One of the toughest challenges when you run your own business is deciding how much to charge for your services. You don’t want to charge too much and chase clients away, but you also don’t want to charge so little that you aren’t bringing in the profit you want. As an in-home daycare provider, this is a question that you will need to struggle with before opening your doors.
It’s not as simple as just having kids come into your home. There are several potential costs associated with running a daycare, such as toys, food, additional utility costs, and much more. So when you pick your prices, you have to take all of those potential expenses into account. Otherwise, you will find that you end up with less money at the end of the month than you expected. Here is a quick guide to figuring out how much to charge for in-home daycare.
Understand Your Overhead
Every business has overhead, and an in-home daycare is no different. You will have costs, such as food for the kids in your care and toys. Plus, you will need to baby and childproof your home. You can’t expect that your utilities will stay the same after you bring in several children to your home daily. You should account for those costs to be higher. You will also need to factor in your administrative costs and things such as a computer, paper, and other office supplies.
Never forget that you need insurance as well. Your homeowners’ plan will not cover you for business purposes. Daycares carry additional risk since you are taking care of very precious people. Parents may sue your daycare as part of a dispute, even if you did nothing wrong. Plus, there is always a chance that a child could get hurt while under your care. Therefore, it’s important that you understand your insurance costs and needs so that you get coverage for any possible risk. Do not think that you can get away without insurance, as you will find yourself in a bad financial spot if something negative happens.
What Do You Want to Earn For Yourself?
There are several reasons why someone might want to go into business for themselves. However, the main reason is for money. People want to earn while doing something they enjoy more than a nine to five job. You need to figure out how much you need as a salary to live your life. That includes your rent or mortgage, utilities, debt repayment, and any other regular costs that you might have. If you don’t charge enough, you will find yourself scrambling every month to make ends meet. Do not let yourself get into that situation because of your pricing. Build your salary, and that of any staff you might hire, into your fees so that your life is covered.
Where Do You Live?
Where you live will have a major impact on how much you charge. If you live in a rural area, you probably can’t get away with charging too much unless you market yourself only to wealthy families. Daycares in urban centers are very expensive, and there is a lot of competition. You can get away with charging prices that you might think are exorbitant, but you will still find people to pay. The cost of living in urban centers and cities tends to be higher as well, meaning that you need to charge more to cover your own costs.
What Kind of Daycare Will You Run?
There are different kinds of daycare. There are strict before and after school programs, for example. There are some daycares that are run like pre-schools, where you can offer some learning as well as playtime. If you are offering a learning program, then you can charge more since you will be providing more.
Some daycares also cater to kids of certain ages. If you have a lot of babies, you may charge less since they nap and require less supervision than a rambunctious toddler. Older daycare-aged kids also have the potential to cause more wear and tear on toys and possibly damage to your home. You will need to weigh these factors when setting your prices.
Set a Rate Per Hour
Once you have an approximate idea of what you need to bring in over a year to make a profit, pay your overhead, and give yourself a salary, you can then calculate appropriate rates. Mostly, daycare charges per day or per hour. Often the kids that go to daycare for an entire day are charged less per hour than part-time or after-school kids. So in your calculations, you will need to consider how many full-timers you want to have and how many part-timers. You can then calculate how much you will need to charge to reach your goal.
That amount will change depending on where you live. An average cost in the United States is a little over $3 per hour. Part-timers pay upwards of $3.50 an hour.
Check With the Competition
One of the best ways to get an idea of appropriate rates is to see what other at-home daycares are charging. Then you will know an approximate amount that you need to charge to compete. You can try to undercut your competition to gain clients that way, but you don’t want to leave yourself short. You can also go for higher-end pricing, provide extra services, and compete on that level. You will have to choose what is most appropriate for you.
As you can see, setting the pricing for a home daycare is no simple matter. There is a lot to consider, and there are a lot of possible variables. If you decide that your pricing is not working for you, then you can always change it as you go. However, you will need to give your current clients fair warning. Usually, at least a month of lead time would be enough. Any less, and you could be leaving them in a tough spot. Over time, you will find the perfect sweet spot, and your at-home daycare can grow and flourish.