Guide to Raising Tuition Rates for Your Early Childhood Education Center

Do you need to increase your tuition rates at your Early Childhood Education center? In the following guide, learn five strategies for implementing a tuition increase at your childcare program. With proper planning, you can successfully raise your tuition rates to accommodate your cost of living. Read on to find out more.

Raising Your Tuition Rates: Risks and Benefits

When it comes to deciding whether to raise your tuition rates as a childcare professional, it’s helpful to look at the potential impact of your decision in terms of risks and benefits. It’s probably pretty easy to figure out the risks of not increasing your tuition rates:

• You will struggle to accommodate the rising costs of living and operating a business.
• You may set a precedent in which parents expect that the rate they currently pay or once paid is the rate they will always pay.
• You give the impression that your services are locked into a specific price and are only worth that price.
• You fail to account for the increased value you offer families with your increasing years of childcare experience, as well as the monetary investments you make in your childcare program in the form of quality teachers, supplies, curriculum, meals, activities, and so on.
• You face the reality of being increasingly underpaid for the demands of childcare work.

On the other hand, considering the risks helps you better understand the benefits of increasing your tuition rates:

• You adequately accommodate the rising costs of living and operating a business.
• You may set a precedent in which parents anticipate that the rates they pay now will increase according to a predetermined schedule or rate to which they agreed upon enrolling their child.
• You communicate to families that your services increase in value over time, and thus are subject to a price increase.
• You account for the increasing years of childcare experience you gain, as well as the continued monetary investments you make in your childcare program.
• You create a sustainable future for yourself and your childcare business by providing room for a steady trajectory of increased revenue over time.

In your risks/benefits analysis, you may also weigh the risks of one or more of your families becoming angry or upset with you for raising your rates or even leaving your childcare program. While these are not easy or pleasant scenarios for a childcare professional to navigate, you must consider them in light of the significant and long-term risks and benefits outlined above. Your decision to raise your rates should ultimately be made with your business and livelihood in mind—not the whims or feelings of those who may react negatively.

Okay, so if you have decided that raising your tuition rates is the right move for your Early Childhood Education business, how do you go about it?

Five Strategies for Raising Your Tuition Rates

The following strategies will help you successfully navigate a tuition increase for your childcare program:

Include Tuition Increases in Your Childcare Contract – Set your childcare business up for success by including a statement about tuition increases in your childcare contract. When a new family enrolls their child in your program, the parents will sign the contract, acknowledging that your tuition rates are subject to change. You can make this statement as general or as specific as you want. Here are a few examples:

“Tuition rates at Little Loves Learning Center are subject to an annual increase.”

“Tuition fees at Little Loves Learning Center are subject to a yearly increase every September.”

“Tuition rates at Little Loves Learning Center are subject to a 3% increase upon your child’s enrollment anniversary.”

Each of these examples differs in how general or specific the tuition increase statement is in terms of timeframe, amount, and conditions. There is no right or wrong way to include a statement about tuition increases. However, doing so can help you establish an understanding with parents from the beginning that you will raise your tuition rates throughout the relationship.

Consider the Timing of Your Tuition Increases – Let’s face it, there’s never a wonderful time to announce to parents that they will be paying more money for childcare. Nevertheless, you can be sure that the announcement will fall easier at certain times of the year than at others. For example, you may not want to time your tuition increases during or after the holiday season or during tax season. These can be financially burdensome times for everyone. Instead, you may want to time your tuition increases in September to coincide with the beginning of the school year, a time when parents are anticipating many changes anyway.

Announce Your Tuition Increases Far in Advance – Giving plenty of advanced notice of your upcoming tuition increase can help parents budget accordingly and keep them from feeling blindsided. Ideally, 60 to 90 days is the minimum time you would want to give for an upcoming tuition increase. Send home a letter to parents directly instead of entrusting a notice sent home in a child’s backpack, where it will likely be lost or forgotten. However you choose to announce your tuition increase, doing so far in advance is a courtesy you can give families who may need to adjust.

Provide Reasoning for the Increase, or Not – Some childcare professionals like to provide reasoning for increasing their tuition rates to justify the added cost. This may be something you want to do. Here are some valid reasons you could give for increasing your rates:

“As stated in the childcare contract, tuition rates at Kinder Angels Childcare Center will increase on September 1^st to accommodate the rising cost of living for all Kinder Angels team members.”

“Just a friendly reminder that tuition rates at Kinder Angels Childcare Center will be increasing by 2% on September 1^st. The new rates reflect changes to our childcare staff, including one new infant caregiver and one new toddler caregiver to keep our adult-to-child ratios as small as possible.”

“This letter is to notify our families at Kinder Angels Childcare Center that tuition fees will increase on September 1^st to [amount] per child. The scheduled tuition rate is in accordance with our childcare contract and accounts for the improvements we have made to our childcare facility this year for the benefit of all our families.”

These examples point to specific reasons for the tuition increases, but you may instead choose to announce your new rates without providing an explanation, and that’s okay too. Consider the following example:

“Beginning September 1^st, tuition rates at Kinder Angels Childcare Center will increase to [amount] per child.”

Whichever way you prefer to announce your new rates, you can do so with confidence, which brings us to our last point.

Be Unapologetic – The nature of a childcare provider is to be loving, caring, and compassionate. These qualities are at the heart of what you do. However, business decisions like choosing to raise your tuition raises should be made without regard to the potential negative feelings and grumblings from the families you serve. Yes, the costs of childcare are significant and continue to rise. But as the cost of living rises for your clients, remember it is also rising for you. The cost of doing business is a burden that falls on your shoulders if you do not find a way to compensate yourself for operating a quality Early Childhood Education program.

Keep in mind that only you can decide the true value of your services. What are they really worth? Consider all your years of experience and those of your childcare team members. Think about the investments you have made over the past year to your program. And weigh in the increased prices you have had to pay for everything from daycare supplies to food. With this in mind, you can raise your rates knowing that you deserve a fair wage that accommodates the increased costs of running your childcare center.

Families will understand this and accept it, or move on. The ones who gripe and argue about a reasonable price increase, especially one they have agreed to in your childcare contract, may be better suited to finding care elsewhere. You want customers who value your services enough to pay what they are worth.

We hope this guide is helpful to you as you consider whether to raise your tuition rates and how to do it.

The experts at Honest Buck Accounting are dedicated to helping childcare business owners build a strong financial foundation for their business with a full range of professional accounting services. Get in touch with us to learn more.