How to set your nursery prices

One question that I’ve been asked recently is how much do you charge and how do you set your prices.

This was actually asked by someone already enrolled on the full course, so I simply just directed them to the part of the course that covers this and it really helped them.

But, I assume that others have this question too and if you’re watching this video I assume you do too.

Though, a quick note if you do have any questions regarding opening nursery do make sure you join our Facebook group with over 800 members like yourself all looking to open a nursery.  It is a support group for people like yourself to ask questions and get advice from others including myself.

Although, there are no silly questions you can ask anonymously in the group if you are worried about how your question will be perceived. You can join this group also by clicking the link here.  When you do join feel free to introduce yourself and don’t hesitate to ask any questions.

I would also love to hear from you myself so if anything I’ve done or said whether on these videos or on any of the courses or just by answering one of your emails or questions in the description whether the help or advice has been big or small I’d love to hear how I’ve helped you.  You could easily do this by dropping a comment on any of my videos or by sending me an email at nurserycourseuk@gmail.com

So, let’s get straight into the topic.

How do you set your prices?

The first thing you need to do when planning on how much you should charge is to work out how much it costs to run your nursery.

There is no point planning how much to charge if you don’t know whether how much you are charging will cover your expenses.  You need to find out what your weekly running costs are.

So, how do you do this?

Those already enrolled on the full course and who have undertaken this unit will know that I’ve create a document that works this all out for you automatically but for those who haven’t enrolled on it what are you waiting for enrol now! I’m joking, for those who haven’t enrolled on it you can work this out yourself by listing all your expenditure.  It may take a bit longer than those who have enrolled on the course but you should or may have worked at your costs already via your business plan so this should make it a bit easier.

Some of the expenses you can expect are:

• staffing costs – including wages tax national insurance training costs etc
• utilities like gas electricity water internet and rent
• marketing costs and
• other things like business rates

I have done a video on some of the expected cost of running a nursery so do check this out to find out other things to include though you have to remember two things which a lot of people do not budget for:

Firstly, you need to account for ‘what if’.

Whether you’re doing your personal budgets or your business budgets you always have to account for what if for example what if there’s a break-in and what if toys get broken what if there’s a leak what if you need emergency staff what if what if what if.

There are lots of eventualities that you need to prepare for and budget for this is one of the reasons many businesses fail they don’t actively budget for unknown circumstances.  So, when it does happen they don’t have the funds available leading them to closure.  So, make sure you budget and incorporate this when setting your prices – you don’t want to get caught out.

Secondly, you need to account for your wages.

Remember you are not doing this as a charity I’m going to assume you have your own bills and family to look after so you have to make sure you are paying yourself a wage.

My support is not only to get you running your own nursery, but I also want to support you becoming financially independent.

So, you’re not constantly worried about when the next paycheck is coming in.

The start of this is ensuring you pay yourself a wage or an income that justifies the hard work and time you are putting in because it will be hard work.

You’re creating jobs and educating young minds in your community, which is a huge responsibility but it should also be rewarding.

A lot of people I work with say they don’t mind earning little or even nothing as they enjoy working with children but I have to stress that enjoyment is not going to pay your bills that enjoyment is not going to pay yourself or your taxes or pay for improving your nursery.

So, you have to include your income into it as well.  You can’t be scared of making a profit for yourself.

I know a lot of people are but again I stress you have to value your time and expertise.

Firstly, you don’t want parents who are only bothered by how much you charge.  If that’s the only concern in them finding childcare then that’s a concern for you.  If you’re providing quality care, you want parents that really value that quality and want that for their child.

If they don’t value that then they may not be the right customer for you.

Granted you want to care for all families especially those that are vulnerable and potentially on a low income but remember you are running a business too.

There are lots of support out there from children’s centres and non-profits that can provide for these families, including a lot of funding support for these families and when you are making a profit it puts you in a better position to support these families or support whoever you want in your community.

I know most of us do this for the passion and the children and the joy we get from seeing them develop but you need to make a profit! I want to see you flourish as well as your nursery and your children.

You can’t effectively serve these children and your community and improve your provision if you are not making a profit which is why it’s so important to charge correctly and work out your costs.

That’s why the document on the course is so useful, it really helps work out the cost for you.

Though, I do want to quickly add when working at your cost you have to remember your ratios –

• building ratio
• staffing ratio
• qualification ratio

Remembering for example that because babies need one member staff for every three children, they are likely to be more costly than for example a three year old whereby you can have one member staff for every eight children.

Baby resources are usually more expensive as well and if you provide nappies and wipes this will also increase the cost.  So remember this when you are budgeting and you may want to charge differently for your younger children than your older children.

Also, think about the sessions you will be doing not all parents want to send their children to nursery all day for five days a week so think about the different sessions you will offer and how much you will charge for them. If you open for example 8 am to 6 pm 5 days a week you could split your sessions from 8 am to 1 pm and 1 pm to 6 pm and allow parents to choose how many days and what days they do.

But, remember when allowing this you need to think about the increased workload on staff this brings.  One full-time place which would usually be one child can be split into many children meaning increase key children for each member of staff.

You also need to think about how to fill the extra days, for example if a parent does three days per week you’ll need another parent to do the two days to complete that weekly space for the child.

So, working this out all your potential costs should give you a starting point to figure out the minimum you can charge.

This step is so important and you shouldn’t do anything until you have worked out all your expenses.

I work with so many childcare owners who didn’t do this before setting their prices.  They simply charge what others are charging which is great but you really need to charge what works for you.  You need to know how much you can charge and how much you’ll be making in order to make your nursery successful.

You don’t know whether your competitors are running their business right or if they’re charging correctly so it could lead to a situation where the blind are leading the blind.

Their business could fail and yours could follow, all because they got their pricing strategy wrong and you copied.

That’s why I stress this to all the people I teach and I stress to you now you need to know how much you can charge and how much you’ll be making don’t leave it down to chance.

The document that’s available on the full course is so useful for this as it helps you work out how much to charge and most importantly does this whilst incorporating your costs. To get access to the full course just click the link here it’s currently just £224.99 using discount code youtube1.

Once you have the minimum you can charge to cover your cost you can then start thinking about how much to charge.

When doing this you have to remember that your cost will go up each year as you grow as things like business rates increase and wages go up.  So, you need to allow room for your prices to grow and still be competitive.

If after working out all your costs and the minimum you can charge is too high you need to think about how you can reduce your cost or where you can add value to justify a higher charge and focus on this when doing your marketing.

This is something we also cover in the full course where you learn how to keep your branding and marketing succinct so that you can send the right message and the same message across all contact points of a parent.

Again, this probably won’t be the last time I say this but I want to say again before I introduce the next point:

DO NOT UNDERCHARGE

Value your time and effort.  Running a nursery is such an important job and if people really understood the cost involved with running a nursery I believe there’ll be a lot less complaints about nursery fees.

So, do not feel you have to charge less because of this.

But, one thing that I do and you can do if you want is have introductory prices this is where you charge less for a short and specific period either for example the first few weeks or months of you opening or for the first few days weeks of a child starting.  This is something I do and I done when I first opened I charged cheaper than my competitors for the first few months in order to get a quick increase in enrolment to reach that magic number of those enrolled for me to start making a profit.

This is something you could do too, though it’s important to set a deadline for when this will end and ensure parents know that this is not the actual price they’ll be paying and that they are getting a discount for being the first ones to sign up.

As I said introductory prices are good to get a quick boost in your enrolment early on and to try and fill up places as soon as possible.

Now I’ve said don’t just copy your competitors, but it is important to know what they are charging.

Most people I work with charge middle of the range.

However some do charge high prices right out of the gate and I always applaud them for this.

It’s great to start off like this one thing I always advise them though is to do research on what their competitors are doing to charge their higher prices and try to offer similar and if you can offer better than the competitors whether that be regular trips extra lessons like music classes or language uniform etc.

If you want to go for that premium price you have to look at what others are doing to charge that premium and offer a better service.

Though, never be afraid to charge what you feel your childcare is worth.

Most parents aren’t going to make their decision on a nursery place purely based on price,

Parents generally will make their decisions based on emotions and how they feel about you especially when it comes to who is going to look after their children.  If you can create a great impression through all stages of your interaction with them, whether that be on your website through your emails or on your show-around they will choose you even if you are more expensive than your competitors.

This is why I stress on the course to make sure that all stages of your marketing leave a good impression on your parents. Which is why the marketing section on the course is so long.  It’s almost as long as all the other units combined.

I’m a parent myself and if I was choosing someone to leave my child with I would have to feel connected somehow to that person.  You have to feel comfortable with that person you kind of have to feel that their family or an extension of your family.

So creating the best experience is what will create that bond of your parents and get them to join you over other nurseries not just undercharging.

A lot of you have that advantage over some nurseries in your area that may be chain nurseries as you can create a better bond with them as it’ll be easier to create a better bond and build more personal relationship.