Your business is forever changing and to remain successful you must be able to adjust and adapt with the circumstances you face. The world is littered with the empty frames of businesses that failed to adapt. Here’s an example: how about Kodak who pioneered the digital camera but failed to recognize the impact – now they are a fraction of the business they once were. Financially, you must be able to charge special fees when warranted and you must have a process for raising your rates to keep pace with costs and inflation.
With special fees you may expect your parents and guardians to underwrite the costs of a trip, or an educational program. There are many other examples where enrichment that benefits the children should not be absorbed by your business and the cost should be shared among your clients. In a previous blog we discussed the importance of setting fees for picking up a child late, delivering a child before standard business hours, fees for children who are not toilet trained etc.
Many of my childcare business clients are loath to increase their rates. They are concerned that their working parents cannot afford the rate increase so they struggle within the same pricing structure that they have had for the previous three to five years. It is critical that you control your costs and your can demonstrate thrift in your conversations with your parents and guardians and through newsletters. However, your costs go up every year and some times more often than one year. Your food costs increase, your labor costs increase, your utilities and energy costs increase, supplies increase, insurance costs increase and taxes increase. You simply need to keep pace with these increases to maintain your profit margin. No one likes to be notified of an increase and your parents won’t like it either. You may even have some shop for a lower rate and that is OK.
Keep your rate increases to just the level necessary to maintain your profit margin and let your clients know that rate increases will be notified in September to be effective January 1st. Explain clearly why the rate increase is happening and not just “to keep pace with costs”. Tell your clients exactly what kinds of increases you are facing and most will understand.
There is also another consideration that we will discuss in a separate blog and that is your own personal worth. How do you get a raise? If you are developing professionally, if you are delivering a better product each year as you gain experience. If you are working towards an accreditation or a degree your value must increase as well. Everyone expects cost of living increases. Shouldn’t you as well?