Why Do Daycares Use Waitlists Instead of Raising Prices to Meet The Demand?

[Myst_Seattle]

I've been looking into the pricing of daycares here in Seattle and one thing was surprising to me - for some reason all daycares have huge waitlists, with some parents reporting they've spent up to three years trying to get a spot. There are also "waitlist fees" if you want to get on the waitlist in the first place.

Now, the fact that there aren't enough daycares in major metropolitan areas is well known and this doesn't surprise me. But why would daycares choose to use long waitlists instead of just raising the prices until supply meets the demand? I mean, other service providers generally don't force you to wait in line for years and just vary the pricing based on the number of customers.

So I was hoping that Daycare members could resolve my question and explain the reasoning behind such policies. Is it to ensure that no spots are ever vacant? Is it to avoid a backlash from angry parents? Is it to help out struggling parents who would be priced out otherwise?

[Cat Herder]

My waitlist is about 3 years, now. I charge what I need to earn to meet my financial obligations, keep an emergency fund and life insurance, take a couple of vacations per year and fund my IRA. It has nothing to do with whom is on the list. I also have no desire to earn more, more money = more problems in my experience. :: I love my life as it is.

My tuition rate is fixed, increases yearly (just like my clients' wages) and reflects inflation in my region. I am not sure what you mean by "vary the pricing based on the number of customers". It has nothing to do with the number of customers, that is a fixed number, too, set by my regulations. I did not choose it and feel it is low for my ability.

[lovemykidstoo]

With my daycare I was finding that most of my kids were starting to leave at 3 1/2 yrs old. How can you have a 3 year waitlist, wouldn't they be aged out by then? Or are they parents that are not yet pregnant?

[Cat Herder]

With my daycare I was finding that most of my kids were starting to leave at 3 1/2 yrs old. How can you have a 3 year waitlist, wouldn't they be aged out by then? Or are they parents that are not yet pregnant?

I have many parents TTC on the list, one of my current clients is still trying and keeping the slot. I won't have an opening for at least 3 years.

I also keep them until age 6. Redshirting is common here.

[lovemykidstoo]

I have many parents TTC on the list, one of my current clients is still trying and keeping the slot. I won't have an opening for at least 3 years.

I also keep them until age 6. Redshirting is common here.

Thanks! I was curious. Here it seems that as soon as those parents can get their kids to kindergarten (free), they do it no matter if the child is ready or not.

[Cat Herder]

Thanks! I was curious. Here it seems that as soon as those parents can get their kids to kindergarten (free), they do it no matter if the child is ready or not.

That was my experience as well for many years, then the mill and several large farms closed. New artsy, tourist, golf, resort and "event" markets opened. And finally, there was an influx of new subdivisions, condos and adult living. The community changed pretty quickly.

I am also the only star rated family provider in town right now.

[Annalee]

I have many parents TTC on the list, one of my current clients is still trying and keeping the slot. I won't have an opening for at least 3 years.

I also keep them until age 6. Redshirting is common here.

Love the “redshirting” terminology. College football is upon us!happyface

[jenboo]

I've been looking into the pricing of daycares here in Seattle and one thing was surprising to me - for some reason all daycares have huge waitlists, with some parents reporting they've spent up to three years trying to get a spot. There are also "waitlist fees" if you want to get on the waitlist in the first place.

Now, the fact that there aren't enough daycares in major metropolitan areas is well known and this doesn't surprise me. But why would daycares choose to use long waitlists instead of just raising the prices until supply meets the demand? I mean, other service providers generally don't force you to wait in line for years and just vary the pricing based on the number of customers.

So I was hoping that Daycare members could resolve my question and explain the reasoning behind such policies. Is it to ensure that no spots are ever vacant? Is it to avoid a backlash from angry parents? Is it to help out struggling parents who would be priced out otherwise?

Im confused. Are you asking why daycares don't raise prices until the majority of people can't afford it and then drop off the waitlist?

It why they don't increase prices to hire more staff so they can enroll more kids?

[Unregistered]

Apologies for not being clear enough. If there's a daycare like Cat Herder's where the waitlist is at 3 years, it should in theory be possible to keep increasing the price every year until the waitlist is at 6 months or less as more and more parents are being priced out of the daycare. But in practice daycares don't seem to do it or at least the ones in Seattle don't.

[Snowmom]

Apologies for not being clear enough. If there's a daycare like Cat Herder's where the waitlist is at 3 years, it should in theory be possible to keep increasing the price every year until the waitlist is at 6 months or less as more and more parents are being priced out of the daycare. But in practice daycares don't seem to do it or at least the ones in Seattle don't.

So, what your suggesting is to price daycare services out of the realm of typical salaries and only cater to the elite who can afford extravagant prices? In order to trim waitlists?

Why wouldn't those customers just choose a nanny service then? It seems to be the likely outcome of price gauging.

[Blackcat31]

Apologies for not being clear enough. If there's a daycare like Cat Herder's where the waitlist is at 3 years, it should in theory be possible to keep increasing the price every year until the waitlist is at 6 months or less as more and more parents are being priced out of the daycare. But in practice daycares don't seem to do it or at least the ones in Seattle don't.

That makes zero sense.

Daycare is a huge cost already for working parents so raising rates isn't going to be a benefit for anyone.

Those with bigger wallets have more options but regardless my issue is that I am limited to x number of spaces and despite the fact that my wait list is also pretty lengthy, raising my rates isn't going to change the maximum capacity the state allows me to have.

[Ariana]

Apologies for not being clear enough. If there's a daycare like Cat Herder's where the waitlist is at 3 years, it should in theory be possible to keep increasing the price every year until the waitlist is at 6 months or less as more and more parents are being priced out of the daycare. But in practice daycares don't seem to do it or at least the ones in Seattle don't.

No idea why! No idea why some providers insist on offering services for WELL below market value either, thus keeping rates low...or why providers don’t unionize, band together and increase pay and working conditions. My guess and I do not mean for this to sound offensive is that most providers are only in it for the short term and have low education/know very little about business.

[Ariana]

That makes zero sense.

Daycare is a huge cost already for working parents so raising rates isn't going to be a benefit for anyone.

Those with bigger wallets have more options but regardless my issue is that I am limited to x number of spaces and despite the fact that my wait list is also pretty lengthy, raising my rates isn't going to change the maximum capacity the state allows me to have.

I think they mean that you will have higher paying customers on your waitlist since most would drop off if they couldn’t afford you. So rather than having 200 people waiting for a $50 a day space, you could have 10 waiting for a $70 a day space. It makes sense to me!

[Blackcat31]

I think they mean that you will have higher paying customers on your waitlist since most would drop off if they couldn’t afford you. So rather than having 200 people waiting for a $50 a day space, you could have 10 waiting for a $70 a day space. It makes sense to me!

No, it just means only those that have more money can find child care.

I charge a higher rate than most in my area and I also have the longest wait list so where is the correlation?

[Ariana]

No, it just means only those that have more money can find child care.

I charge a higher rate than most in my area and I also have the longest wait list so where is the correlation?

Yes and only those who can afford a brand new IPhone buy one. It is the law of supply and demand. So if you are in high demand, raise your prices more. That is how supply and demand works. It’s why gas prices go up and down depending on circumstances.

I charge pretty much the same as I did when I opened 10 years ago because there are so many providers charging bottom barrel prices for such a highly sought after service. They have the idea that cheaper will attract more clients.