Increasing Fees...how do I tell parents?

[DaycareLady]

Wow. What a learning journey these first few months since I have opened my doors have been! I am so thankful for all of you ladies and you amazing advice!

I opened in January at $30 a day...this is common for our area. Anyways, this is a small town and I know most of the other home daycares...the care really isn't that great and most of the do no programming. I'm really not trying to sound conceded but with my education and the program I offer, I have a huge wait list and people calling daily. All of this being said, there is another daycare provider in my town that has similar qualifications and programming and she charges $35 a day for 2 years and under and $32 for 2 and up. i would like to change my fees to this as well....not just because hers are higher, it does help but because I do value my program and the quality of care I provide and I want my prices to reflect that. i also make healthy, homemade foods with lots of fresh fruit, and this is really adding up.

I am working on a new and improved contract as well and these fees will be in there for all future clients....but how do I approach current clients? I plan on getting them to resign new contract but how much notice should I give for the fee increase? Thanks so much!

[Crayola kiddies]

I personally wouldn't change fees in the first year. As a parent I would be ticked if three months after signing on you raised your fees. I would only increase the fees for new clients signing on and for the current ones I would increase a dollar a day after the first year. If you increase your fees $5/day for your current clients after only three months you might find yourself referring to your wait list. JMO

[Bookworm]

I agree with Crayola. Any new clients you sign on, do so at your new rates, and then with your current clients, do the raise for Jan 2014. I have it in my contract/handbook that both have to be renewed every year by the clients, so I would put the raise in then.
I am in my second year of business, and did the same thing as you. Had clients signed on, then decided to raise my rates, however, I did so to new clients only, and then in November, I told my current families that I was raising my rates as of Jan 2013.

[Momof4]

Agreed! Unless you make a huge change like feeding the children when you didn't before or something equally drastic I'm afraid I'd suck it up for the first year and raise rates slowly, like $2 or $3 a year until I was in line with where I felt I deserved to be. That's what I've done for the past 5 years and I started out undercharging. I'm now charging a higher rate, have added days off to my contract and have made adjustments that are fair to my clients and to me. However, I have an annual renewal date of Sept. 1st and every year I get all my clients to sign a new contract for the year so that if I've made any small policy changes or a rate change, etc. they know when to expect it. I also give them a couple month's notice.

[BlueRose]

I agree. Current clients should stay the same until they have been with you for a year. New clients start at new fee.

[dodge__driver11]

I do it like this:

When I decide to change my fees, I charge them to any new families that sign with me, all previously signed families keep the old rate.

[DaycareLady]

Thanks ladies. I am writing in my new contract that I am revisiting it and may revise every 6 months. I do give my parents a lot of breaks, I don't ask for a deposit, I don't ask to be paid on any holidays (stat or my own), they don't pay for my personal days off, etc. I don't ask for a holding fee and hold spots for parents often. I am thinking of telling parents of this increase now but won't put it into effect for them until July ( since in my new contract I am reviewing jan and July). This gives them 4 1/2 months to find new care if they choose not to pay the extra couple of dollars a day? I also want to do this now because I have 2 new clients that work with my current clients and I know they will be discussing how much they pay, I rather everyone be on the same page and know that they are all paying the same/will be paying the same.

[apples and bananas]

Thanks ladies. I am writing in my new contract that I am revisiting it and may revise every 6 months. I do give my parents a lot of breaks, I don't ask for a deposit, I don't ask to be paid on any holidays (stat or my own), they don't pay for my personal days off, etc. I don't ask for a holding fee and hold spots for parents often. I am thinking of telling parents of this increase now but won't put it into effect for them until July ( since in my new contract I am reviewing jan and July). This gives them 4 1/2 months to find new care if they choose not to pay the extra couple of dollars a day? I also want to do this now because I have 2 new clients that work with my current clients and I know they will be discussing how much they pay, I rather everyone be on the same page and know that they are all paying the same/will be paying the same.

You could do something a little different and make some extra cash. You could put a new policy in charging for states. If there are 10 stats in a year and you charge 30 for each stat, that's an extra 300.00 a year per client. If you were to raise rates an extra $2.00 times 320 days (assuming clients take time off for vacay or sick) that would be an extra $640 per client per year. It's cheaper for the client to pay the stats.

If you write the letter right and it might not seem so harsh.

I charge a high rate for my community, but I don't charge for stats, sick, vacay. So, a new client is happy to pay a top dollar for me knowing that they will save money elsewhere. However, if you do the math I actually come out on top.

I'm with everyone else, I wouldn't do a rate change for an existing client, until they're with you a year at least. But if you need the extra income I may look at using stats or sick as an extra money maker. I can't imagion anyone would leave you for an extra 30 a month on average.

[DaycareLady]

Thanks so much! I really appreciate that? I do have a question, I thought I read somewhere that if I charge for stat days I fall under a different category at tax time, or that I have to be a registered business? Am I wrong?

[Judy Trickett]

When I increase fees I do it two ways:

1. I post the increased fee on my fees schedule of my website and any new clients come into care on the new fee schedule.
2. Existing clients get a fee increase at contract renewal time. All my contracts expired Dec 31st each year and at that time I make any necessary changes and have parents sign the new contract. If a parent takes issue with any changes then I replace them with another family.