“Will parents still like me if I charge more?”
That’s the fear of some family child care providers who are reluctant to raise their rates.
These providers keep their rates unchanged so they will never have to deal with the stress involved in talking about money with parents.
Others intentionally keep their rates low to help out low-income parents.
However, in my opinion, your goal should be to set your rates so that they will reflect the quality of the care you offer and be competitive with the best programs in your community.
To keep up as the local rates rise with inflation, this means that you will need to raise your rates on a regular basis.
It’s true that many providers don’t raise their rates for years – but that’s exactly how more experienced providers end up earning less than someone who is just starting out.
To make sure that you are being paid according to your years of experience and knowledge, you should consider raising your rates annually. The easiest way to present this to parents is to add a new term to your contract:
“Rates will 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 this new term in your contract well in advance of your next rate increase will put the 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.
You might say, “This year I’m making an exception to my normal policy of raising my rates, since I had to close my program for several weeks due to an illness. However, next year I will follow my contract and raise my rates as usual.”
Making it a practice to raise your rates annually will add up over the years. It can make a big difference in your income. If you are charging $140 a week and increase your rates by 3%, that will add up to $4.20 more per week per child. If you work 52 weeks a year, the difference that year will add up to $218.40 ($4.20 x 52 weeks) per child.
If there are five children in your program, you will earn $1,092 more that year. If you raise your rates by another 3% the next year, you will earn another $1,125. At the end of two years you will have earned an additional $2,217.
“Will parents still like you if you charge more?” Who knows? If you really want parents to like you, lower your rates! If your rates reflect the quality of your care, most parents will pay and not complain.
How do you address rate increases?
Tom Copeland – www.tomcopelandblog.com
Image credit: www.sumsolutions.com
For more information about rates, see my Family Child Care Marketing Guide.