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How To Set Daycare Rates

How To Set Daycare Rates

Child care is like every other business. There are many options for deciding your fees for services. Most centers have flat fees for each age group and allow clients to come and go anytime within those hours. Those hours are traditionally about twelve hours a day. The rates are higher to reflect the longer hours available to the clients.

Home child care is different in that most providers don’t have a second shift crew coming in to relieve themselves after an eight hour day. Being the sole provider of the services means  you need to decide what you really can offer and how much money you need to be profitable within that many total hours of work. You need to also consider  there will be hours daily and weekly  you will need to accomplish business related tasks when you don’t have children in the home. Definitely figure that into your rates for tuition.

Many providers have open to close hours similar to the center model. They are typically providers that work within a ten to eleven hour day. The parents can use any or all of those hours for the same fee. This keeps the billing simple and often the arrival and departures of the kids are often within fifteen minutes of opening and closing. That can add to the stability of the group of kids. The parents often view your business as more of a business if they see other clients abiding by the same routine and schedule. The time to pick up or drop off is reinforced by the other clients.

A common model is to open early and offer ten to twelve hours a day but limit clients hours to contracted hours within the range of hours of operation. The fees for that use are dependent on total number of hours used and sometimes how late the pick up is in the evening  and the providers family time becomes shared time with the day care.

Clients wanting or needing hours up to the end and beyond the set maximum time the business is open  can become an ongoing issue with providers. It  can cause turmoil within the provider and her family. She may take the family because, all other things begin equal, they will be a good source of income. After providing that for a few weeks or months it is easy to become weary of that last fifteen minutes or half hour when you still have one family and you want to be off of work to be with yours.

One of the things that causes a lot of conflict between providers and parents is when the hours of use begin to stretch beyond what the provider originally and somewhat begrudgingly allowed. When, for example, clients start being late and stretching 5:30 p.m. to 5:45 p.m. that extra fifteen minutes becomes the most grueling part of the providers day. If it’s not handled and the parents are allowed to tack on the extra time, very often the 5:45 p.m. turns to 6:00 p.m.

This can happen with arrival times too. Parents may want to arrive early within the hours she is providing for other clients. The parent may also feel that if they drop off later than their contracted time that this gives the leeway to use extra time at the end of the day to make up for the time the provider didn’t have the child.

The additional time desired by the parents usually comes in fifteen minute blocks. When they feel comfortable adding time onto their day without additional fees it doesn’t take long before they believe the late pick up IS their daycare schedule.

For example: A client scheduled to pick up at 5:30 p.m. is allowed to start coming at 5:45 p.m.. After a block of time of that being allowed they are comfortable adding another fifteen minute block. When they come at 6:00 p.m. they believe they are only fifteen minutes late. If it’s allowed to go on for too long and the time gets even beyond 6:00 p.m. the provider then wants to reign it in and tries to renegotiate back the original deal.

When the provider communicates to the parents she wants what was originally agreed upon the parents become upset because they are used to the “flexibility” and having this extra time every day for free. They are using those extra two to four hours a week of awake time without their child for a reason. That reason is important to them. Getting it for free is REALLY important to them.

Recently a provider on our forum described this very common scenario in a letter to a parent.

“I just wanted to be open with you and let you know how I have been feeling for the last little while. There has been a few things that have really been bothering me and I tried really hard to approach you in the nicest way I could about them but regardless they have left me feeling full of stress in the end. The first thing was your irregular show ups for drop offs and pick ups. When you first signed on with me you asked for 8am – 4:30pm. Soon after you started showing up at 4:45pm, then 5:00pm, then 5:15pm…this was when I approached you, for the first time, and asked you if you wanted a different pick up time at which you said yes 4:45pm. You soon later began showing up at 5:00pm and 5:15pm, I approached you again and you said you needed 5:00pm, which again you were not able to always make it on time for. And then the drop offs started going all over the place varying between 8am and 8:45am, I literally never knew what to expect…hence the fact that I sent out letters to ALL of my families regarding drop off times.

You need to understand this from a daycare prospective, if a provider doesn’t know when to expect a parent (the times the child is to be in daycare) how do we know what to charge parents? There is a totally different fee for parents needing 8am – 4:30pm (8 and a half hour day) and parents needing 8am – 5:15pm (9 hour and 15 min day). I didn’t raise your rates out of courtesy but seen no courtesy back from you.

You need to realize that regardless of if I am open from 7:30am – 5:30pm you are still on contracted hours (your hours), I am NOT always open until 5:30pm, nor do I always start my day at 7:30am, this is totally depending on my parents SCHEDULES.

This is a textbook example of how doing individual schedules within open and close hours can be misunderstood by parents and cause conflict between parent and provider when the parent wants flexibility and longer hours for the same price of the schedule agreed upon when the child enrolled.

There are a couple of ways to solve it. One is to enforce late fees and early arrival fees from the very first occurrence. This is difficult for most providers because they feel if they aren’t flexible they will loose the client. They hope that the lateness is a situation dependent issue and the parent will go back to abiding by the hours. When it becomes apparent that  isn’t going to happen, often the provider concedes and allows the schedule to change as a courtesy. Then it happens again and the cycle starts all over. Before long she is doing three to four hours of care more than she is charging for, her closing time has  changed, she becomes burnt out, and her family life begins to suffer.

When I first started doing child care I did both day and evening shift. I learned pretty early on that parents had to drop off and pick up at the times we had agreed upon or I would be over in my numbers. This was especially true of the three p.m. to six p.m. times. Those where the overlapping hours between the two shifts where day parents would want to extend the hours by picking up late and the evening shift parents would want to extend the hours by dropping off early.

I devised a fee schedule  based upon total number of hours used per day and the arrival time for the evening shift and the departure time for the day shift. The hours in the rates were a maximum of nine hours with an additional hourly rate beyond nine hours of scheduled time. The day shift and the evening shift rates were the reverse of each other. The later the kid stayed on the day shift the more expensive. The earlier the kid arrived on the evening shift was more expensive.

I don’t do evening shift anymore but I kept the rates table because it has worked so well for so long.

Nannyde’s Tuition Policies

Please see our “rates” section for weekly and part time rates. Tuition is due on Friday by noon for the upcoming week.

We do not raise rates on existing clients except for situations where the care hours for the child have increased or departure time has changed to a later departure. We also offer siblings born into the day care the same base rate as the older sibling.

The rates can be lowered under the following situations: The child’s schedule changes requiring an earlier departure or the child going from full time to part time (minimum of three full days per week). Notices for any changes that lower the weekly rate must be put in writing and presented to the day care on a Friday. A months notice for any fee lowering change must be given. Also the change must be approved to insure there is a slot available for the change. Any schedule changes that result in a pick up earlier than 3 p.m. will not lower the rate below the 3 p.m. departure rate. This is our lowest possible weekly rate.

Parents will contract with the day care for arrival and departure times. Parents are allowed to bring their children no more than five minutes before the scheduled arrival time unless overtime arrangements have been made. The only exception to this is inclement weather. If you arrive more than five minutes early please park on the street to wait to enter the day care until your scheduled drop off time.

Late pick ups: Don’t do it

Rates Our rates are calculated differently than most child care homes and Centers. The rates are based upon the total number of hours per day and the departure time. The published rates are based on a maximum of a nine hour day. If you need more than nine hours per please add $5.00/hour to our base rates.

Full Time Rates (2010) based upon a maximum of nine hours a day and time your child departs from day care:
3:00 p.m. departure $135.00 per week
3:15 p.m. departure $140.00 per week
3:30 p.m. departure $145.00 per week
3:45 p.m. departure $150.00 per week
4:00 p.m. departure $155.00 per week
4:15 p.m. departure $160.00 per week
4:30 p.m. departure $165.00 per week
4:45 p.m. departure $170.00 per week
5:00 p.m. departure $175.00 per week
5:15 p.m. departure $180.00 per week
5:30 p.m. departure $185.00 per week
5:45 p.m. departure $190.00 per week
6:00 p.m. departure $195.00 per week

We have a different rate structure for part time. Part time is a minimum of three full working days per week. We do not provide drop in care. We do not offer half day rates.

Part Time Rates

3:00 p.m. departure $33.00 per day
3:15 p.m. departure $34.00 per day
3:30 p.m. departure $35.00 per day
3:45 p.m. departure $36.00 per day
4:00 p.m. departure $37.00 per day
4:15 p.m. departure $38.00 per day
4:30 p.m. departure $39.00 per day
4:45 p.m. departure $40.00 per day
5:00 p.m. departure $41.00 per day
5:15 p.m. departure $42.00 per day
5:30 p.m. departure $43.00 per day
5:45 p.m. departure $44.00 per day

Additional hours beyond nine hours per day billed at $5.00 per hour.

Overtime must be pre-arranged and approved.

This graduated rate scale limit’s the hours to a nine hour day and encourages parents to pick up as early as their schedule will allow. If they want later hours for pick up they know before they ask what the rate will be. They know going into requesting extra time that they will have a WEEKLY fee increase. If they go over nine hours they have the weekly fee plus an extra $5.00 per hour in addition to the base weekly fee.

Now it sounds complicated but it’s actually pretty easy. It is a protection measure I put in place to avoid being asked to do additional earlier or later hours for free.

Ask away but your gonna pay.

Every year I give myself a five dollar per time slot raise. The way I figure the bottom rate (3p.m.) is by the amount I need to break even in the slot. It’s my base pay I must have for each kid. Anything after that is gravy. The later the pick up the happier I am on the way to the bank.

Most of my clients start out with early departures. They work out their schedules to get here as early as possible to get the lower rate. As they progress in their jobs they usually ask for later pick up times. That’s how I get my raises without raising rates. The parent knows if they need later hours they must pay. When they get raises that are based on them working longer or later hours… I get raises for working longer or later hours.

Even though it seems a bit much, the way I see it is I would rather have a specific conversation about money from the first day I meet them and teach them the pay way then to have a situation come up later where I’m worried about loosing a client because they want later hours for the same amount of money.  It’s an insurance policy to avoid future conflict.

I would rather have my fees attached to pick up time so if they really want later pick up time I can lead them to the table and say “you have been picking up closer to four p.m.. If you need four p.m. pick ups here’s the rate for that slot”. Believe me, they only ask for it when they really need it. It’s not a situation where they can just pay a late fee for occurrences, they must pay that later pick up  rate everty week.

The rates for after five pick up are comparable to the centers in my areas twelve hour rate. When the parent needs that late of hours they will often not choose me because they can get that fee with the open hours of a center for the same amount of money. Most of my clients leave by four thirty with a few needing extra time a few days a week.

Whatever pay scale you use, you need to put it in writing and enforce it. Build in protections from the beginning. Don’t be kind and allow extra time for free. When you decide you don’t want to do that anymore it causes conflict and you can very easily loose a client over it. It’s better to have a good policy and fair pay built into your system and stick to it.

  1. Sweetie Pie07-30-11

    Are these state rates or just for Daycare that just do private DCM only?

  2. stephen08-02-11

    yeah it was very important to the family for the child care ..

  3. Jessica08-02-11

    What about multiple children? Are you charging the same rate for each child or is there a sibling discount?

  4. Tracy08-11-11

    I love the 3pm rate scale – how do you work it if a parent’s pick up and drop off times vary due to their work schedule? I have a mom that will sometimes go in early and her mom drops off the kids at 7am – sometime she will pick up by 2:45 and sometimes she will go home and her mom will get them at 4:30 or she will go home and come back to get them at 5:00. There are days she won’t drop off until 10am and then pick up at 4:30 – 5:00 – do you look at her average pick up times for that week and charge her where the average falls?

    • Dominique08-16-11

      Tracy, a lot of providers would charge 7-5 no matter when she drop offs or pick ups because she is needing the flexibility and needing that full time slot. Looks like nan’s schedule works for parents that are very consistent with the schedule and agree beforehand what the times will be.

  5. Terri09-02-11

    I would love to know where you are located. The family childcare homes in my area are roughly 40-50% higher a day than what you charge. As a provider myself I just can’t see how you can afford to stay in business. Please know that this is not a judgement just an observation.

    • torifees09-03-11

      I live in Des Moines Iowa. The average center rate here is about 200 a week. Home child care rates are varied by area. North, East, South child care is about 100-130. West and suburbs about 150-170. I live on the North East side of Des Moines. The rates I have posted are my 2010 rates.

  6. Jennifer09-14-11

    The average rate where i live is $45 for a full day. Do you think it is reasonable to up that a bit, maybe to $50 a day because I will be providing all organic, free range, local, preservative free food? It is so much more expensive (at least here in CA) to eat this way. i want to provide that to the families, but I’m wondering if they would pay a bit more for it. What are your thoughts?

  7. Melissa09-15-11

    In your state is it mandatory to be registered with the state? What kind of state regulations do you have to follow?

  8. carol09-26-11

    What time do you open in the am then? 6am?? I wonder how you could make a schedule like this for part time half days ? i like the concept alot it saves from them asking but i don’t know if it would work so then Nannyde do u think that then if DCM schedules 115pm to 6 pm and u charge your full day rate if they want to be late or early you should over look it? becuz it is not a 9 hr day?

  9. tragula butler05-17-13

    Are the rates that you have listed the same for all age groups that you care for? Do you not charge different rates for different age groups as most centers/home providers do? Would you suggest offering this rate system that you use in a small center? I look forward to your response.

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