If you are planning on opening your own daycare, one important thing to consider is how much money you can expect to make as a daycare owner. The answer to that question varies, depending on several factors.
As an at-home daycare owner, you can expect to make between seven and fifteen dollars per hour (about $14,000 to $30,000 per year), depending on your location, the ages of the children you watch, and the specialty services that you offer.
As you can see, that’s quite the range! Let’s take a look at the factors that you should consider in order to determine how much you should charge each client, and consider some ways to boost your income and make your business more lucrative.
Location, Location, Location!
As you know, the cost of living in the United States varies from state to state, and that goes the same for childcare. When you open your business, you will want to make sure you are charging competitive rates that don’t undervalue your work, but you will also want to be careful not to charge much more than the average cost of comparable daycare in your area. Under-cutting your competitors may seem like a good way to get more clients, but it will mean more work for you and a lower profit, while over-charging will send potential clients looking elsewhere.
According to Business Broker, if you live in the District of Columbia, you are in the state with the highest average cost of at-home daycare. Parents in D.C. spent an average of about $30,000 per year on home-based daycare in 2018. South Carolina is at the lowest end of the scale, and parents there paid an average of $9,000 per year for the same services in 2018. If you’d like to see where your state comes in, you can see the chart here.
While the maps and charts that can be found online will give you an idea of what you can charge your daycare clients, it is also a good idea to look at what your competitors charge before setting your price. It is possible that you are in an area within your state where parents are unable to afford the average daycare costs, or you could be in a district where they are willing and able to pay a little more!
You should note that the amount of tuition you charge per client is not equal to your total profits. Some of the money your clients pay will go toward the maintenance of your daycare, and you should budget those details carefully in order to determine how much of your daycare’s income must go back into the business, and how much of it goes into your paycheck.
Charging by Age
Obviously more children attending your daycare means greater income, but did you know that the age of those children also impacts how much money you can charge? That’s because infants, toddlers, and school-aged children all require very different degrees of care. As a result, you should alter your daycare tuition depending on how old the enrolling children are.
Newborns and infants up to one year of age are your smallest clients, but you should charge more for their care because they require some pretty specialized attention. Unlike older children, they will need to be fed often, diapers will need to be changed, and naps will need to be supervised. This means a lot more valuable time and concentrated effort on your part. The average cost of childcare for infants attending at-home daycares in the United States is $300 to $900 per month. Your location will determine where in this range your fee should lie, but this age group should certainly make up your highest enrollment costs.
You can also charge more for toddlers, who need diapers changed or toilet training time, careful supervision during snack time, and the added need for more hands-on playtime. Toddlers are a little more self-reliant than infants, so most at-home daycares do charge a little less for children between the ages of one and four years old, but the average for this group is still about $300 to $900 a month.
School-aged children, aged four and up don’t need the same level of attention as infants and toddlers, so you should charge the least amount for these oldest clients. Children in this age group are usually toilet trained and will need supervised play-time with their peers, snacks, and guided activities like story and craft time. To give you an idea of how much to charge for these clients, you should keep in mind that the average cost of daycare for these children is about $200 to $800 per month.
Special Services and Add-ons
A good way to increase the amount of income you get through your business is to offer specialty services, which you can charge more for. Most at-home daycares offer general playtime, snacks, and maybe some adult-guided activities, but if you are prepared to go above and beyond the normal expectations, you may find that parents are willing to pay more in order to give their children access to your unique services. Some of the things you can include are:
- Nontraditional Hours
A lot of at-home daycares are structured so that parents drop off and pick up their children, but if you are willing to add transportation services to your business, you will be able to charge extra money, and some parents will be willing to pay for the convenience. If you over this service, you will need to make sure that you have proper auto-insurance, as well as car and booster seats for each child, but it is just one small service you can offer to make your business more lucrative. How much you charge for transportation will depend on your area, but a flat rate of $15-$20 per ride may be a good place to start.
Operating during nontraditional hours is another great way to increase your income. Offering to care for children earlier in the morning, later into the evening, overnight, and even on weekends will definitely be a bonus for busy parents, and you can charge them an additional fee for the service.
You can also watch children during date nights or charge extra for on-demand care. For early drop-offs and late pick-ups, a common rate is between $.50 and $1 per minute. For other nontraditional hours of operation, you can charge an hourly rate that is a little higher than your normal fee.
Enrichment services are an excellent add-on for your daycare that will allow you to earn extra income while helping the children under your care expand their learning, and most parents will be thrilled as their children begin to perform better at school and will consider the service well worth the additional cost. Enrichment can be as simple as teaching ABCs and 123s for your youngest clients, or you can work on more structured activities, such as helping those who are just learning how to write practice forming their letters and offering tutoring and homework help for school-aged children.
The amount you should charge here depends on the type of enrichment you are offering. If all children are getting the same service, a flat fee can be added to every client’s tuition, but if you are offering individual enrichment services at the parents’ request, you will want to charge an hourly rate. In that case, if you do not have a teaching background, you can charge up to $45 per hour for tutoring, while a certified teacher can charge up to $85 per hour. It is a good idea to check local tutoring agencies, such as the Sylvan Learning Center, to get an idea of what these services cost in your area.
These are just a few of the additional services you can offer. Look and see what other daycares in your area are doing, and use your imagination to help you come up with unique ideas that will boost your business by making your daycare more appealing and allowing you to charge a little extra.
As you can see, the amount of money you can charge for your daycare varies depending on your location, the needs of your clients, and the services you offer. The amount of money you will make as a daycare owner really depends on you, and your willingness to go above and beyond for your clients.
How do I determine how much of my enrollment fee goes back toward my business versus the amount I can consider personal income?
Using a spreadsheet will help you determine how much income you are earning. You will need to subtract the costs of things like snacks, monthly insurance fees, and supplies. There are many free templates available online, or you can work with an accountant to determine how much money needs to go back into your business, and how much you can consider profit.
Can I charge extra when caring for children with special needs?
That depends on their requirements. You should charge more for a child who needs diapering or toilet training assistance, and you can also add a tutoring fee if you are helping them with enrichment. Keep in mind that some children with special needs may require care that is beyond your training and capabilities. If that is the case, it would be safest to refer them to a facility that can meet their unique requirements.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Get all the information you need to open a daycare of your own! Check out our startup guides here.
Meet Shawn Chun: Entrepreneur and Childcare Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online daycare business resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a childcare business owner, I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Daycare Business Boss: I want to help childcare business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.