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-   -   Why Do Daycares Use Waitlists Instead of Raising Prices to Meet The Demand? (https://www.daycare.com/forum/showthread.php?t=92280)

Myst_Seattle 08-21-2019 12:08 AM

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?

Cat Herder 08-21-2019 04:29 AM

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.

lovemykidstoo 08-21-2019 05:08 AM

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?

Cat Herder 08-21-2019 05:17 AM

Originally Posted by lovemykidstoo:
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?

I have many parents TTC on the list, one of my current clients is still trying and keeping the slot. I won't have an opening for at least 3 years.

I also keep them until age 6. Redshirting is common here.

lovemykidstoo 08-21-2019 05:24 AM

Originally Posted by Cat Herder:
I have many parents TTC on the list, one of my current clients is still trying and keeping the slot. I won't have an opening for at least 3 years.

I also keep them until age 6. Redshirting is common here.

Thanks! I was curious. Here it seems that as soon as those parents can get their kids to kindergarten (free), they do it no matter if the child is ready or not.

Cat Herder 08-21-2019 05:29 AM

Originally Posted by lovemykidstoo:
Thanks! I was curious. Here it seems that as soon as those parents can get their kids to kindergarten (free), they do it no matter if the child is ready or not.

That was my experience as well for many years, then the mill and several large farms closed. New artsy, tourist, golf, resort and "event" markets opened. And finally, there was an influx of new subdivisions, condos and adult living. The community changed pretty quickly. ;)

I am also the only star rated family provider in town right now.

Annalee 08-21-2019 06:44 AM

Originally Posted by Cat Herder:
I have many parents TTC on the list, one of my current clients is still trying and keeping the slot. I won't have an opening for at least 3 years.

I also keep them until age 6. Redshirting is common here.

Love the ďredshirtingĒ terminology. College football is upon us!happyface

jenboo 08-21-2019 07:24 AM

Originally Posted by Myst_Seattle:
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?

Im confused. Are you asking why daycares don't raise prices until the majority of people can't afford it and then drop off the waitlist?

It why they don't increase prices to hire more staff so they can enroll more kids?

Unregistered 08-21-2019 07:51 AM

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.

Snowmom 08-21-2019 08:47 AM

Originally Posted by Unregistered:
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.

So, what your suggesting is to price daycare services out of the realm of typical salaries and only cater to the elite who can afford extravagant prices? In order to trim waitlists?

Why wouldn't those customers just choose a nanny service then? It seems to be the likely outcome of price gauging.

Blackcat31 08-21-2019 09:15 AM

Originally Posted by Unregistered:
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.

That makes zero sense.

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.

Ariana 08-21-2019 09:23 AM

Originally Posted by Unregistered:
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.

No idea why! No idea why some providers insist on offering services for WELL below market value either, thus keeping rates low...or why providers don’t unionize, band together and increase pay and working conditions. My guess and I do not mean for this to sound offensive is that most providers are only in it for the short term and have low education/know very little about business.

Ariana 08-21-2019 09:25 AM

Originally Posted by Blackcat31:
That makes zero sense.

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.

I think they mean that you will have higher paying customers on your waitlist since most would drop off if they couldnít afford you. So rather than having 200 people waiting for a $50 a day space, you could have 10 waiting for a $70 a day space. It makes sense to me!

Blackcat31 08-21-2019 09:29 AM

Originally Posted by Ariana:
I think they mean that you will have higher paying customers on your waitlist since most would drop off if they couldnít afford you. So rather than having 200 people waiting for a $50 a day space, you could have 10 waiting for a $70 a day space. It makes sense to me!

No, it just means only those that have more money can find child care.

I charge a higher rate than most in my area and I also have the longest wait list so where is the correlation?

Ariana 08-21-2019 09:32 AM

Originally Posted by Blackcat31:
No, it just means only those that have more money can find child care.

I charge a higher rate than most in my area and I also have the longest wait list so where is the correlation?

Yes and only those who can afford a brand new IPhone buy one. It is the law of supply and demand. So if you are in high demand, raise your prices more. That is how supply and demand works. Itís why gas prices go up and down depending on circumstances.

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.

Ariana 08-21-2019 09:41 AM

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 donít 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.

Blackcat31 08-21-2019 09:43 AM

Originally Posted by Ariana:
Yes and only those who can afford a brand new IPhone buy one. It is the law of supply and demand. So if you are in high demand, raise your prices more. That is how supply and demand works. Itís why gas prices go up and down depending on circumstances.

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 understand how supply and demand works.

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.

Annalee 08-21-2019 09:45 AM

Originally Posted by Ariana:
Yes and only those who can afford a brand new IPhone buy one. It is the law of supply and demand. So if you are in high demand, raise your prices more. That is how supply and demand works. Itís why gas prices go up and down depending on circumstances.

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 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! :)

Ariana 08-21-2019 09:46 AM

Originally Posted by Blackcat31:
I understand how supply and demand works.

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.

It works perfectly here actually. SOME people can’t afford to pay more but some people can. SOME people would just have to sacrifice more or think harder about the choice to have children. The way things are now, parents tend to feel entitled to cheap care but buy brand new cars. Or complain about childcare fees while producing more kids and the provider can barely make ends meet. Maybe it would help society if childcare cost more.

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.

hwichlaz 08-21-2019 10:34 AM

Originally Posted by Ariana:
No idea why! No idea why some providers insist on offering services for WELL below market value either, thus keeping rates low...or why providers donít unionize, band together and increase pay and working conditions. My guess and I do not mean for this to sound offensive is that most providers are only in it for the short term and have low education/know very little about business.

I charge average rates, and I do NOT want to unionize. Being self employed means making my own rules and setting my own rates...a union would only hurt, not help that.

Unregistered 08-21-2019 11:10 AM

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.

LostMyMarbles 08-21-2019 11:10 AM

Originally Posted by lovemykidstoo:
Thanks! I was curious. Here it seems that as soon as those parents can get their kids to kindergarten (free), they do it no matter if the child is ready or not.

This is so true. I had two parents sign wavers to get their children in a year early. The one is so behind as it is. The other has fits when she doesnít get her way and is kind of mean about it. Iím absolute sick that the parents are doing this. My heart just hurts that they are already telling these parents their kids will get held back for kindergarten. My food program lady pretty much said it like it is. She said that the parents are only doing it for financial reasons. Itís so sad.

Unregistered 08-21-2019 11:11 AM

Originally Posted by Ariana:
No idea why! No idea why some providers insist on offering services for WELL below market value either, thus keeping rates low...or why providers donít unionize, band together and increase pay and working conditions. My guess and I do not mean for this to sound offensive is that most providers are only in it for the short term and have low education/know very little about business.

They don't want to follow standards. I'm a licensed teacher with an MA and have taught in public schools. Many of the posters here aren't qualified to be aides.

Ariana 08-21-2019 11:33 AM

Originally Posted by hwichlaz:
I charge average rates, and I do NOT want to unionize. Being self employed means making my own rules and setting my own rates...a union would only hurt, not help that.

Yes I totally get it! Union jobs though offer higher wages, automatic raises with inflation and seniority, pensions, more time off and more benefits.

Ariana 08-21-2019 11:37 AM

Originally Posted by Annalee:
[/b]


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! :)

I also charge higher fees, always have but cannot price myself completely out of the market. I have recently increased my 8-10 hour rate to roughly $12 a day more than most providers and people are still paying it. I have an education and run my daycare really well so it is high quality which some people are willing and able to pay for.

Blackcat31 08-21-2019 12:12 PM

Originally Posted by Ariana:
Yes I totally get it! Union jobs though offer higher wages, automatic raises with inflation and seniority, pensions, more time off and more benefits.

Unions sell that idea to people buts itís not how it actually works here.

Blackcat31 08-21-2019 01:47 PM

Originally Posted by Unregistered:
They don't want to follow standards. I'm a licensed teacher with an MA and have taught in public schools. Many of the posters here aren't qualified to be aides.

Was there a thread somewhere in which everyone shared their education levels? If so I haven't seen it but I don't think it matters anyways as many of the posters here ARE more qualified than you think and most know more about children and their development than many others do.

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.

Cat Herder 08-21-2019 01:52 PM

Originally Posted by Blackcat31:
SMH at some of the offensive statements I've read lately.

Mines bigger than yours. :p

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:

LysesKids 08-21-2019 01:59 PM

Originally Posted by Unregistered:
They don't want to follow standards. I'm a licensed teacher with an MA and have taught in public schools. Many of the posters here aren't qualified to be aides.

That's where you are so wrong; many of us are very qualified & we have degrees... I myself was a Sub teacher in a rural area of in TN when my youngest child was 10 (they had more regular substitutes than actual teachers many days).

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

Myst_Seattle 08-21-2019 02:17 PM

Originally Posted by Blackcat31:
That makes zero sense.
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.

I fully agree that it won't let you increase your capacity, but in theory it should increase your profit margin. Let's say you are currently charging $100 per week and have a 3 year waitlist. If you increase it to $110 (for new clients) the waitlist might drop to 2 years. If you further increase it to $120 it might go down to 1 year. Therefore your revenue would increase by 20% without having to take up any extra work.

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.

e.j. 08-21-2019 02:47 PM

Originally Posted by Blackcat31:
Unions sell that idea to people buts itís not how it actually works here.

Same here. The union stated specifically that they would work to increase wages for child care providers but that they wouldn't address working conditions, state regulations, etc. I can see where a union might benefit center workers in terms of raising their rate of pay but see little to no benefit for independent family child care providers.

Unregistered 08-21-2019 02:57 PM

Originally Posted by Blackcat31:
Was there a thread somewhere in which everyone shared their education levels? If so I haven't seen it but I don't think it matters anyways as many of the posters here ARE more qualified than you think and most know more about children and their development than many others do.

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.

What degree do you hold?

Unregistered 08-21-2019 02:58 PM

Originally Posted by LysesKids:
That's where you are so wrong; many of us are very qualified & we have degrees... I myself was a Sub teacher in a rural area of in TN when my youngest child was 10 (they had more regular substitutes than actual teachers many days).

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

What was your job? I know people in the "legal field" who are secretaries and have only graduated high school. Law firms even need custodians.

Blackcat31 08-21-2019 03:18 PM

Originally Posted by Myst_Seattle:
I fully agree that it won't let you increase your capacity, but in theory it should increase your profit margin. Let's say you are currently charging $100 per week and have a 3 year waitlist. If you increase it to $110 (for new clients) the waitlist might drop to 2 years. If you further increase it to $120 it might go down to 1 year. Therefore your revenue would increase by 20% without having to take up any extra work.

This isn't actually true either. I raise my rates pretty regularly and it doesn't seem to make a difference as to the length of my waitlist.

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:
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.

The thing about waitlists too that many aren't realizing or mentioning is it isn't first come first served so those last signing up to wait might sometimes be first served.

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.

Blackcat31 08-21-2019 03:26 PM

Originally Posted by Unregistered:
What degree do you hold?

NYB.


Originally Posted by Unregistered:
What was your job? I know people in the "legal field" who are secretaries and have only graduated high school. Law firms even need custodians.

Some of the smartest, nicest, most wonderful caring people I know never even graduated high school.

...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!

Josiegirl 08-21-2019 03:46 PM

Originally Posted by Unregistered:
What was your job? I know people in the "legal field" who are secretaries and have only graduated high school. Law firms even need custodians.

Does this sound derogatory to anyone else? :rolleyes:

Myst_Seattle 08-21-2019 03:51 PM

Originally Posted by Blackcat31:
This isn't actually true either. I raise my rates pretty regularly and it doesn't seem to make a difference as to the length of my waitlist.

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. :)

In this case, wouldn't you want to keep increasing the price until you reach the "breaking point" and start seeing a decrease in the queue? I mean, it's basically free money as you'd get paid more for doing the exact same job.

Michael 08-21-2019 03:53 PM

Originally Posted by Blackcat31:
Was there a thread somewhere in which everyone shared their education levels?

This might be it. The thread is from 2010: https://www.daycare.com/forum/showthread.php?t=24163

e.j. 08-21-2019 04:11 PM

Originally Posted by Josiegirl:
Does this sound derogatory to anyone else? :rolleyes:

There are several comments that sound derogatory to me. It's unfortunate and unnecessary.

Leigh 08-21-2019 04:25 PM

Originally Posted by Blackcat31:
Unions sell that idea to people buts itís not how it actually works here.

That's totally how it works here. I made more at my union job 20 years ago than I could make in the workforce now. I wasn't rich, but I made a FAIR wage, that was more equitable than people make now. I had great healthcare, a pension, and a contract between us (union employees) and the company that we BOTH agreed on and felt good about. If I could choose union/non-union, it would be union every time. Another benefit for the entire community? Other companies would set their wages more in accordance with my company to recruit and retain employees. My entire community was better off when we had this union company (the city's largest employer). Companies now are literally starting at $3-$4 an hour LESS than what I made 20 years ago.


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