No one wants to pay more for the same thing they’ve been getting for less, and child care tuition is no different. That’s why, when raising your tuition rates, it is so important to plan and communicate in advance.
It can be difficult for you to stomach raising tuition for families who may have become part of your own family. When you’re a child care or preschool professional, your business really is personal.
But when your expenses start to outweigh your child care tuition income, you need to be all business.
Let’s take a look at five tips for weathering any disruption when you raise your rates.
1. Be Prepared
Start with your service contract. Include a section that states that your rates are subject to change, and outline the estimated percent increase parents can expect and how and when they will be notified. Make sure to go through this with the parents/caregivers during your initial intake meeting. You should also include this information in your child care handbook.
Follow through by doing exactly what you said you would in your contract. Give the proper amount of notice to families – in writing – through a letter than is sent via both email and snail mail. Notices in cubbies can get lost during the hectic pick-up and drop-off times or slip down to the bottom of a backpack where they don’t get seen for weeks.
Every time a new child enrolls, you should take the opportunity to introduce your program and present the terms of service to parents. This is your chance to explain the value of the child care and preschool services you offer and how often your tuition increases (which helps them understand that it will increase, and what the range of that increase could be).
2. Be Considerate
Raise your rates every year or every other, but be aware that the news will be harder to swallow during certain times of the year. For example, increasing your rates during the holiday season or just after can put a strain on families who may already be stressing over finances.
Tax season is another tricky time for many families, even with the child care tax credits they were able to deduct using YTD payment statements from your center. A child care tuition increase just as the ink is drying on their checks to Uncle Sam may lead to some serious grumbling.
If you’re raising tuition or fees across the board, the best time to announce it is when you open registration for the next school year, before the current school year has ended. Parents will be more receptive when you make the change effective at the start of the new school year. In fact, if that was part of your intake meeting, many of them will expect it.
If raising rates mid-school year is unavoidable, be sure to give plenty of notice between the time you announce it and the time the new tuition scale takes effect. We recommend no less than 30 days, but preferably 60 to 90 days so parents can budget accordingly.
3. Be Reasonable
When you raise rates, make sure you’re covering your expenses above all else, and always budget in an emergency fund that helps you stay afloat when surprise expenses hit. That said, try to keep any increases within 2-5% of the total tuition parents are currently paying.
Let’s say it costs $245 per week to care for a 2-year-old. If you increase that rate by just 2%, it’d be about $5 more a week, per child. For year-round care, that’s $260 more per child, each year. A 5% increase would yield $637 per child, per year. If you’re keeping on top of your budget and raising tuition a small amount each year or every other year, your increases will likely stay in the 2% range most years.
4. Be Transparent
Parents may digest the news of a child care tuition increase a little easier when you offer some explanation of why in the communications you send, whether by personal letter, email, in-app messaging or school-wide newsletter.
While you don’t have to itemize every expense, it does help you maintain a good rapport with parents if they know where some of the money is going. Parents want to know what they’re paying for and won’t have as many questions if you assure them that your new rate will improve the quality of their child’s care.
Here are some common reasons that prompt child care, preschool and before and after care organizations to raise tuition:
- Hiring new staff to lower staff-to-child ratios: The majority of your financial outlay each week or month inevitably goes to payroll, so more teachers means more expenses. Since many parents will question your ratios when deciding on care, this is one they will be excited about.
- Increasing staff salaries: Inflation remains high, and your staff is dealing with higher costs of living. And increasing staff salaries will inevitably draw stronger, more experienced and more skilled teachers, which makes your program stand out.
- Cost of supplies and other materials: The prices of everything have risen – including the supplies your center needs for activities and day-to-day operations, as well as for groceries.
- Adding a new service (extended hours, diaper program, etc.): When you offer more, people need to pay more.
However you communicate your new rate to families, don’t apologize. Remember, this part is all business. You know the value of your care and what it takes to stay afloat and on top of your game.
5. Be Competitive
Are you conducting regular market surveys of other area child care, preschool or before and after school programs to make sure your tuition and fees are in line with the going rate in your area?
If your prices are too high and you aren’t offering a big “extra” that warrants it, you may need to take a good look at your expenses and start cutting what you don’t need. If you slip in the other direction – below the market average – parents may question the quality of care and child development your program is providing.
Centers competing for the same children actually help each other by increasing tuition regularly. How?
Look at it this way: When your prices go up a bit, other centers will do the same with theirs. This means higher pay for teachers, higher quality of teachers, lower staff-to-child ratios, lower staff and child turnover, improved equipment or additional services – all of which correlate directly with elevated quality of care. Parents will happily pay for good quality, especially when it comes to their children’s education, development and care.
Whatever way you decide to manage your rates, stick with it. It’s one thing to have to raise your rates, but it’s another to not set any expectations for how your new rates are implemented. Parents will undoubtedly groan at the thought of having to pay more, but they will at least appreciate that you were considerate, reasonable, upfront and transparent. And you will have the peace of mind that your child care business has what it takes to compete in the industry.
Manage Tuition Increases and Your Costs with Procare!
It’s difficult to raise tuition if you don’t have a clear view of your expenses and the revenue you’re bringing in.
With Procare all-in-one child care management software, you can get your complete financial picture in just a few clicks. That way, you can make data-driven decisions that make sense for your business and the families you serve.
From registration, attendance tracking, staff management and lesson planning to family engagement, tuition collection and reporting, Procare Solutions helps ease the challenges faced with running a child care business.
Want to know how much time and money you could save by using the Procare all-in-one solution to run your child care center,? Enter some details into this online calculator to learn about your potential savings of using automation!
Procare Cost and Time Savings Calculator Automated Payment Processing Cost & Time Savings Calculator Digital Curriculum Cost and Time Savings Calculator
Calculate your potential cost and time savings by using Procare’s all-in-one child care management software. All we will need from you is some information about your child care location*: Calculate your potential cost and time savings by using Procare’s secure and effortless child care payment processing. All we will need from you is some information about your child care location*: Calculate your potential cost and time savings by using Procare’s classroom management. All we will need from you is some information about your child care location*:
* Our data model is based on our experience working with over 100,000 child care centers, before and after school programs and youth organizations since 1992.
Switching to will save you hours and a month!*
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We understand that smaller centers and in-home daycare providers are operating on a tight budget, and that is why we provide all these features for the affordable price of just $25 per month. Let us handle the business of child care so you can get back to caring for your children.
To learn more about Procare home version, click below.
*Please note that the report you see only factors in cost and time savings for the in-home solution features. For Procare home version users that are interested in seeing how they can benefit from Procare’s full suite of capabilities, contact us today to speak to a Procare representative. *Please note that the report you see only factors in cost and time savings for the in-home solution features. For Procare home version users that are interested in seeing how they can benefit from Procare’s full suite of capabilities, contact us today to speak to a Procare representative. *Please note that the classroom management functionality is not available for in-home users. For Procare home version users that are interested in seeing how they can benefit from Procare’s full suite of capabilities, contact us today to speak to a Procare representative.
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Procare Cost and Time Savings Calculator
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