How to handle fee increases at your childcare center

Incremental fee increases are a common practice in owning and operating a childcare center. Most of the time these are implemented on a yearly basis but could also be one-offs depending on the financial needs of the business. It is important that you keep your childcare center profitable so that you can provide high-quality childcare to the children and pay your educators a fair wage. 

You can use this budget template to help manage your childcare center’s finances on a day-to-day basis.

When you are determining your fee increase amount, be sure to include all key stakeholders in these conversations. You want to ensure you find the proper balance of not significantly increasing parent charges while also ensuring that you will be able to provide proper supplies for your children and staff. 

When a decision has been made to increase fees, follow these steps: 

1. Inform all team members and include the parent communication plan. 

Educators interact with parents on a daily basis and need to know when parents will be informed and how to answer any questions they may get asked. 

2. Let your parents know as early as possible. 

The more time they have to process this information and prepare/save, the more satisfied they will be in the long run. Are you potentially risking that they could leave and find alternate care? Yes, depending on your withdrawal policies. However, honesty and transparency go a long way in relationship building and most parents know that fee increases are part of childcare payments no matter what center they choose. 

3. When you inform parents, ensure you provide all of the information. 

This includes:

• exact amounts (this free printable template can help!)
• the date this will come into effect
• any benefits the parents will see from it (this could be things such as a new management app, increase in educator pay rate, lower ratios, increase in food quality/quantity, new events, equipment, programming, learning materials, etc.)
• any changes to the billing and payment process 
• answers to questions you know will come up e.g. subsidy 

4. Be prepared for the questions that will come up. 

It might be useful to prepare a FAQ document in advance and send it to parents along with the initial fee increase announcement. Common questions generally revolve around subsidy, if this will impact them because of *insert subjective situation here* or expressions of frustration and anger.

5. Show empathy to parents and educators and hear them out. 

If a parent needs to vent or express frustration, allow them to do so in a safe and positive space. Also, be sure to provide extra support to your staff members as they navigate an increase in parent questions and concerns over this time. 

Things to avoid when increasing childcare fees 

Once the fee increase has been communicated to parents and staff members, it goes without saying that you need to be sure to implement it on the date you committed to in the way you informed parents. Do NOT change the increase amount, the date it comes into effect, or the payment processing method. This is a sensitive time for parents and you owe it to them to be consistent and follow through on your word. 

Most importantly, you must avoid making special arrangements for certain parents. Parents talk and word will get out. You need to treat each family fairly and making special arrangements undermines that. The relationship you build with each family is so important. Although it may not feel like it at the time, being transparent and consistent with each family will prove trust and add value for your families in the long run. 

Once you have implemented a successful fee increase at your childcare center, you can use the tools and skills you built to recreate the same experience next time! Each time will get easier! Not only for you but also for your staff members and families. However, before you start moving ahead to next year, take some time to pat yourself on the back. This is a very hard part of childcare center management and you deserve some praise for navigating through it!!