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By
Catherine M. Pruissen
One
of the toughest considerations for new child care
business operators is what to charge for their services.
Charge too much and the fear is parents won't utilize
your service. Charge to little and, well, you might
as work for nothing. So just what should you charge
for your child care services? The five tips below
from Start
& Run a Profitable Home Day
Care, should help you get get your
calculator heated up and your rate sheet completed.
1)
Check out the rates for child care in your area.
Be snoopy. Call around and ask about standard rates,
rates for the different age groups and for families
with more than one child. "Begin determining
your rates by calling several daycare homes listed
in your local newspapers, dayhome agencies advertising
in the Yellow Pages, your local child care resource
and referral agency, dayhome providers' groups in
your area," writes author Catherine Pruissen.
2)
Calculate your expenses.
Before you can even consider what to charge for care,
you need to know how much it's going to cost you to
operate your business on a per child or per month
basis. "This way you can make sure that your
rates cover your expenses as well as paying you a
salary." says Pruissen. The book provides an
Estimated Operating Budget worksheet that covers
things such as food, supplies, insurance, advertising,
utilities, equipment, supplies and so on. It also
has a complete chapter on start up and operating budgets
to guide you through the process in a systematic way.
3)
Place a value on your time.
"....many
business owners don't think in terms of paying themselves
an hourly wage; they concentrate on overall profits,"
Pruissen notes. She suggests estimating how many hours
per week you plan to work including the time you need
to handle your paperwork, bookkeeping and shopping
duties. Then take that time and multiply it by the
hourly wage you'd like to earn. For example, if you
plan to work a 50 hour week, you need to multiply
that by say, $10 per hour for a total of $500 per
week. Finally, divide that total by the number of
children you plan to care for, ($500 divided by 4
children =$125 per child per week).
4)
Factor in the quality of the program you offer.
Your training, the programs you provide that perhaps
some of the other child care operators don't such
as field trips, bringing in outside resources such
as a story teller, crafts person, etc., will obviously
factor into your rates. "Your training and experience
may justify charging a slightly higher rate since
many parents will opt for paying extra fees if the
provider is worth it." Pruissen writes. You certainly
don't want to baseline your rates if you offer a great
variety in your program and have extra training and
skills that ultimately provide the children with a
higher quality of care.
5)
Planning for the unexpected.
In any business you have to be prepared to handle
unexpected expenses. A child is absent from care for
three days; a parent doesn't pay; holidays and vacations
creep in when you weren't notified even though you
were supposed to be by the terms laid out in your
Parent Manual and child care contract; all these things
eat away at your earning unless you provide for them
in your fees ahead of time. Take a moment and write
down the costs of an absentee child for 5 days of
the month. Somehow, you need to figure that cost into
the daily or monthly rates you will charge. If you
prefer, you can tack on a simple surcharge to each
monthly, weekly or daily rate you work out. If an
absentee child costs you $125 monthly, divide that
by the number of children in your care and the number
of days you work each month ($125 divided by 4 children
divided by 22 days per month = $1.42 per day).
Tally
It Up
From
your research you found out that child care in your
area costs anywhere from $22 to $35 per day for a
toddler. Now you need to put the five tips above together
in a way that will help you see where you can fit
your rates in that price scale.
- Your
estimated operating costs for the month per child
are: $250x4=$1,000
- Plus
the minimum cost per child you want to earn for
the week: $125x4=$500
- Plus
the added costs of running a higher than average
program:
$100 per month.
- Plus
your charge for covering unexpected expenses: $125
- Your
total expenses: $1,725 divided by 4 children = $431
per month per child, or 19.59 per day based on 22
working days.
Now
you can see that from your base rate of $19.59 per
day, you have room to work within the costs charged
in your local area and still make a profit. Keep in
mind that these figures are only estimates and are
conservative at best. The idea is to give you a way
to calculate your fees that makes sense and to help
you see that in the end, what you will charge parents
is fair and justifiable.
Of
course, using predefined worksheets, like the ones
available in Start
& Run a Profitable Home Day Care will help
you to determine your fees a lot easier and let you
look at your figures in a way that makes sense and
puts the whole process into a viewable and understandable
perspective. But a pencil, paper and calculator will
work wonders too.
Resources:
Start
& Run a Profitable Home Day Care, by Catherine
M. Pruissen
(available in our Online
Catalog).
Other
Helpful Publications and Software:
The
Daycare Centre Business Plan Guide, by Catherine
M. Pruissen
(available in our Online
Catalog).
Monthly
Expense Form, (available
in our Online Catalog).
Child
Care Administrator V2, (available in our Online
Catalog).
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