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Daycare Center and Family Home Forum>How Should I Raise My Rates?
permanentvacation 01:05 PM 08-05-2011
The going rate in my area for an infant (under 2 years old) is $150 for licensed home daycare providers (I'm a licensed provider). However, I have been undercharging due to living in a small home ( can't compete with the nicer homes and large fenced yards). However, I am moving in a couple of weeks to a larger home and will be able to compete more with the layout of other daycares in my area.

Also, I rely pretty heavily on my ex-husband for extra money to pay my bills and pay for our children's outings. I really hate having to go to him for extra money, but he has plenty (so it's not really putting a hurting on him) and due to my small home, noone would pay me the typical daycare rates. I am making more than I would if I went out to work. But still not making quite enough to make ends meet.

Since I rely so much on my ex for financial help, I have said for a couple of years now that I don't know what I would do if the man dropped dead! Well, now he's in the hospital. Been there for over a week and will be there about another week. Then he has to be on bed rest for at least two weeks. Now, he owns his own company with employees. So, technically, he's making money (his employees are working and his company is still making money) even though he's unable to work himself. So, in a sense, he still has money that I could ask for. However, I really think it would be completely wrong of me to ask him for financial help right now. Oh, and he doesn't have health insurance, so he's racking up a pretty hefty hospital bill that he will have to pay out of pocket!

So, I guess him being in the hospital is what it is taking for me to demand to myself that I stand on my own two feet financially. Since I am moving to a nicer place soon, I am way over-qualified to be a home daycare provider ( I am actually qualified to be the director of a center), I teach my children much more than any of the three centers that I worked at and than many home providers teach, and simply that I honestly need to make more money, I really want to raise my rates to the typical going rate around here. The going rate for an infant is $150/week. I watch infants for $100/wk! The going rate for a preschooler is $125/wk. My rate is $100/wk.

So, my question to you is... Do you think I should ask my current parents to pay more or should I simply advertise to get new kids at the higher rate? I just started watching a baby at $100/wk last week (this is only the 2nd week the baby's been here) and basically on their 2nd Friday here, I would be saying I want to raise their rate an extra $50/week!! That seems very extreme to me! I think if I were the parents I'd flip out if my daycare lady said that to me. However, I also would be quite confused as to why she terminated me (if I get a higher paying client) when there's been no problem.

So, if you honestly needed more income, how would you handle changing your rates with your current clients? Ask them for more money or replace them with new clients who hire you at the higher rate?
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MarinaVanessa 01:27 PM 08-05-2011
Wow, that's a lot of info to take in all at one time, but here goes ...

I think that you should advertise for any openings that you have at the new higher rate that you have decided to charge. If your area's going rate is $150 and you think that's what you want to charge then charge any new clients that amount and not your old rate.

Now for your clurrent clients however $50 is a HUGE jump and might shock them into a coma. I suggest that you let them know that you are moving and that their rate will go up slightly and then raise it a little each year. I suggest offering them a $20-$25 a week rate increase and see what they say. You should aim high ($25 rate increase a week) and it's too steep for them hopefully you can settle for a $10-$15 rate increase. You don't want them to jump ship. Compare your rates to other daycares to them and explain why this is necessary. If they don't hesitate you'll be one lucky dog and if they do settle for raising their rates slightly then you can increase the rate again each year. I would suggest raising that rate again by a few dollars (like $2 or $3 a week) each year until they are caught up with the newer clients.

If any of your current clients freak out at the rate increase you can always choose to work with them on a case by case basis if you want to keep them. If you fill your openings at the higher rate and still continue to get calls form people interested in your DC then you can offer your clients (paying the lower rate) one by one to either pay the new higher rate or to find alternate daycare. Eventually you'll either have cycled all of your lower paying clients out or they will catch up and eventually pay the new rate. This is what I would do anyway.
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