I don't really do observing. I offer a 4 week trial period. If they aren't satisfied with the level of care their child is receiving, they may exit within that time without penalty.
I also offer one of my current daycare families as a reference.
I've only had 1 family ask. I told her that I charge for that there is a fee for the service and I don't do it under observation. They are welcome to drop off for an hour as a "stay and play" date.
Observation only creates a ruckus among the children. Kids will battle for the alpha dog position and be very attention seeking while people they don't know are there. That's why all interviews are done over naptime or after hours.
