What Is the Cost of Opening a Daycare Center?

by Christopher Raines; Updated September 26, 2017
Cheerful Preschoolers

A day care business can allow you to tap into a business always in demand for working mothers. However, opening a center subjects you to up-front costs to meet government health, safety and licensing standards, and allow children space to play, eat, stay clean and nap. These expenses will vary by your center's zip code, size, number of children, selection of equipment and menu of services.

Construction and Upgrades

The center must meet building codes and other regulations. St. John Lutheran Church of Cedar Falls, Iowa reports that it spent $17,106.03 in 2012 for egress windows, new doors and an additional outside entrance to comply with building codes. The North Carolina-based Self-Help Credit Union projected in 2014 that renovation costs for a center licensed for 76 children could be as high as $55,000. Star Child Academy, based in Apopka, Florida, estimated in February 2014 the costs of buying land and constructing a building for its franchised centers in the $3.1 million to $4.5 million range.

Room Furnishings and Supplies

The rooms for infants should have equipment such as cribs, diaper-changing stations, music and activity gyms. Preschool rooms need art supplies, couches and manipulative toys. According to Utah's Department of Workforce Services, Office of Child Care in 2012, a fully-furnished and equipped infant room could run about $10,000, while a minimally stocked version costs about $7,000. The agency estimated in 2012 that a preschool room costs run from $8,000 to $15,000.

Providing Outside Play

The South Carolina Institute of Medicine and Public Health reported in December 2013 that fixed-play equipment ranges in costs from $4,000 to $50,000 for modular systems. Portable play equipment, such as balls, hula-hoops and bean bags, run about $200. However, they must be replaced more often than fixed playground equipment.

Equip the Kitchen

Day cares need commercial-grade kitchen equipment to comply with health requirements. The size and power and manufacturer or seller of the units will affect costs. For example, as of January 2014, Advance Tabco, headquartered in Edgewood, New York, prices its three-compartment commercial grade sinks from $1,047 to $7,998. Frigidaire, in 2014, listed the manufacturer's suggested retail price on a 19.5 cubic feet food service grade refrigerator as $1,999.

Hiring Costs

State licensing authorities typically set ratios of children to workers.Thus, the number of children you accept at the start will determine your staff costs. Childcare worker salaries vary by job descriptions, positions and location. The Bureau of Labor Statistics reports that in May 2013, the average salary of a child care worker in a day care center was $19,980.

Inspections and Permits

You must get a license to operate a daycare. As part of the process, the center must pass a battery of tests. These inspections typically include fire safety, sanitation, lead risk, furnace and playgrounds. Figure your state's fees for these inspections and the application into your start-up costs. For example, the Michigan Department of Human Services advises its applicants that the estimated application and inspection fees, as of January 2014, ranged from $1,470 to $4,830. Depending on your state, the application fee will depend on how many children you're able to keep.

Child Care Insurance

Insurance costs vary by the location, size and features of your center. West Bend Mutual Insurance Company, located in Middleton, Wisconsin, reported in April 2013 that its large, commercial daycare owners had premiums around $2,000 a year. The cost for in-home daycare facilities was $250 to $500 per year. These estimates include coverage for molestation and abuse claims. The use of transportation and longer operating hours are among other factors that can raise insurance costs.

About the Author

Christopher Raines enjoys sharing his knowledge of business, financial matters and the law. He earned his business administration and law degrees from the University of North Carolina at Chapel Hill. As a lawyer since August 1996, Raines has handled cases involving business, consumer and other areas of the law.

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