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Old 08-29-2019, 11:00 AM
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DaddyDaycare DaddyDaycare is offline
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Join Date: Mar 2019
Location: California
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Quote:
Originally Posted by Myst_Seattle View Post
Others have already explained why my idea might not necessarily work out in practice for everyone, see the comments above. But here's how it works in theory:

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.
I love your question and I don't find it ridiculous at all, but I'm coming from a corporate business background. I briefly considered opening up my own day care, but after some research decided I didn't want to take a pay cut to deal with difficult families and daily operations. I would imagine that if maximizing profit was the main motivator, a lot of DCs wouldn't be in this field. Your point about the bigger franchises like Fullbright is a good one though.

I've been in a lot of situations where something that may appear obvious to someone can actually be very nuanced. The entitled parents because they paid extra is a really good example of that! Something I'll keep in mind as it applies to businesses outside of daycares as well

I also want to point out that a pure Supply & Demand model doesn't apply for daycares. I wouldn't want to send my baby to a daycare that costs $7/month, and on the other end of the spectrum, people wrongly conflate price with quality
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