How to Set Rates for a Home Day Care

by Tina Amo; Updated September 26, 2017
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A home day care is a business opportunity for people who love children and can care for them responsibly. Each state regulates home day care providers and determines the qualifications and requirements, but it is up to the owners to set their own rates. Not all parents make their child care decisions based on price alone. Your rates should reflect the value of service you provide and the quality of your facilities.

Local Rates and Incomes

A good starting point is to find out what child care providers in your area charge for their services. Many counties have child care referral agencies or licensing offices that can provide rate information. Look beyond the numbers to determine the range and level of services those rates cover. Knowing the average family income in your county is also helpful. According to Tom Copeland, author of "Family Child Care Marketing Guide," families can typically afford paying about 10 percent of their income for child care. These two numbers should give you a ballpark range.

Pricing by Age Group

The age group of children you care for can also affect the rates you charge. Your state or county licensing office sets required adult-to-child ratios based on the age of children under your supervision. For example, in Florida, one adult can care for up to four infants, or six children who are 1 year old, or 11 children who are 2 years old. You might charge more for infants, for example, because they require more of your focused time and limit the total number of children you can take on.

Setting Fees by Attendance

There are many ways you can structure your fees. Parents may appreciate paying only for the hours the children are in your care each week, but this can result in irregular income for you. Charging a flat rate guarantees a regular income and minimizes potential for argument about hours. You can charge flat rates for blocks of time, from partial days to full-time care. A hybrid fee structure involves part-time blocks with the option for extra time on an hourly basis if needed. Remember to account for days children miss due to illness, holidays and vacations. You might charge flat rates per months or semesters, where the fee is spread evenly across the length of the term, and parents agree to pay the rate whether the child misses a day or not.

Charging Fees for Extras

Offer additional value-added services for add-on costs. For instance, you might offer pick-up and drop-off services or provide all meals and snacks. If you offer transportation, for example, the cost of gas, maintenance and insurance are on top of your regular fee and should be added to your rates. Another add-on fee that many day cares charge is for parents who are late picking up their children. This not only pays for the extra labor hours but also discourages late pickups.

Calculating Expenses

To ensure that your rates cover your costs, calculate all the costs of running the business -- use of your home, utilities, maintenance, supplies. Then determine your targeted hourly or monthly rate and the number of children you plan to care for. Staying within the ball park range keeps your business competitive, but if you need to charge higher rates to reach your desired income, provide a higher value to parents in the services and quality of care you offer.

Offering Discounts

Child care providers often offer reduced rates for various factors as an incentive for parents. For instance, you might offer lower rates for siblings if parents register more than one child or offer a discount to parents who pay the tuition for the full year ahead of time.

About the Author

Tina Amo has been writing business-related content since 2006. Her articles appear on various well-known websites. Amo holds a Bachelor of Science in business administration with a concentration in information systems.

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