How to set your in home daycare rates

How to set your in home daycare rates

We all want to charge the highest rate possible. Everyone wants to make a fortune with their home business, right? However, that’s not always possible. Your pricing needs to be competitive with other local businesses in order to attract clients. It takes a lot of time and effort to run a daycare. You will be working long hours with little rest. Be sure not to undercharge yourself either. Learn how to set your in home daycare rates. What services to offer and what to charge for them.

How to set your in home daycare rates

You should start by researching your competitors. 

You don’t need to break out an Excel sheet, but collect information about other businesses near you. Make sure you call around to several daycare centers and home daycares to find out their rates and what they provide. Within a few, you will begin to see a general average rate for your area. 

The next step is to review your research. 

Are there any daycares that stand out from the rest? What makes them unique? Do they charge a premium?  

Now, ask yourself

Is there something that will set your home daycare apart from others?  Did any of the home daycares you contacted offer similar services? How much did they charge? You may need to look beyond your local area to find a comparable home daycare.  

Types of in home daycare rates

Your rates should reflect how you plan on running your home daycare. If you haven’t thought about this yet, it’s a good time to start. Ask yourself if you would prefer to have only full-time children or a mixture of full-time and part-time kids.  

Monthly Rate

Charging a monthly rate is fairly straightforward. This is a set rate for the whole month regardless of how many days are in the month. Basically, you are charging clients for 5 days of care for a total of 4 weeks per month.  This equals 20 days of care per month.  This rate should be a set amount and does not fluctuate.  

*Overall this should be your lowest cost per day of care.  Cost per day is the amount of money you charged to clients per day for care.  For example, your monthly rate is $750 for 20 days of care.  Your monthly cost per day of care is $37.5. ($750/20=$37.5)

Part-time rate 

You can charge part-time rates in a few ways. One way is to charge a set rate for a certain number of set days per week. Or another option is charging for a certain number of days per month.  You would charge clients this rate on a monthly basis, regardless if the clients drop off their child. The cost per day for part-time care should be slightly higher than your monthly cost per day rate.  

For example:

2 days a week is ($) amount  (2 days a week for 4 weeks = 8 days of care per month)

3 days a week is ($) amount (3 days a week for 4 weeks = 12 days of care per month)

Or 10 days of care per month is ($) amount

You’re only allowed to have so many kids in your care, so if you plan on taking on part-time kids make sure that it works in a way for you to be able to fill the other days. 

Examples:

Sally comes three times a week only on Monday/Wednesday/Friday. You can then offer care to another child on only Tuesday/Thursdays. Although this system is more difficult to make work it is possible.  

Margo comes 10 days out of the month. Her parents let you know a month in advance what those 10 days are. With plenty of notice, you can fill those extra spots.   

Drop-in Rate

Drop-in childcare is when a child only comes to your home daycare once in a while. No set days or hours. The parents will usually contact you ahead of time, asking if you have space on a certain day.  If you plan on having a drop-in service, make sure this is your highest per-day rate. Drop-ins can be a lot of work.  Often these kids are not used to daycares settings.

What to charge for drop-in childcare?

You can go about this three ways

  1. An hourly rate.  
  2. An inflated ½ day rate. Usually charge for 4 hours or less of care.
  3. An inflated full day rate. Usually charged for 4 hours or more of care.

What does an inflated rate mean?  Simply, take your part-time cost per day rate and add a few dollars to it.  

Example  

Your part-time cost per day rate is $45 per day.  Make your drop-in rate $50 for a full day and $25 for ½ day and $10 for hourly.  

Before and After School Rate

This service includes looking after school-aged children in the hours before school (6-8 am) and after school (3-6 pm). Plus any additional holidays, professional development days or incidental weather days.  The expectation of this service is that you make sure that the child gets to and from school safely. Whether that is simply walking them to a bus stop or driving them to and from school.  

How much to charge for before and aftercare?

This type of care isn’t so much about the hours that you provide, but the daycare spot it takes up.  If you provide this service, you can’t take on any other child for that spot.  Basically, you are using up a full-time space for only a couple of hours in the morning and afternoon.   

Also consider the resources that the type of service requires.  Are you providing an afterschool snack?  Are you spending money on gas? What about the wear and tear on your vehicle?  Make sure that cost is built into your rate.

Examples:

  • A flat rate for just Before and After (6-8am) and (3-6pm)
  • A daily rate for holidays, professional development days or snow days.
  • A flat rate that includes holidays and professional days.  (You can’t predict weather days)

Things to think about before offering before and after school

How are you planning on transporting all your children to and from school? It can be quite a headache to trek toddlers through the snow twice a day to just drop off one kid.  

Think about how you are going to handle the age differences in children. Older kid toys like lego can be a choking hazard for younger children.  So, how do you plan on entertaining toddlers and school-age children at the same time? 

*This type of service works well if your own children are similar in age and require you to already be transporting them to school.

*Some home daycares only provide before and after school care.  Allowing you to have most of the day without children. 

Summer rates.

This service is for full time care in the summer for school age children.  Issues that can arise with this service are the conflict with vacations.  Most people take some sort of vacation during the summer.  While paid vacations are common practice with your regular full time clients, not so much with summer clients.  It’s best to charge a weekly rate for this service. And be sure parents know ahead of time your vacation days.

Example:  Take your part time cost per day and multiply it by 5 ($45 x 5 = $225 per week).  Then you can charge clients for the weeks they use.  

Weekend, Overnight and Extended hours Rate  

Typically most home daycare caters to parents that work a typical 9-5 job.  Most home daycare providers reserve evenings and weekends for their downtime and family time. However, there is plenty of opportunities if you want to take on this type of service.  

Example of after-hours childcare: 

  • Evening care hours are Monday to Friday 5:00 pm to 11:59 pm 
  • Weekend hours are Saturday and Sunday 9:00am-5:00pm.
  • Date Night Care – Weekend Evening 5:00 to 11:59pm
  • Flat overnight fee

*Take into consideration the effect this service would have on your work/life balance.  Adequate downtime is essential.  This job can be draining, with high levels of burnout.  Consider providing this service once in a while, if you are running a full time home daycare during the day.

*In some states/provinces you’re not legally allowed to operate overnight.  Check the regulations of your area before offering this service.

Discount for sibling groups

Some home daycares provide a discount for sibling groups.  Meaning that the provider gives a discount to parents if they sign contracts for more than one child at a time.  The problem with this is that you are still working the same amount of hours and your costs aren’t any less.  

The benefit of taking on sibling groups is less time finding clients and siblings usually have less of a transition period.  But the downfall is when a sibling group leaves your home daycare, you have to fill two or more spots all at once. Another issue is when one sibling goes off to school and parents still expect to pay the discounted rate. 

Calculating Your Break-even Point 

Don’t expect to be at full capacity right away. Budget for 75% to 85%. 

Figure out your break-even point. Is there a minimum amount that you “need” to make running a home daycare worthwhile? For some, this will be $2,000 and for others, it will be $500.  

Say you need to make $2000 per month and due to your research, the average price for childcare in your area is $750.  

You would need to take on at least 3 full-time kids to make your $2000. 

Desired income + monthly expenses / Your rate = How many kids you need to take on.  

($2,000 + $150 ÷ $750 = 2.86 Full Time Children)

***Important this calculation does not take into consideration that you still need to pay taxes on this. In Canada, you need to pay into the Canadian Pension Plan twice.  If this is a concern for you, adjust these amounts accordingly.  

Now if you are just running a home daycare to make some extra cash, this might not be such a concern to you, but your time is still valuable.     

Remember, if you are able to add more value to your services you should be charging more. Also, keep in mind, you should increase your rates every year to keep up with increases in the cost of living.    

Hope this blog post helped you learn how to set your in home daycare rates. If you have any questions, comment below

Need help developing a Home Daycare Business Plan? CLICK HERE

Leave a Comment

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.