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SOESD / School Improvement Services / Child Care Resource Network / Start & Operate a Home Child Care Program / Setting Fees

Setting Fees

Setting Fees
 
Here are three things to consider: How much can families afford? What is the going rate in the community? How much do you need to make a living?
 
Economists tell us that, in general, families can afford about 10% of their income for child care expenses. Many are faced with having to pay much more. While you want to be sensitive to a family's budget, it is not your responsibility to help all parents afford child care. It is your responsibility to set up a quality program based on sound business practices. Keep in mind there are some government subsidy programs and your willingness to accept families on these subsidies goes a long way to helping them out.
 
The going rates in your community can be obtained through Child Care Resource Network. They have compiled the monthly and hourly rates for cities in your area, broken down by age groups. You will want to know the average rate and the range of rates to decide where you fit in; consider your level of education, experience and the kind of program you offer.
 
Child care is a valuable service to families, and to society, and should be paid accordingly. It is a challenge to balance charging enough to support your own needs when many families simply cannot afford the cost of quality care. Do consider your current housing and operating expenses, future family needs and repair/replacement expenditures when setting your rates. Think about savings, think about taxes, think about college for your kids and think about retirement.
 
The next step is to determine how you will charge for your services. Hourly is sometimes easiest to figure out but tends to be only beneficial when you have full time children. Flat rates are better when you have part-time children as you will not lose as much money when families pay for a slot. Flat rates also alleviate disagreements about how many hours a parent has to pay for.
 
Lastly consider whether you will charge when children are absent due to illness or vacation. Will you charge for your holidays or vacations? Will you charge a late fee if parents are tardy? Will you ask for a deposit or advance payment to reduce the chances of being burned by a non-paying parent? Asking for payment in advance is the best method of not being burned by a non-paying parent.
 
Deciding how you will arrange your fees so you can stay in business can get you past the bumps that may arise with non-paying parents, unexpected expenses or slow times. But remember, whatever choices you make can be adjusted as you learn your way into the business and find out what you can live with and live on. When good providers leave the field because they cannot make a living, everyone loses. Remember Child Care Resource Network is available to help you in sorting through your options and starting a successful business.
 
If parents are questioning your rates or slow to pay, justifying your rates to may help them be more at peace with making their payments to you.   
  • Remind parents that your program is less expensive than local child care centers
  • Point out the benefits of your program for their children, the value of stability, early brain development, social-emotional growth and school readiness
  • When you are on the Food Program they have no cost for most of their children's meals
  • Six or more children for the better part of 10 hours a day use up a lot of activity materials like crayons, tape, paper, pipe cleaners, paints
  • The same goes for the wear and tear on books, puzzles, blocks, dress up clothes, games and outdoor equipment
  • Kindergarten preparedness brings its own expenses
  • Cleaning supplies and dishwasher time increases with the need for daily sanitation and cleanliness.
  • Utilities go up while furniture, carpet and paint wear down
  • Strollers, cribs, bedding, car seats and changing tables require more care, cleaning and even replacement
  • Training costs so the you the provider can continue to offer and improve the quality of care
  • Holiday and birthday recognition activities and gifts
 By this time parents will start to understand the behind-the-scenes costs of operating a small business like yours. Hopefully they are also seeing you cannot put too high a price on the safety, social-emotional wellness and future educational success of their children.
 
If the parents don't already know you may inform them of ways they may reduce the costs of care. See if they are utilizing their company's flexible spending account. Money is set aside pre-taxes for the payment of child care. Also, they may be eligible for federal and/or state Earned Income Tax Credit. And then there is the federal child care tax credit as well.
 
Perhaps the parent has something to offer you that would reduce their payment to you such as being a back up for you (make sure they have completed a background check first). Perhaps they have some skill or equipment that would improve your program or home?
 
If a parent simply does not pay, your only real recourse is to take them to small claims court. Local police will not charge them with theft of services and you cannot take a deduction from you taxes for a loss. To successfully take them to court you will need to be sure your documentation is in place in the form of a signed policy/contract and copies of any written communication you have had with the parent, and perhaps a journaling of any conversations and events. The best thing to consider is to ask for some kind of payment in advance so you are protected from parents leaving without paying or giving notice.
 
Journaling may also be a valuable tool if you are concerned a parent may make a complaint against you. Keep notes on how things are going with all your children and parents, especially incidences. Consider asking your parents to evaluate your program in writing periodically. What can you do to improve your program? What is not working? Would they recommend you to another parent? Use notes regularly to keep communication open, such as payment notices, activity updates, and holiday and vacation reminders.
 
If you have questions about any of this, contact Child Care Resource Network.
 
 



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