Rate change; how to inform?

My home daycare services teachers (schedule works great with ours as my husband is a teacher too). So, with having just opened in August and with a limited client market I chose a rate on the low end of our city's range...it helped me build a healthy client base and establish trusted referrals/word of mouth advertising. Now, I wish to raise my rates slightly (to mid range). So, I have 2 new families starting with me in September who have signed on with the new rate.
Here's my silly questions.....
1) Is it too soon to increase for my current families (2 of them just started in January)?
2) How do I reassure them that I will NOT keep increasing my rates on them every year ongoing? Is it crazy to put a rate lock-in clause for them on their contract?
2) As for my existing families, if I do increase their rates do I give the new 2012/2013 contract by: E-mailing, by mail, by hand? I hope to send them all out June 1, which is lots of notice for them.
If only these families had any idea how thought/care/concern we put into these things!

Most only do increases for new families coming in and leave the existing families at the old rate. If you are going to increase the existing families then I wouldn't do it in the first year.

My contracts say right in them that fees are subject to change and reviewed annually ... I give 60 days notice of the change in writing handed at pick up along with the new cotract to be signed and returned within 30 days - failure to return the signed contact serves as intent to withdrawal when the fee change takes effect and I would aim to fill the vacating space .... I have raised my fees alternating years since I have opened cause like you I started at a lower rate than I felt I was worth to get established and have moved from midrange to high end over last 5 years.

Every increase parents have resigned on the spot without question ... I think we stress way more than needed - but it is our nature ;)

I have a clause in my contract that says rate increase happen annually. But I also think you shouldn't increase the rate for your existing families in the first year.

:thumbup::thumbup:It is in my contract that the 1st of January annually there will be a rate increase regardless of the start date. If you are straight and upfront with the people from the get go then this shouldn't be an issue. I dont think that you should not put your rate up just because it is within the first year of care. Everyone else gets some form of pay rise each year even if its just to reflect cost of living which would be 5%. Why shouldn't you?? I would always put it in writing but hand it to the parents in person.

I have been in the same situation and I had this parent on a much lower rate for 2 years until they left so I understand how tricky it is as you don't want them to leave you and then be out of pocket. Good Luck :thumbup:

Since you deal with teachers kids only then Sept is the ideal time to raise rates if you are going to do regardless of when during the year a family signed on and gives them the summer to find alternate arrangements.

I have a higher rates for teachers anyways after getting burned twice it is no longer an option. Basically you pay more for Sept to June and then over the summer pay very little to hold the space but can use some time over the summer. If you are not charging them for the summer then you are taking a hit in the pocketbook for sure. I know teachers don't like to pay for the summer while off but they have to remember they get more per month for 10 months too in most cases.

Depending on how much you are raising your rates to and how they compare with what is in your area then I don't think it is out of line to say that after a year of operating you have determined that to continue offering the program you want to that the following fees will be in effect starting Sept 2012. Give the contracts out June 1 with them due back by June 30 WITH a deposit for Sept. Otherwise you also have the summer to look for more clients.

It depends on how much of an increase. In my opinion, for existing clients, you will have to raise it gradually...maybe a dollar per year. I have it in my contract that I can raise rates once per year, but only by a dollar each year. Otherwise it might seem unfair to parents. I think Playfelt's idea of raising it as of September is great. Good luck!

My contracts renew once a year and everything in the contract is guaranteed for the year. I would hold firm as you are now with your current clients and raise the rates at the annual renewal date if you have one. If you don't then Playfelt is right about choosing Sept. as a good time for them.

You can reassure families that you will not be raising your rates by guaranteeing the contract from a start date to a finish date as I do. And to explain why you are raising your rates, it's simple - cost of living increase.

Playfelt, if you'd be so kind, I would love a private message telling me your fee increases for teachers and what you charge for summer as compared to your normal rates. I took a pretty tough hit all school year this year by trying to work with a teacher, and I would like to avoid making the same mistake in my new location should the situation present itself again.

Thanks.

I don't mind posting the info here as it would be interesting to see if others have a way of accommodating the uniqueness of teachers ( I am a teacher by training so I totally get it but now....) I used to have them pay the same Sept - June as others but then in the summer they paid a small fee per week and could still bring their child for one of the days and most did and got the house cleaned, groceries done or even lesson planning for the next year. But when I had two teachers in care who totally knew this was the process and agree to it then come June refused to pay the fee. One left care and the other finally backed down and paid to keep her space for Sept. as she saw me immediately able to fill the other teachers' space so she got scared.

Now the idea is I get that summer weekly holding fee up front spread out throughout the year and I will hold your space all summer with a deposit for Sept. and child can come one day a week at no charge since it was already paid - this works well for teachers paid only for 10 months instead of spread over 12. This is what it says in my contract: (note my regular fee is $200 a week so they pay an extra $1000 approximately over the school year which for the 10 weeks of the summer is my regular $100 a week to hold space with one day of care. Now they pay me Sept to June the yearly total. Have only had one take me up on it cause she liked not having bills in the summer she would have to budget for. It works out the same more or less but I am not the one losing money in the summer if they won't pay)


$225.00 all ages (5 days per week, maximum 10 hrs per day)
Applies to school year including school breaks and PD days. During the summer, child may come for one day of care per week (day of my choice). Additional days will be regular $40 fee.
Space will be held over the summer with a non-refundable retainer fee, paid in June, which is equal to two weeks of care ($450). Fee will be applied to the first two weeks of care for the following September.

Its definitely great to hear how others handle teachers rates etc. I charge my teachers regular rate and then take a 50% retainer for the summer paid upfront. They have to pay me the first day of the summer break and it is 50% of the total amount for the summer. This secures their spot and I tell them they can bring their child 2 days per week as they have paid for it.

I am still somewhat conflicted about taking a teachers child. I have 1 right now who has been paying 2 days a week for nearly 18 months as she has been on extended Mat leave but she goes back to work in September and I will have her 2nd child in my care also and both will be full time. I just feel annoyed with myself for taking them on as once the summer comes I lose income but whether they are paid for 10 mths or 12 mths of the year they still get paid for the whole year and really what financial insentive is their for me to give them a discount. I should stop moaning as it was my choice to take them on and now this is my lesson I'm learning right now, but I'm even considering as theres 2 now, saying one child has to pay full price and one has to pay the 50% retainer over the summer otherwise I will lose even more money.

Phew! All that worry on my part for nothing. I decided to increase for everyone, even my 2 clients that just started in January. I have signed back contracts from everyone; no one resisted in the least. In fact, one parent said she would have paid more, because I'm so worth it to her for what I do (wow!). Phew!

Love posts like that ... we often do worry too much for sure ~ and honestly a client who resists a small increase in fees when we all know that EVERYTHING in life goes up in cost from time to time well I would have to seriously consider wanting to work with them anyway ;)

Oh Dream, I'm so happy for you!!!