Most family child care providers are reluctant to raise their rates.
It can be a difficult topic to bring up in a conversation with parents.
As a result, many providers don’t raise their rate for years! I’ve talked with providers who have never raised their rates.
To keep up with inflation and the increase in the quality of your care over time, I believe it makes sense to consider raising your rates every year.
The easiest way to deal with this is to include a rate increase in your written contract. You can put in your contract:
“Rates will/may be raised annually.”
“Rates will be raised annually in September.”
“Rates will be raised annually on September 1st by 2%.”
“Rates will be raised on the child’s anniversary date each year, by no more than 3%.”
Announcing such language in your contract well in advance of your next rate increase will put parents on notice and relieve much of the stress associated with raising your rates. When the time comes, if a parent objects to your rate increase, you can simply refer her to the contract that she signed.
You don’t have to give a reason for your annual increase, but if you think it would be helpful, you could explain:
“My expenses (utilities, supplies, training, insurance, food ) have gone up this year.”
“I have one more year of experience providing child care and I’m using the knowledge I’ve gained to better help you child learn.”
“I have increased the quality of my program over the last year (bought new equipment, attended a training workshop, offered a new curriculum, etc.).”
“I have added more services (longer hours, more flexible pickup time, more field trips, etc.).”
Adding an annual rate increase to your contract doesn’t mean that you actually have to raise your rates every year. Let’s say that one year you decide not to raise your rates for some reason. In that situation, don’t let the date of your annual increase pass without explaining to the parents why you have chosen to skip it that year. You don’t want them to think that you have dropped your annual rate increase policy.
Don’t try to over-explain rate increases. Some parents may complain, most do not.
You have the option of raising your rates for some parents, but not others. You can decide to raise rates only for new parents. You can raise rates for all but one family because they have suffered a financial setback. You can postpone a rate increase for one family.
Most parents get raises over time. Providers deserve the same.
How do you address rate increases?
Tom Copeland – www.tomcopelandblog.com
Image credit: https://www.flickr.com/photos/68751915@N05/
For more information about rates, see my Family Child Care Marketing Guide.