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

[Snowmom]

Does this sound derogatory to anyone else?

Most certainly!

Unregistered:
A good licensed, educated teacher would never portray the self righteous, judgmental attitude you are displaying here.
Good teachers have compassion for others, see worth in all people, teach children and young adults how to treat others and the world they inherit with kindness. I take pity on the ones who will be subject to your wrath.

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.

I have to say, that comment really rubbed me the wrong way. That statement couldn't be further from the truth. Maybe where you live, that's what you're seeing. In my area, we take pride in our field. Many of us have had years of early childhood education and training. I don't know too many fields that require the ongoing training we do here.

In regards to short term: The providers I know have 10 years or more under their belt. Myself included.

[Unregistered]

I charge more for infants AND require full time Carr
I do this because it’s needed in my community AND spots are rare.
Same way other places do it. Higher demand, less ‘product’ and less spots.

[Mom2Two]

3) Wait lists aren't all they're cracked up to be. By the time their name came up, other dc had been found. This is from when I was lucky enough to accumulate several names so take that thought for what it's worth.

Yep! Exactly. I have never bothered having a wait list. The parents find other care. They aren’t all just waiting around with no daycare.

[Myst_Seattle]

They aren’t all just waiting around with no daycare.

Here in Seattle a lot of parents do end up waiting for a long time. Getting a full-time nanny is an alternative solution, but good nannies are very hard to find.

Some parents might also find a daycare that's far from where they live, instead of being able to send their kid to the closest location. Some are only able to find a part-time option while they want a full-time option. None of this would be an issue if waiting lists didn't exist.

[LostMyMarbles]

I fully agree that it won't let you increase your capacity, but in theory it should increase your profit margin. Let's say you are currently charging $100 per week and have a 3 year waitlist. If you increase it to $110 (for new clients) the waitlist might drop to 2 years. If you further increase it to $120 it might go down to 1 year. Therefore your revenue would increase by 20% without having to take up any extra work.

It would price out some parents out of the daycare market, but at the same time it would help parents who have recently moved into the neighborhood and haven't had a chance to sign up for the waitlist three years ago. That's an issue faced by many of my parent colleagues who are new to Seattle.

Why do you assume that the waitlist would drop due to a rate increase? The need for childcare will still be there regardless of a rate increase.

[Blackcat31]

Here in Seattle a lot of parents do end up waiting for a long time. Getting a full-time nanny is an alternative solution, but good nannies are very hard to find.

Some parents might also find a daycare that's far from where they live, instead of being able to send their kid to the closest location. Some are only able to find a part-time option while they want a full-time option. None of this would be an issue if waiting lists didn't exist.

Can you elaborate on that thought process?

I don't understand how you are coming up with these conclusions.... although it could be a simple misunderstanding in regards to parent perspective and provider perspective.

But if you could explain how eliminating wait lists would fix the issues you mentioned I would appreciate it.

[Snowmom]

None of this would be an issue if waiting lists didn't exist.

That’s ludicrous. Waitlists will cease to exist when there are enough options for families to find adequate care. Price gouging does nothing to eradicate that.

I would bet good money that the lack of daycare in your area is due to licensing restrictions and mandated policies they inflict on their local providers. Many states make it near impossible to make a good profit with their ratio restrictions. On top of that, state representatives who have never stepped foot in a daycare impose statute after statute of mandated procedures that make this job dreadfully complicated. As a result, that drives providers out of business by the dozens.

If you truly want to make a change in the daycare supply, write to your representatives. Let them know that the public (you) wants changes. That they should make this professional a priority and appealing to future providers by giving them resources they need and freedom in their business, instead of pushing them out in the name of “universal pre-k”.

[Myst_Seattle]

Why do you assume that the waitlist would drop due to a rate increase? The need for childcare will still be there regardless of a rate increase.

The need would still be there, but you won't have to wait for it. Just like you can always buy a plane ticket for Christmas, even if it costs a lot more than on other days. Likewise it is easy to buy a house in Seattle, although you need a lot of money to afford one.

Can you elaborate on that thought process?

Having a long waiting list means parents who both want to work full-time are unable to do so, even if they have the funds to pay for childcare. I personally know people who are struggling with this issue. Increasing the price would increase the profitability of daycares and make access to their services easier to plan for.

Waitlists will cease to exist when there are enough options for families to find adequate care. Price gouging does nothing to eradicate that.

It is easy to demonstrate why this is true with an exaggerated example. Let's say you increase your daycare price to $100,000 per week. At those rates only someone like Bill Gates would be able to afford it and the waitlist would be gone. Obviously you can't charge $100k per week, but there is always a price point at which the waiting list would become minimal without hurting your profitability. In economic theory this is referred to as the "supply and demand" curve.

If you truly want to make a change in the daycare supply, write to your representatives.

I completely agree that overregulation is the root cause of the daycare deficit! However that doesn't explain the business practices of daycares in the existing legal environment

[Blackcat31]

Your theory however does not work in all economic areas...:

As I have already said I charge a lot more than other area daycares do. (Almost double) Many of them have openings they can’t fill.

I have a lengthy waitlist...a waitlist that has grown as my rates have grown. So how does your theory work when applied to me?

The business of child care is not the same as The business of selling a product ....

It’s also important to remember that most childcare providers are looking to make an income but they are not in this business so that they can rob hard-working parents

[Myst_Seattle]

Your theory however does not work in all economic areas...:

As I have already said I charge a lot more than other area daycares do. (Almost double) Many of them have openings they can’t fill.

I have a lengthy waitlist...a waitlist that has grown as my rates have grown. So how does your theory work when applied to me?

This just means that you have a superior product and people are willing to pay your company more than to competition. You could most likely increase the prices even more while still working at full capacity. Similarly Paul McCartney's concerts regularly sell out while small time bands struggle with attendance rates. Paul's product is superior and he can make more money from it than others in the business.

It’s also important to remember that most childcare providers are looking to make an income but they are not in this business so that they can rob hard-working parents

If the explanation is that you are consciously lowering your profit margins to help out struggling parents, then it makes perfect sense! Although I'm not sure this explains why corporations like Bright Horizons also has waitlists.

[Rockgirl]

In the $100,000/week example, sure, it eliminates the waiting list. But who did it help, besides the Bill Gates person and the daycare provider?

As others have pointed out, our maximum allowed ratios do not change, no matter how high we raise our rates. This whole concept of raising rates to eliminate waiting lists is just ludicrous. The parents sitting at home waiting for daycare would still be doing that even if I doubled or tripled my rates.

[Myst_Seattle]

In the $100,000/week example, sure, it eliminates the waiting list. But who did it help, besides the Bill Gates person and the daycare provider?

By increasing the prices you're helping:

1. Yourself as the business owner, as your profit margins go up. This might additionally incentivize you to expand the daycare in the future.
2. Daycare employees (if there are any) might see an increase in salary
3. Parents will have more flexibility as they know wait times for daycare are short

As others have pointed out, our maximum allowed ratios do not change, no matter how high we raise our rates.

The ratios don't change, but your income per customer will increase.

This whole concept of raising rates to eliminate waiting lists is just ludicrous. The parents sitting at home waiting for daycare would still be doing that even if I doubled or tripled my rates.

If you double your rates a certain percentage of parents will no longer be able to afford your daycare and would drop off the waitlist. If you triple the rates even more parents will drop off. Nobody has infinite money Obviously this wouldn't address the problem of daycare shortage as the number of available spots won't increase, but it would address the issue of waiting lists causing issues for parents.

[Alwaysgreener]

By increasing the prices you're helping:

1. Yourself as the business owner, as your profit margins go up. This might additionally incentivize you to expand the daycare in the future.
2. Daycare employees (if there are any) might see an increase in salary
3. Parents will have more flexibility as they know wait times for daycare are short



The ratios don't change, but your income per customer will increase.



If you double your rates a certain percentage of parents will no longer be able to afford your daycare and would drop off the waitlist. If you triple the rates even more parents will drop off. Nobody has infinite money Obviously this wouldn't address the problem of daycare shortage as the number of available spots won't increase, but it would address the issue of waiting lists causing issues for parents.

Can you tell us your story? What happened to you, that makes you upset with the wait list? Are you currently waiting for for an opening?

[Myst_Seattle]

Can you tell us your story? What happened to you, that makes you upset with the wait list? Are you currently waiting for for an opening?

I'm not waiting for an opening right now, but I would have to be if I decide to have a child in Seattle. I'm also surrounded by people who've recently moved to the city and are struggling to find daycare.

This isn't an issue when it comes to other expenses: for example its fairly easy to find a property to buy/sell, although it's very expensive compared to the rest of WA state. And there aren't queues in IKEA for baby cribs or other child expenses

[Josiegirl]

I don't see the answer to the Seattle kind of dilemma as pricing the normal income family out of the dc possibility completely or leaving them with the lowest possible standard dc that can be afforded. I see the dilemma as being solved by increasing the # of available quality child care options. When states stop making the hoops so difficult to jump through and start giving providers more support, more respect, in regards to being in the profession then maybe the dilemma will improve. When they can gather funding to help pay the costs of dc(which is already exorbitant in some places) more than they do currently, then things will improve.

States have taken away financial support while increasing their regulations and requirements in recent years, making it more and more difficult for a provider to be able to stay in business or *want* to stay in business. Nothing burns a provider out more than constantly giving giving giving of their time and money to stay in regulation.