NEW DCP- Rates Based on Experience or Competition?

[mamac]

I haven't gotten any clients yet and I'm having trouble with my rates. I know there's a lot of discussion about this but do people just set an arbitrary amount? Is it based on experience? Competition? What you have to offer?

My area charges anywhere between 135 and 200 for home DC. (Centers are around 200-225)

MOST of the home DC's are between 150-170.

I'm going in at 160. I have no official experience other than my own 2 kids (oldest is 5 1/2) but I know I will have more to offer than some of them in terms of space and even what I will provide in terms of education and activites. (one considers herself a sitter)

I would like to start out at the higher end but considering as I'm new would I be setting myself up to fail? I'll be honest, my kids have been to a few different HDC's and I never put any thought into asking what they offer. Never really knew what DCP's were SUPOSSED to be providing in terms of activities. I had to find someone that would accept my schedule requirements but I would have chosen the cheapest of the bunch if I had a choice. (I know better now)

So the question is: Does it matter if I don't have the experience to charge more than the average DC?

And on a side note for those of you experienced: Do the majority of people shop around looking for the cheapest rate?

[Patches]

I'm just starting out, too. I charge about average for my area. It's a little lower than I would like to charge because I'm very experienced in child care and have degrees in early childhood education, but I am just starting out with my own child care and I'm young (which I feel like some people tend to associate with inexperienced).
My plan (in a nutshell) is to get some good families, get a good reputation in the community, and raise my rates for new clients ntil I'm getting what I think I deserve.
By the way, congrats and good luck!

[BumbleBee]

I'm just starting out, too. I charge about average for my area. It's a little lower than I would like to charge because I'm very experienced in child care and have degrees in early childhood education, but I am just starting out with my own child care and I'm young (which I feel like some people tend to associate with inexperienced).
My plan (in a nutshell) is to get some good families, get a good reputation in the community, and raise my rates for new clients ntil I'm getting what I think I deserve.
By the way, congrats and good luck!

Ditto.

[CedarCreek]

I am starting out on the "higher" end in my area. Its higher because unfortunately we have a huge problem with illegal unlicensed providers charging freaking 90 a week. Compared to the centers, i'm not expensive though. I just had to be patient, eventually the parents that interviewed realized I did a lot more than just babysat like they thought.

[itlw8]

if you charge a low rate you get parents who can only afford to pay the low rate. For some dumb reason parents think a higher cost means higher quality

So do not under cut your prices too much or the parents you get will often nit pick every cost increase.

[DaisyMamma]

I think your rate is where it should be for just starting.. I don't think you should lower it. In my opinion people tend to hire a daycare provider based on rates. This could just be in my area, or could be the income bracket of families that I tend to interview. I haven't fully figured it out.
Like the previous poster said, you're just starting, so get a couple of families in the door and go from there. I can tell you that when I first started I put out a lot of ads offering below average rates. $145/week when the cheapest you can find here is $165. It did not help me at all. I think it made people wonder what was wrong with my daycare. I'm now firm on $175. Home daycares here are always full though, so I will be increasing that again soon.
I don't have a degree in ECE but I do have one in Art and have many years experience. I don't feel that my program has more to offer than the next guy, so I charge high/average rate for my area.

You will get the most calls in early Winter, late Spring and late Summer.

Congrats on starting out! It took me about a year to get fully established and now I'm usually full. I hope you get full quickly too!

[DaisyMamma]

if you charge a low rate you get parents who can only afford to pay the low rate. For some dumb reason parents think a higher cost means higher quality

So do not under cut your prices too much or the parents you get will often nit pick every cost increase.

It's true. I agree.

[Abigail]

I opened only a year ago, but starting interviewing a year and a half ago. My rates were $130 and $125-$130 was average. I would try to find a better average rate than you're huge gap.

I worked at a daycare for a year prior and have a genuine desire for this to be my career and have only educated myself. I have a degree, but not child care related. I'm young as well and going to have our first child *Soon, hoping in the next 2 weeks, . With being so young and not having a child myself I felt like a lot of people overlooked my daycare. At the same time just starting out part of the daycare was not finished and I need more experience with tours.

I laugh thinking about some of the beginning tours I did. We have the entire lower level exclusively daycare so that is a huge perk for most because of the space. So one family I had come in the daycare entrance and it was dark and kind of creepy cause they were told to come to this address and go to the backyard pretty much and just walk in the basement door. LOL. Then another family I gave at tour too we ended up sitting in the future kitchen room which was only a dim light and low height kidney table on concrete floor and the walls were not even done. I figured the table and tiny chairs were a good place to sit and look over paperwork. HA HA HA. Then another family I gave a tour when it was getting colder out. This is our first home and I couldn't figure out how to keep the daycare level warm. It would be 68 degrees upstairs, felt fine to us, but then it would only be 62 degrees or so downstairs! The one mom of a baby asked if it would be warmer than this and I said yes that I turn the heat down at night but STILL I should have thought about turning up the heat for the tour!

Anyways, I would start out your first 1-2 families at the $150 range and once you sign up 1-2 kids the families all begin to have a "trust" in your new business and you also will have a month or a few months under your belt to create a good routine and some basic experience with rules with parents and policies and more. From January until March it was a learning curve. Interviews became SO EASY and not to stressful! I have such good word of mouth from many families and get calls once a month when I don't even advertise. I hope the business stays up because I now have two employees and will be on maternity leave soon and when I get back to work in April I want to fill up to capacity to help my income since my employees are going to soak up more than half my income. I love having an extra hand around to help and like to bigger group size too.

I raised rates for my last family I enrolled and any new families that I enroll will also be on that schedule. I started out with 10 paid holidays and 5 paid personal days and offered no free days to parents. So starting at average rate with 15 paid closed days a year was fairly successful. Figure out what separates you from the daycares down the road and the rates they probably offer and what experience they have and what draws families to them over you. Then tweek a few things and you'll be great. Sometimes it's not even the rate. It could be that you have a pet or a small house or an inconvenient location or not great hours or many other tiny things that make a huge difference. The hardest part was starting because no one wanted their child to be enrolled alone and I worked HARD with advertising and research and phone calls with families who showed interest because current families continually asked when another child might start so I was lucky to have only a few weeks pass before another started and another started.

Be licensed from the start.
Be on a food program.
Be formally prepared with paperwork that is easy to understand and well written.
Be safety ready with things setup for daycare.
Have a plan of action for advertising and giving tours.
Have fun and try not to stress too much! It will come in time!

[CedarCreek]

I agree that looking younger seems to hurt you sometimes in the interviewing process. Almost everyone I have interviewed has point blank asked me, "How old are you?". It's a little insulting. I always want to answer with, "Old enough to have an 8 year old son, 3 year old son, a home that I own and run my own business. How old are you?"

[mbullette]

If you charge a higher rate you tend to get better class of families or at least I have. The not so good families can't afford higher childcare and tend to want everything for nothing. It really depends on the area you are in but I would not go on the lower end. Just remember to do what is best for you.

[mamac]

So many great responses I wanted to reply!

By the way, congrats and good luck! Thanks! Good luck to you, too!

Ditto. Thanks!

if you charge a low rate you get parents who can only afford to pay the low rate. For some dumb reason parents think a higher cost means higher quality

So do not under cut your prices too much or the parents you get will often nit pick every cost increase.
Thought about that. I'm trying to avoid having to increase because I didn't charge enough to start with. It's funny about the better quality thing... I called one DC (highest cost around here) figuring if she was actually finding clients at that rate she must be great. She was the biggest B I spoke to. Don't know how she has any clients!

!

You will get the most calls in early Winter, late Spring and late Summer.

Congrats on starting out! It took me about a year to get fully established and now I'm usually full. I hope you get full quickly too!
Thanks! I was thinking this probably wasn't the best time of year to start so I'm really hoping Ill get some calls. I still need to register w/ referral agency and next week I'm going to put out flyers, brochures, etc. and REALLY start advertising. I just wanted to get all my ducks in a row first!

I would try to find a better average rate than you're huge gap. 160 is the average. The high and low rates only accounted for 3 DC's out of the entire city.

I'm young as well and going to have our first child *Soon, hoping in the next 2 weeks, . Congratulations!

With being so young and not having a child myself I felt like a lot of people overlooked my daycare. At the same time just starting out part of the daycare was not finished and I need more experience with tours. I'm not young... I just look it. Great if I were still single, but not so much in business situations.

Anyways, I would start out your first 1-2 families at the $150 range and once you sign up 1-2 kids the families all begin to have a "trust" in your new business and you also will have a month or a few months under your belt to create a good routine and some basic experience with rules with parents and policies and more. I'm hoping to get into a routine quickly. I am so lost without one and I am constantly stressing over everything!
The hardest part was starting because no one wanted their child to be enrolled alone Whew! Got that one covered. I've got my LO home with me!

Be licensed from the start.Check!
Be on a food program.Check!
Be formally prepared with paperwork that is easy to understand and well written.Almost Check!
Be safety ready with things setup for daycare. Check!
Have a plan of action for advertising and giving tours. Check!
Have fun Trying to!and try not to stress too much!Trying not to! It will come in time!I sure hope so!!

I agree that looking younger seems to hurt you sometimes in the interviewing process. Almost everyone I have interviewed has point blank asked me, "How old are you?". It's a little insulting. I always want to answer with, "Old enough to have an 8 year old son, 3 year old son, a home that I own and run my own business. How old are you?"
Ugh.... Story of my life! So sick of hearing ppl say "But wait until you're *** age! You'll look so young!" I just want to look MY age. My mom told me I could still pass for a teenager.... And I'm almost 40!:confused:

If you charge a higher rate you tend to get better class of families or at least I have. The not so good families can't afford higher childcare and tend to want everything for nothing. It really depends on the area you are in but I would not go on the lower end. Just remember to do what is best for you.
Yeah that's what I was thinking. That's one of the reasons I won't accept vouchers. I'm thinking they'd never want to pay late fees, etc.

I think I'm going to stick with 160 and see how people feel about what I have to offer them. If it goes well I'll decide on an increase.

Thanks for all the help. Now to finalize my paperwork.... I think.

[Heidi]

I get quite a few calls from my website, so consider making one. I can PM you with mine, if you like. Also, if you Facebook, be sure to create a page for your daycare and ask your friends to "like" it.

You might consider, to start, offering some sort of referral bonus. If a family refers someone to you, and the new client signs a contract and gives you a deposit, the refer-er () gets $50.

You are going to ask for a deposit, right?

[EAP]

Don't base your rate on getting clients who just want to pay less than a center. I was clueless about what my area rates were when I started and I priced myself way under what made actual financial sense to run the business. I had to do an increase for my current families just to break even and now I am bringing in new clients at what the rate really needs to be. I would have priced it differently from the beginning if I would have had any clue about the amount of work it would take and the quality issue with families who just want something for nothing.

[melilley]

Congratulations to you! I am in the same boat as you! I am just starting out, doing the finalizing of the paperwork as we speak(aheemmm, supposed to be) and going to put an ad on CL tomorrow! It is agonizing when you don't know what to expect! I have been going over and over on what I should charge too! Rates in my area are $85(I don't know how)-$150 a week so I decided on going in at $130, but even at that I'm not sure if its too little. I guess we will just have to live an learn! Good luck!

[mamac]

I get quite a few calls from my website, so consider making one. I can PM you with mine, if you like. Also, if you Facebook, be sure to create a page for your daycare and ask your friends to "like" it.

You might consider, to start, offering some sort of referral bonus. If a family refers someone to you, and the new client signs a contract and gives you a deposit, the refer-er () gets $50.

You are going to ask for a deposit, right?

LOL. I am so technologically challenged it's not funny. I just got my first laptop ever two months ago. I still have a "flip phone" and I just signed up for a facebook page to see pics of my ds at a classmate's birthday party! And none of my friends use facebook. I couldn't IMAGINE creating a website!!!! (would love to though!)

Ummmm..... deposit? I hadn't planned on it. Out of the 3 DC's I've used I never had to pay one. Not sure it's "the norm" around here. ? I have decided to charge a half rate holding fee for up to 4 weeks. (and full rate if they needed anything more than that.) I'm worried about scaring people off before they start if they start comparing me to all the other DCs. I know that I am taking my paperwork much more seriously than the ones I'm familiar with in terms of how I worded my handbook, contract, etc. I have gotten so many great ideas from this website that I keep changing/adding to it daily, which is part of the reason why I'm not actively advertising "just yet." I know I can't procrastinate too much longer though.

Would love to see your website! Are there any "Build-your-own-website-for-dummies" sites out there? :confused: