Although it might seem like January 1st would be the ideal time to make a rate hike, unfortunately, it is widely considered a very bad time. Most families experience a holiday hangover from gift spending and expenses. So if that was your plan, try waiting a bit before you increase childcare tuition.
One of the best times of year is around the beginning of the traditional school year, Aug-Sept time frame. Many providers have new enrollments around this time and it’s long before the holiday season.
Whenever you decide you are going to increase your rates, it is best to plan for it. Providing your clients with a 30-day notice is considered a best practice. So for a September 1st date, notice should be given on or about August 1st.
Mail a (physical) letter to clients indicating that an increase childcare tuition is coming. Include the date the increase will be in effect, why you are increasing your rates and the new rate (see below).
Send out an email to supplement the letter to ensure your clients receive the information. The email can simply be a duplicate of the mailed letter.
Here are a few templates for a tuition rate increase:
In the letter to parents include why you are increasing your rates. Most people understand a standard cost of living raise. You could also indicate that the increase will help support improvements you plan to make at your childcare. Improvements could include new or replacement furnishings, supplies, hiring additional staff or giving a raise to your assistant. Do this in a general manner. Try not to over-explain or to be apologetic about the increase.
So I know you want the numbers right? You want to know how much you could or should increase your rates. Well, here it is.
Staying within the 2-5% range is considered palatable and less likely to send your clients heading for the hills (or another provider).
If you are saying “Wow, that is way less than I wanted.” Consider planning for another increase in 12-18 months. Believe me, it will be here before you know it.
One last consideration to make is where your new rates will position you with your competition. That is not to say that you don’t deserve it. So if the increase will put you at the top of your marketplace just be aware of that fact. It may mean that you will need to show future clients why you are worth your rate. We should all be able to communicate our value to clients. Here are some potential points of value to make clients aware of:
