattle: Call it a donation or a bribe it is what it is and it's unethical. Originally Posted by Myst_Seattle: |
Originally Posted by Blackcat31: Originally Posted by Blackcat31: |
Originally Posted by Snowmom: |
Originally Posted by Ariana: |
Originally Posted by Cat Herder: We are THE most essential service. There is no other service more essential than ours. Yet we are some of the lowest paid workers. Do the math it just does not add up and I think it is good to have a conversation about it :) FWIW I think Myst Seattle has some good points to ponder if only we could stop taking things so personally and listen. |
I am curious so I PM'ed Tom Copeland and asked for his legal advice/interpretation as to the legality of this "idea".
Hopefully he will put his two cents in. |
Originally Posted by Ariana: |
Originally Posted by Unregistered: |
Originally Posted by Myst_Seattle: |
I think I'm totally missing this argument. The only reason I had a wait list was because I had more people interested in spots than I had spots available. I don't see how pricing people out of my wait list would have helped me at all. Then when someone leaves, I have no one to choose from. Everyone already complains about paying for daycare and expects you to watch their kids for next to nothing. I would have no clients if I had charged higher than what I already charged...
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Originally Posted by Indoorvoice: 1. Let's say your daycare is based in a major city, charges $100/week and has a waitlist of 2 years 2. You increase the price to $120/week and wait for a year. Now your waitlist has decreased to 1.5 years 3. You further increase the price to $150/week and wait for another year. Now your waitlist is at 6 months. For you as a business having a 6 month waitlist should be as good as having a 2 year waitlist, as you still have enough potential clients at your door whenever you have a vacancy. And at the same time your profit margins go up as you now charge more than you did before, for the exact same amount of work. As a bonus parents can now plan for daycare much more easily, as wait times will become short and predictable. |
Originally Posted by Myst_Seattle: Too many factors for upping fees just to shorten the waitlist. Unless you have lived real world waitlist for home daycares don't think it will work; theory vs Real life - 2 totally different things... even the area can contribute as a factor. Blue collar neighborhoods can't afford even half of what most city folks pay |
Originally Posted by LysesKids: |
How does any of what you suggested benefit the provider?
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Originally Posted by Blackcat31: You've mentioned in an older post that you've PM'ed Tom Copeland. Did you get a response by any chance? |
Originally Posted by Myst_Seattle: |
All times are GMT -7. The time now is 10:25 AM. |
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