How to Talk to Parents About Raising Your Rates

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Talking about raising your rates is one of the most difficult conversations family child care providers can have with their day care parents.

During economic hard times it becomes more difficult to bring this up.

But even in good times most child care providers don’t raise their rates on a regular basis. Many never raise their rates.

As a general rule, I believe your rates should reflect the quality of care you offer. If you are among the top 20% of quality caregivers (homes and centers) in your area, your rates should be in the top 20% as well.

I am not recommending that all child care providers raise their rates. Some prefer to keep their rates stable to serve low-income families. This is admirable.

If you do want to raise your rates, here are some suggestions for how to talk to parents about it:

* Notify parents at least one-two months in advance. It shouldn’t be a surprise.

* Don’t raise your rates in April (when tax bills are due) or December (when holiday expenses can be a burden).

* September is generally a good time to raise rates, because this is often when children begin school and you may need to fill an opening.

* You can raise your rates for new families only and keep rates steady for current families. This is not illegal discrimination.

* You may not want to raise everyone’s rates at the same time. If you do, you run the risk of losing more than one parent at the same time. Stagger rate increases so only one family at a time is affected. You can pick the parents’ anniversary date. Other child care providers regularly rates for everyone in January or September. There is no right or wrong about this issue.

* Don’t try to over justify your rate increase. No matter what you say, some parent may not agree with your reasoning. Just announce your new rates in writing. If parents ask for an explanation, consider telling them:

“My costs have gone up (such as utilities, property tax, food).”

“It is a cost-of-living raise.”

“I have another year of experience in providing care, and I’ve applied this knowledge to help your child learn more.”

“I have introduced a new benefit into my program (such as a computer, extra field trips, new curriculum).”

“I will be providing better care for your child this coming year because ____________ (fill in your explanation).”

* Don’t argue with parents who say your rates are too high. They may be too high for the particular parent you are talking to.

* Your best way of communicating about your rates is to talk about the value of your service rather than the price. The cost of providing quality child care is expensive. Parents can always find cheaper care somewhere else. Point out how your program benefits their child and mention that your rate takes these benefits into account. Parents will pay more if they can see the value of your benefits and the quality of your service.

* Instead of raising rates, charge annual fees for business liability insurance, attendance at family child care conferences, NAFCC accreditation fees, or other special expenses.

Although you may be reluctant to talk to parents about raising your rates, remember that parents stay enrolled in your program because they believe you are doing a good job helping their children. Also, parents are not going to say to you, “Isn’t it about time you raised your rates?”

How have you handled it when you did raise your rates?

Portions of this article were taken from the new, second edition of my book Family Child Care Marketing Guide.

Image credit: allabout-energy.com

Marketing smallFor more information about marketing, see my Family Child Care Marketing Guide.



Categories: Marketing, Money Management, Money Management & Retirement, Starting Your Business

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7 replies

  1. I’m a little different, I use what I call the “one rate” plan. The rate you start at is the rate you stay at till the child leaves at age 5. So, if they start at, say, $200 per week, they stay at that rate. If the child is able to use the toilet independently when they start, the rate would be slightly lower.

  2. I assume that alternatively if I’m lowering my rates to draw in new business, that I don’t have to lower my rates for my currently enrolled families then?

  3. You are correct. Although, I don’t recommend permanently lowering your rates to attract new clients. Give several months of a discount instead.

  4. Karen – Many providers follow what you do. This means you aren’t getting a raise for many years. I hope you are raising rates for the new children.

  5. We tell the parents what the new rate will be in January and raise them in September of each year. We raise our rates 3-6% based on local comparisons.

  6. I agree with raising my fees for the quality care that I provide. After all I want parents to choose my care because of the quality I offer, not because I’m the cheapest care they can find. By doing this, I also gain the benefit of having quality parents in my program.
    If you raise your fee by $5.00 per week each year, that’s only $1.00 a day or .10 cents per hour for a 50 hour work week. For parents to receive quality care, they could give up a coke a day (cost of the drink $1.00) or a meal at a fast food restaurant once a week. I honestly believe that parents feel their child is worth the cost.
    Personally, I feel it’s only fair to raise my fee to everyone in my program at the same time, each Sept.
    If a provider is not raising her fees (her income) she’s not being fair to her own family. After all, if she’s losing income every year because her expenses keeps going up and she doesn’t raise her rates. Then most providers will cut back on their own family’s activities or school clothes for her own children. Even worst, they quit because they can no longer afford to stay in business. We lose too many quality providers every year.

  7. I have gone with the method that Karen mentioned, too and it works so well for me. I feel that I offer one of the highest quality programs in my area and so I charge a higher rate than some other providers when a family first starts, with the benefit to them that their rate won’t be increased. Also, if a family changes their childcare slot (such as going from part time to full time) or has a new baby, they will pay the current rate for that new slot. Before I went to this method, I had been doing childcare in my own home for 5 years and had only raised rates once, so I don’t feel that I am losing out on anything by doing it this way, and I don’t have to stress about that awkward conversation anymore.

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