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Understanding Child Care Cost
The child care cost for early education programs is, unfortunately, somewhat unpredictable, and varies based on a lot of competing factors, most importantly, perhaps is location — you’ll likely pay more in San Francisco than you would in Oklahoma. Whether you’re a child care director, opening a micro school, or just trying to set up an in-home preschool, it’s important that you charge what your services are worth, but that you also be fair to the families you’re serving. If you’re trying to establish the economics of your own child care business, having a good sense for child care cost is important.
Here’s some information on these costs in both a general sense and what it looks like from the professional side so that you can plan and make decisions about your professional career.
General Child Care Cost Considerations
The Center for American Progress released a report in 2018 that detailed, broadly, the cost of child care across a variety of situations. This analysis admits that with so many child care providers in the US, that it is an imprecise science, but attempts to outline the actual cost of providing child care. Some important takeaways:
- Caring for infants at a child-care center is most expensive, at around $1200 per month
- Family child care is less expensive in general, averaging $800 a month
- For a director or owner, the greatest expenditure is salary and benefits (see chart below)
Child Care Costs: How Much to Charge
Note that these are the average costs to the child care provider themselves. You will obviously have to charge more in order to keep your doors open. Knowing exactly how much to charge can be a challenge, but there are a few things to keep in mind. The rate you charge is the most important, but remember that ECE income is also influenced by enrollment charges and fees. This is called the “Iron Triangle” of ECE finance.
There are no hard and fast rules, but bear in mind that if your program is not fully enrolled and you are not collecting tuition and fees promptly, that affects your bottom line. Balancing your fees and rates can be a challenge, especially in tight financial times, but having a good foundation to begin with can help, as can keeping costs low in the first place (for more on that, see below).
As with any business, it’s important to have a clear and measured understanding of your expenses, and it’s worth bearing all of these issues in mind. For many families, infant-based child care is prohibitively expensive — costing almost 20% of their monthly income. Depending on your business model and what you want to accomplish with your child care program, you will want to consider how many families you can expect to attract and how many employees you will be able to employ, if any.
Notably, costs for home child care are much more affordable, at an average of $800 a month. This is part of the reason for the growth in popularity of small programs, both in-home, or along the lines of micro schools and forest schools.
Infants & Toddlers Versus Preschoolers
It’s also important for you to be realistic about what ages of children you intend to care for, and which you can care for. There is a reason that infant child care is more expensive — not only do very young children need additional care and attention, but there are substantially more regulations to consider when caring for infants.
Infant care is often more expensive because there are limits to the number of infants you can care for and they generally require a smaller ratio of care providers to infants. For example, in California, the ratio is 4:1, and in New York it’s even tighter, at 2:1 infants per adult.
Infants are also just a lot of work, and the cost of watching them reflects that. It’s important to bear this in mind when you decide what kind of child care services to provide. If you have employees, you will need more if you want to care for infants, and if you don’t, the size of your child care program will need to be smaller.
The startup costs for a child care center start at a minimum of around $55,000. Before you start to worry, this cost is for those who are planning on taking over a pre-existing facility and it represents the average cost of renovating everything.
As you might imagine, renovating a building to make it clean enough, safe enough, and generally child-proof can be extensive. Though the overall revenue is lower, the margins can be much higher and it can be more lucrative to start an in-home program, which is why there has been so much growth in models like micro schools in recent years .
If you are hoping to scale your operation, it gets challenging, but caring for a small number of children in your home is a great way to start, because your overhead, startup costs, and general risk burden are much lower.
There are still plenty of costs to consider: some states charge to get your child care center license. Your state may also have requirements about how many teachers you can have per child, as well as standards regarding what safety measures you have for the teachers and the children.
When thinking about startup costs, it’s important to consider that it will vary substantially based on how much staff you’re going to need, the type of building you have, what state you live in, and the age of the children you intend to care for.
Child Care Costs: What to Charge
Though you undoubtedly have a love of children and are enthusiastic about your business, a child care program is like any other business, and you need to stay profitable to keep your doors open. Child care is often unaffordable for many families without subsidies or other aid, so you want to set your rates as reasonably as possible. This is another advantage of starting an in-home program or a smaller, more targeted child care center — keeping your operation small lets you run it more efficiently. A smaller classroom also allows for higher quality of care and instruction, and is generally better for both teachers and students.
There are many factors to think about when it comes to costs. You have to decide how long your hours are going to be, whether you’re going to provide meals like for lunch or snacks. If you have administrative costs, as you will as your program grows, these need to be considered, as do unexpected expenses, utilities, benefits, fees, and other often overlooked costs of starting a business.
Unsure? Wonderschool Can Help
Though it can be daunting to start any business, a child care program can come with costs and regulatory concerns that stop many in their tracks, it doesn’t have to be that way! Yes, there are costs and risks to any new business endeavor, but between the rising cost of child care and the COVID-19 crisis, the need has never been greater for small, affordable child care options.
The world needs passionate caregivers and instructors, and this endeavor is an exciting and fulfilling one! Contact Wonderschool today to find out more about how you can launch your own program!