I Can't Decide How To Charge For Daycare

[Dilley Beans]

I know everyone does it differently but I can't decide which I prefer:

Option A:
Charge only for the days I am open and charge a little more to help cover holidays and vacation without pay. No paid holidays per year, no paying during my week of vacation. They would see their balance due lessened if there was a holiday and if I have a sick day or vacation, they would not owe on those days. They would still owe on their sick days and vacation. Basically, if I am open, payment is due.

Option B: Charge parents the same price every week, 52 weeks a year, which comes to a little less per week than option A but the same amount of money. But, they owe during my 2 weeks vacation and holidays. If they have a sick day or vacation, they will still owe, but if I take a sick day or personal day other than state holiday, I would prorate their account.

I have decided what I believe each spot is worth, now I need to figure out how I want to handle how it will be presented to clients. Does that make sense? It is all about perception, how do they feel about / do they feel they are paying for my vacations and holidays, even though they would be technically paying the same amount spread out differently?

Please help me, your feedback is greatly appreciated.

[melilley]

If it's the same amount of money for option A and option B, option A sounds like a better deal. It makes it sound like they don't have to pay for any closures. For option B, it makes it sound like they have to pay more.

I am paid for one week of my vacation (I can take another unpaid), 5 personal days, and all holidays with Christmas Eve and the day after Thanksgiving. I give full time families 1 week of free vacation a year and part time equal to how many days they are contracted for in a week. I've never had a problem.

[Blackcat31]

For years I required payment 52 week a year and the only time I didn't charge was for any unexpected days I needed to close. I closed for 2 weeks of vacation, all federally recognized holidays and a couple personal days.

Most clients were okay with it but would occasionally question the policy.

Then I decided to simply things and go the "if I am not open, you do not pay" route and wow!...No fuss, no questions and no issues, comments or constant need for clarification from clients.

It's weird though because it is the same amount of money they would have paid 52 weeks a year. :confused:

Apparently the psychology of the words "You don't pay when I am closed" is enough that parents are actually happy with it.

It's a lot marketing tools used by big retailers;

like selling something for $49.99 verses getting it for $50

or 3 easy payments of $19.99 or pay $50 right now.

Most people really believe the "easy payments" are the way to go...

You could always offer both options to a couple parents and see which one they choose....

[AuntTami]

I think option A sounds better, as PP mentioned.

In option B it *sounds* like they're getting ripped off because they're paying for something they're not getting(since you're closed)(Even though I know they're not, they're not going to see it the way we see it)

They don't know the rate is slightly higher to accommodate "if i'm closed, you don't pay", so they're not even going to question it.

[jenboo]

OK, this is a little embarrassing, bit how would one do the math to make sure the parents are paying the same amount for the year but not paying for the days you are closed?? I like this idea but not sure how to figure out the calculations.
I want to charge $175 a week

[TaylorTots]

I do option A and it's definitely a selling point during interviews. Most parents tell me it was one of the things that made it an easy choice to choose me vs. another provider who was comparable or a little less per week.

I used to be $135 per week, 52 weeks per year = $7020 for a full time enrollment.

Since I changed over a while back I am $145 per week, all days I am open (closed 10 personal/vacation days, 8 holidays) = $7018

[TaylorTots]

OK, this is a little embarrassing, bit how would one do the math to make sure the parents are paying the same amount for the year but not paying for the days you are closed?? I like this idea but not sure how to figure out the calculations.
I want to charge $175 a week

52 weeks in the year X 5 days per week = 260 days of childcare

subtract how many days you are closed for holidays/personal/vacation/illness

= total days of paying childcare


$Total income wanted per spot annually divided by total days of paying childcare = total $ needed per spot daily. Multiple by 5 to get a weekly rate.


Example:
I am closed 18 days a year between holidays/sick/personal/vacation.
260-18=242 (total days of paying childcare)

I want $7020 per spot yearly so...

$7020/242 = $29.01 needed daily per spot.

$29.01 X 5 days a week = $145 weekly rate

[Heidi]

So, if it's "you don't pay if I'm closed", how do you charge PT families?

I charge $140 per week now. I have 1 family who uses 3-5 days a week, but they're all over the place (mom works at a hospital and has no control over her schedule). We agreed they'd pay for 4, same cost every week (easier for us both to budget) of $115 (my rate now is $120 for 4 days, but I didn't raise theirs this year).

Because I usually take one or two days here and there, they always just pay the 4. Since the new year is coming up, would you change that contract?

[jenboo]

52 weeks in the year X 5 days per week = 260 days of childcare

subtract how many days you are closed for holidays/personal/vacation/illness

= total days of paying childcare


$Total income wanted per spot annually divided by total days of paying childcare = total $ needed per spot daily. Multiple by 5 to get a weekly rate.


Example:
I am closed 18 days a year between holidays/sick/personal/vacation.
260-18=242 (total days of paying childcare)

I want $7020 per spot yearly so...

$7020/242 = $29.01 needed daily per spot.

$29.01 X 5 days a week = $145 weekly rate

Got it! Thank you! I knew there was a reason I picked a career where I only need to count to ten ::

[Blackcat31]

So, if it's "you don't pay if I'm closed", how do you charge PT families?
I charge $140 per week now. I have 1 family who uses 3-5 days a week, but they're all over the place (mom works at a hospital and has no control over her schedule). We agreed they'd pay for 4, same cost every week (easier for us both to budget) of $115 (my rate now is $120 for 4 days, but I didn't raise theirs this year).

Because I usually take one or two days here and there, they always just pay the 4. Since the new year is coming up, would you change that contract?

I do what Taylor Tots posted but in 3 different formulas....

3 days a week, 4 days a week or 5 days week.

I don't offer any other options.

For PT families that have a varying schedule, they need a full time space.

I adjust slightly for pick up times but that's it

SOOOO much easier this way.

[TaylorTots]

So, if it's "you don't pay if I'm closed", how do you charge PT families?

I charge $140 per week now. I have 1 family who uses 3-5 days a week, but they're all over the place (mom works at a hospital and has no control over her schedule). We agreed they'd pay for 4, same cost every week (easier for us both to budget) of $115 (my rate now is $120 for 4 days, but I didn't raise theirs this year).

Because I usually take one or two days here and there, they always just pay the 4. Since the new year is coming up, would you change that contract?

That's really your call whether to change their contract. At their current rate you are losing $260 annually of income from them compared to raising their rate. But you are losing $1300 annually by enrolling a part time family instead of a full time family. Whether that is enough to warrant a change in contract is up to you.

[Heidi]

That's really your call whether to change their contract. At their current rate you are losing $260 annually of income from them compared to raising their rate. But you are losing $1300 annually by enrolling a part time family instead of a full time family. Whether that is enough to warrant a change in contract is up to you.

Yeah...I have to think about this anyway. She's having a baby in late February, taking 2 months off, the almost 2 year old is a nap time drama llama, and she wants to know how much the rate goes down when he turns 2 (it doesn't).

[melilley]

OK, this is a little embarrassing, bit how would one do the math to make sure the parents are paying the same amount for the year but not paying for the days you are closed?? I like this idea but not sure how to figure out the calculations.
I want to charge $175 a week

:: I was asking myself the same question. I am not a numbers person at all!

[Hazel]

My rate is $35 a day. Minimum of a 3 day week and scheduled days are required.
All my scheduled closed holidays are paid. Any sick or vacation days the families take are paid. The ONLY days I do no get paid are unscheduled days I am closed (sick or personal) and 1 week vacation, if I choose to take it.
I close Christmas Eve and day. This year I was considering taking an unpaid personal day for December 26th since its a Friday and it would give me a nice long weekend. I haven't closed for a sick day in 13 years, I have closed for a personal day in 4 years and haven't taken a vacation 7 years. I really think I need and deserve it. BUT I KNOW I will have the few parents that will cry and complain that they still have to pay for 4 days that week even tho I am closed for 3 days (only 2 would be paid.). I have to write a notice up soon and just can't find the working I want to use. I'm SURE they will get bent out of shape thinking I'm greedy, asking to be paid for 2 of the 3 days I'm closed.
I even considered, since I am open New Years eve, closed New Years day and then open on January 2nd, I might take THAT Friday as a personal day as well. Maybe that's pushing it... But since I haven't taken any personal time or vacations in YEARS I thought I deserved it..

[jenboo]

My rate is $35 a day. Minimum of a 3 day week and scheduled days are required.
All my scheduled closed holidays are paid. Any sick or vacation days the families take are paid. The ONLY days I do no get paid are unscheduled days I am closed (sick or personal) and 1 week vacation, if I choose to take it.
I close Christmas Eve and day. This year I was considering taking an unpaid personal day for December 26th since its a Friday and it would give me a nice long weekend. I haven't closed for a sick day in 13 years, I have closed for a personal day in 4 years and haven't taken a vacation 7 years. I really think I need and deserve it. BUT I KNOW I will have the few parents that will cry and complain that they still have to pay for 4 days that week even tho I am closed for 3 days (only 2 would be paid.). I have to write a notice up soon and just can't find the working I want to use. I'm SURE they will get bent out of shape thinking I'm greedy, asking to be paid for 2 of the 3 days I'm closed.
I even considered, since I am open New Years eve, closed New Years day and then open on January 2nd, I might take THAT Friday as a personal day as well. Maybe that's pushing it... But since I haven't taken any personal time or vacations in YEARS I thought I deserved it..

You need to take some time off!! I close for every holiday possible. I close for black friday. This year im closed Dec 24th-Jan 9th!!! Not a single complaint from parents. They get the calendar about a year in advance. If anything comes up, I will close but I have only had to do that twice. This year im closed for about 28 days!