What is a fair price for in-home daycare? A fair price for in-home daycare is one that covers your expenses, compensates you for your time and skills, and remains competitive within your local market. How much should I charge for my home daycare? You should charge a rate that reflects your experience, the services you offer, your location’s cost of living, and the demand for childcare in your area. This guide will help you figure out how much to charge for your in-home daycare services.
Image Source: static.trustedcare.com
Factors Affecting Daycare Fees
Setting your daycare pricing requires a careful look at many elements. It’s not just about a number; it’s about creating a sustainable business that provides excellent care.
Your Local Market and Competition
Before you even think about your costs, you need to know what others are charging.
- Research nearby centers: Visit or call other licensed daycare centers in your area. What are their weekly or monthly rates?
- Check other home daycares: Look for unlicensed or licensed home daycares. They might have different pricing structures, but it gives you a benchmark.
- Consider location: Are you in a high-cost-of-living city or a rural area? This significantly impacts home daycare rates.
Your Expenses: The Foundation of Your Rates
Your childcare costs are the most crucial factor. You need to cover everything that goes into running your daycare.
Direct Operating Costs
These are the day-to-day expenses:
- Food and Snacks: Healthy meals and snacks are essential. Budget for groceries that meet nutritional guidelines.
- Supplies: This includes art supplies, educational materials, toys, books, cleaning supplies, paper towels, soap, and diapers (if you provide them).
- Utilities: You’ll use more electricity, water, and gas. Factor in a portion of your home’s utility bills.
- Insurance: Liability insurance is a must. It protects you and your business.
- Licensing and Fees: If you are licensed, there will be ongoing fees for permits and inspections.
- Maintenance and Repairs: Things break. You need a budget for fixing toys, furniture, or anything in your home.
- Professional Development: Staying up-to-date with childcare practices might involve training courses or workshops.
Indirect Costs (Overhead)
These are costs that aren’t directly tied to a specific child but are necessary for operation:
- Your Salary/Wages: This is your compensation for your time, expertise, and labor. Don’t forget to pay yourself!
- Taxes: As a business owner, you’ll need to set aside money for income tax and self-employment tax.
- Wear and Tear on Your Home: Your home will experience more wear and tear. Consider this in your pricing.
- Capital Expenses: This could include larger purchases like new furniture, safety gates, or even renovations to make your space more child-friendly.
Cost Breakdown Example (Monthly)
Let’s imagine a small home daycare for 4 children.
| Expense Category | Estimated Monthly Cost |
|---|---|
| Food & Snacks | $300 |
| Supplies (Crafts, Toys) | $150 |
| Cleaning Supplies | $50 |
| Utilities (Portion) | $200 |
| Insurance | $100 |
| Licensing/Permits (Avg) | $30 |
| Repairs & Maintenance | $75 |
| Professional Development | $40 |
| Total Direct Expenses | $945 |
| Owner’s Salary (Target) | $2000 |
| Taxes (Estimate) | $500 |
| Total Monthly Expenses | $3445 |
Note: This is a simplified example. Your actual costs will vary significantly.
Your Services and Qualifications
What makes your daycare special? Your offerings directly impact setting daycare prices.
- Hours of Operation: Do you offer standard 8-hour days, extended hours, or weekend care? Longer hours usually command higher rates.
- Age Groups Served: Infant daycare fees are typically higher than toddler daycare rates because infants require more one-on-one attention and specialized care.
- Curriculum and Activities: Do you offer educational programs, music, foreign languages, or outdoor adventures? Specialized activities can justify higher prices.
- Meals Included: If you provide all meals and snacks, this adds value and cost.
- Your Experience and Education: Are you a certified early childhood educator? Do you have years of experience? Higher qualifications and experience warrant higher compensation.
- Staffing: If you have assistant caregivers, their wages will be a significant factor in your childcare costs.
Pricing Structures: How to Charge
Once you’ve assessed your costs and market, you need to decide how to structure your fees. Common methods include:
Full-Time vs. Part-Time Rates
- Full-Time: Usually for children attending 5 days a week.
- Part-Time: For children attending 2 or 3 days a week. Part-time rates are often higher per day than full-time rates to account for less consistent income and scheduling complexities.
Age-Based Pricing
As mentioned, infant daycare fees are generally higher due to the intensive care needs.
- Infants (0-18 months): Highest rate.
- Toddlers (18 months – 3 years): Mid-range rate.
- Preschoolers (3-5 years): Lower rate.
Hourly, Weekly, or Monthly Charges
- Hourly Daycare Rates: This is often used for occasional care or for families who need flexible scheduling. It’s important to set an hourly rate that still covers your fixed costs and provides a profit. A common practice is to have a minimum charge for drop-in care.
- Weekly Daycare Charges: This is a very common structure for full-time or regularly scheduled part-time care. It provides a predictable income stream.
- Monthly Childcare Costs: This is often the preferred method for full-time care as it simplifies budgeting for parents. You essentially multiply the weekly rate by 52 weeks and divide by 12 months.
Deciphering Your Costs to Set Your Prices
Let’s combine the factors to start creating your rates.
Calculating Your Break-Even Point
Your break-even point is the minimum amount you need to earn to cover all your expenses.
- Total Monthly Expenses: (As calculated in the example above, say $3445).
- Number of Children: Let’s assume you can care for a maximum of 4 children.
- Break-Even Per Child: $3445 / 4 children = $861.25 per child per month.
This means each child you care for needs to contribute at least $861.25 each month for you to cover your costs and pay yourself a salary.
Determining Your Desired Profit Margin
After covering costs, you want to make a profit. This profit can be reinvested in your business, saved for emergencies, or taken as additional income. A typical profit margin in service-based businesses can range from 10% to 30% or more.
- If you aim for a 20% profit:
- Required Revenue = Break-Even Point / (1 – Desired Profit Margin)
- Required Revenue = $3445 / (1 – 0.20) = $3445 / 0.80 = $4206.25 per month.
- Per Child Per Month: $4206.25 / 4 children = $1051.56 per child per month.
This figure is your target rate per child to cover costs, pay yourself, and make a profit.
Pricing Table Example (Hypothetical)
Here’s how you might structure your rates based on age and schedule. These are illustrative; your actual rates will vary greatly.
| Service Type | Age Group | Weekly Rate | Monthly Rate (Approx.) | Notes |
|---|---|---|---|---|
| Full-Time | Infants (0-18m) | $350 | $1517 | Includes all meals, snacks, diapers, wipes. |
| Full-Time | Toddlers (18m-3y) | $320 | $1387 | Includes all meals and snacks. |
| Full-Time | Preschoolers (3-5y) | $300 | $1300 | Includes all meals and snacks. |
| Part-Time (3 days/wk) | Infants (0-18m) | $275 | N/A | Pro-rated from full-time, higher daily rate. |
| Part-Time (3 days/wk) | Toddlers (18m-3y) | $250 | N/A | Pro-rated from full-time, higher daily rate. |
| Part-Time (3 days/wk) | Preschoolers (3-5y) | $230 | N/A | Pro-rated from full-time, higher daily rate. |
| Drop-In / Hourly | All ages | N/A | N/A | $10-$15 per hour, minimum 3-hour charge. Subject to availability. |
| Late Pick-Up Fee | All ages | N/A | N/A | $10 per 15 minutes after agreed closing time. |
Important Considerations for Pricing:
- Diaper/Wipe Policy: Decide if you will provide these. If so, your infant daycare fees and toddler rates will need to reflect this additional cost. If parents provide them, specify this clearly.
- Nap Mats/Bedding: Will parents provide these, or will you?
- Holidays and Closures: Clearly state your policy on charging for holidays when you are closed and for sick days (yours and theirs). Many providers charge a retainer fee for spots, regardless of attendance.
- Late Payment Fees: Implement a clear policy for late payments.
Crafting Your Rate Sheet and Contract
A clear, professional rate sheet and contract are essential.
What to Include in Your Rate Sheet
- Clear breakdown of services: List what is included (meals, snacks, diapers, specific activities).
- Age-specific rates: Clearly show the different toddler daycare rates versus infant rates.
- Full-time and part-time options: Specify the days and times covered.
- Hourly rates: If offered, list the rate and any minimums.
- Additional fees: Late pick-up fees, late payment fees, registration fees.
- Payment schedule: When are payments due (e.g., weekly, bi-weekly, monthly)?
- Holidays and closures: List the days you are closed and your policy on charging for them.
- Withdrawal policy: How much notice is required if a parent withdraws their child?
The Importance of a Contract
A contract protects both you and the parents. It ensures everyone is on the same page and prevents misunderstandings.
- Clearly define terms: This includes hours of operation, fees, payment schedules, and services provided.
- Outline policies: Include policies on illness, discipline, emergency procedures, and pick-up/drop-off.
- Liability clause: This can protect you from certain responsibilities.
- Termination clause: How can either party end the agreement?
- Signatures: Both you and the parents must sign and date the contract.
When to Adjust Your Rates
Don’t be afraid to adjust your rates as your business grows or your costs change.
- Annually: It’s common practice to review and adjust rates once a year.
- Increased Costs: If your insurance premiums, food costs, or supply costs significantly increase, you may need to adjust sooner.
- Added Services: If you start offering new programs or enhanced services, this can justify a rate increase.
When you plan to increase rates, give parents ample notice (e.g., 30-60 days) and clearly explain the reasons for the change.
Frequently Asked Questions (FAQ)
Q: How much do home daycares typically cost?
A: Home daycare rates can vary widely, but generally range from $150 to $400+ per week for full-time care, depending on location, age of the child, and services offered. Infant daycare fees are usually at the higher end of this spectrum.
Q: Is it more expensive for infant daycare?
A: Yes, infant daycare fees are almost always higher than toddler daycare rates because infants require more intensive supervision, specialized care, feeding, and diapering, demanding a lower child-to-caregiver ratio.
Q: Should I charge hourly, weekly, or monthly?
A: Most in-home daycares charge weekly or monthly for regular care. Hourly daycare rates are often used for drop-in or occasional care. Weekly and monthly charges provide a more stable income for you and predictable budgeting for parents.
Q: How do I determine my overhead costs for my home daycare?
A: You need to estimate the portion of your home’s utilities (electricity, water, gas), insurance, internet, and maintenance that is attributable to operating the daycare. This often involves calculating the percentage of your home used for the daycare and the hours it’s in operation.
Q: What if a parent wants part-time care but my rates are for full-time?
A: You can offer pro-rated rates for part-time care. Often, the daily rate for part-time care is slightly higher than the daily rate calculated for full-time care to account for the less consistent income and increased administrative effort.
Q: Do I need to charge for holidays or sick days?
A: It’s standard practice to charge for your booked days regardless of attendance, which includes holidays you are closed and days the child is sick. This helps ensure your income is consistent and covers your fixed expenses. Clearly state this policy in your contract.
Q: How often should I review my daycare prices?
A: It’s a good idea to review your childcare costs and your daycare pricing at least annually. You may need to adjust sooner if there’s a significant increase in your operating expenses or if you add substantial new services.