Childcare Tuition: How to Price Your Childcare Rates for 2023
The early childhood world is all the bustle. Wages are at an all-time high. Grant money is running out. Every childcare center across the nation is wondering how to price their tuition.
Decisions you make today are going to affect whether your doors remain open by year-end 2023. One of those tough decisions is how much you should raise your tuition. The other question is how much you should raise your staff wages.
As you can imagine, what we pay our staff and what we charge for our programs closely correlate. Both of these decisions should not be made independently, that is for sure.
The following information will help you systematically plan for the upcoming turbulent year ahead while taking into account all the variables surrounding this tough business decision.
Why we do it
Let’s first talk about why we raise our tuition rates and how often we should do it.
It may seem elementary as to why we raise tuition but I feel it needs to be said. Margins are small and if we make the mistake of overlooking the impact even a five-dollar-a-week shift in pricing can have, it will have a ripple effect that is long-lasting and often hard to recover from. Not to mention, pre-covid many schools didn’t routinely increase rates on an annual basis even though the cost of living has consistently increased. Imagine being behind the curve for several years in a row.
If you have been consistently increasing rates, the year ahead will still be bumpy. For 2022 we saw rates jump higher than ever - many increasing by 15 - 25%. We are continuing to see this trend for 2023 and have even witnessed schools increasing rates by 30%.
The bottom line, your supply cost is increasing, labor costs are increasing, facility/utility costs are increasing, and all your direct and indirect costs are most likely experiencing extreme pricing hikes. We raise tuition to maintain a quality program that can benefit our community. We should price ourselves appropriately so we can continue to serve our families and remain a critical piece of infrastructure in our neighborhoods.
Make an educated decision
Gone are the days of just calling your competition to do a rate shop so that you can figure out how to adjust your tuition. We must make an educated decision so that we have the facts when we present the upcoming change to our families. We can’t be afraid to set the standard that we are professionals providing a priceless service for a target audience who relies on the very health and safety of their children.
Many are approaching the rising costs of running a school in various ways:
- Singular tuition increase
- Semi-annual tuition increase (two moderate increases within twelve months)
- Grandfathered pricing for existing families with smaller increases while having more generous increases for new families
- Requiring parents to pay for additional closures (two days of professional development, the week of the fourth of July and from Christmas eve until the end of the year)
- Elimination of items such as vacation coupons, providing diapers/formula,
- Reduced hours
- Designated early closure days
The most important thing to do when determining your new rates is to ensure you adequately plan for rising costs, wage adjustments, etc. The team at ECE Intelligence in collaboration with Child Care Biz Help created a tool that helps calculate what you should raise your tuition per child for the upcoming year.
Do you need help calculating how much you should raise and price your childcare tuition rate? Keep reading till the end to download our tuition calculator tool.
Communicating the change
When communicating tuition increases it's best to make sure you give adequate time (a minimum of 30 days) for families to prepare before the rate change is in effect. The accompanying letter describing the tuition change should include a couple of key points in order to fully educate the families on the careful:
- Significant wins from the year
- New innovative practices that were implemented
- Consider including facts about early childhood education such as: “research shows that a child’s brain is 90% developed by the age of 5-the years they spend in early childhood are essential to their growth and development.”
- Share plans for the upcoming future of your school and significant things you plan on purchasing, updating, and implementing.
- Include professional development that will be provided to the team so they can perform at a higher level.
- Empathize about the increased cost but don’t be apologetic.
Preparing your team
Before the change is announced it's important to train your staff on how to handle concerns and inquiries about the increase. Especially if the increase is significant, your team needs to be consistent and confident in their response.
Every position in your school should be trained on how to respond. The last thing you want to happen is for your teachers to side with families as they complain about rate increases. The increase is partially so they can get paid more so it does them no good to feed into any negativity with a price change.
Here are some ways to prepare them - Empathize > Divert > Raving Fan.
Empathize: I totally understand how an increase in any expense is never easy. We do appreciate you and all our families.
Divert with facts: We are excited though because this last year we have been able to accomplish so much and I know we have plans to make significant improvements again this upcoming year. Specifically, I know that I’ll be participating in [fill-in-the-blank] or - I know our playground is going to get renovated in Spring which will allow us to have an outdoor classroom where we can extend learning outside.
Raving Fan: We will continue to do whatever we can to make sure you remain a raving fan of ours. We love [name of child] and enjoy seeing them every day.
The aftermath
An important, yet often overlooked step is what happens after the dust settles. What type of follow-through occurs to keep a pulse on the satisfaction of your families and to ensure the quality of your school improves as promised?
Some things you can do to ensure families get the value you promised them when you increased the rates:
- Keep a plan with deadline dates of all the items you promised to implement. List each item, expected date of completion, who is accountable, and any other notes.
- When any WINS occur, share those wins with your families.
- Survey your families at least every quarter and ask for feedback.
- Survey your employees to make sure they are happy. When your staff is happy they perform their best!
- Watch your budget. You raised tuition rates so its important to be a good steward of those funds. Keeping a pulse on your numbers because clarity and focus will bring with it more profits. This will help keep future increases smaller.
Get a Free Download of Our Childcare Tuition Calculator Tool:
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Can you please email to me at
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Will do! Thanks Audrey.