I need to raise my rates on one of my families...quite a bit...eeek!

Okay so the first family I took on ( two years ago), I only charged $550 x 2 kids. I wasn't getting anyone so I said yes to the price. I was only charging $600 per month then. Now business is good and I have been increasing my prices per any turn over. So I'm going to the norm rate of $35 per day but averaging it to $700 per month full time and I'll probably stay there. I need to increase them! But I don't want to jump them so much...I'm thinking of just increasing them to $650x 2 per month....advice please
Thank you

I remained loyal to my original clients because they were the ones who got me on my feet and into the business. I raised rates as I took on new clients but kept the rates the same for the original clients. However, I have a renewal date annually in my contracts, do you have that? On the renewal dates I can add new policies as I learn and raise the rates when necessary.

I'm also guilty of starting out by charging too low a rate, but as I said it got me started in the business. I started with all babies and the parents were sending food. When I started feeding the children I raised my rates $5/day per child and all my clients were fine with that change. I stayed at the same rate for 3 years and raised them $2/day this year. If I were you I wouldn't go about a $2 or $3/day rate change and I would give them lots of notice so they can budget for the big change since they have 2 children in daycare.

If your clients are like mine were, they will be understanding. Write a letter and tell them that you have realized that to stay in business you must charge a slightly higher rate to keep up with the rising costs of food and supplies.

Raising fees is such a tough call ~ because there is always that 'chance' that a client will leave as a result ... however you have to look into your soul and ask yourself is that a BAD thing cause IMO if I raised my rates to keep them 'competative' and a client LEFT over it well than they did not value my service enough to deserve to be here!

I am grateful to all of my initial clients for taking a chance on me ~ I served them WELL in return for taking that chance ... however I kept my gratitude out of my business decisions and when I needed to raise rates for my clients due to increased costs EVERYONE'S rates went up in fairness to all clients paying the same for the same service ... also admit that I am paranoid and did not ever want to have to explain to CRA why I had some people being charged $1000/year less than other clients for the same service because I would be afraid they would think it was a 'income tax scam' or something where I was not declaring all my income cause well I cannot imagine CRA seeing it as 'reasonable' that I would be willing to forgo $1000's a year in income as a loyalty bonus :(

Ultimately you have to decide for yourself if being loyal to these clients by not raising your rates in order to keep them is WORTH foregoing the lost income by not raising their rates to the competitive rate of everyone else... so basically if we do a little math at this point serving these clients at your 'old rate' when you opened is resulting in a annual lost of income for YOU of $1800 per child or $3600 a year for every year you have kept them at their current rate so you said it has been TWO years at this rate already so that is $7200 in income you have forfeited ~ sorry but that is a HUGE loyalty bonus that family has lucked into cause most business a loyalty discount is a free dessert on your birthday or something ;)

Honestly this is business decision it is nothing personal, if they can 'afford it or not' is not your problem it is not your job to SUBSIDIZE their childcare ~ if they need subsidy there are government programs for that.... when you think of what you could have done with your own family with that $7200 had you charged them fair market value from the start does that not make you go :eek:

SO moving forward how much MORE are you willing to loose for the pleasure of serving these clients?

Do some more math ~ think with your business hat FIRST and your heart second when it comes to stuff like this!

Yes charging them the same $700 a month as everyone else will result in a daily increase of $7.20 per child or $14.40 and well that sucks for them that they are loosing out on the great deal they have been getting for the past two years ~ I am sure that they made good use of the $7200 they saved by finding you ... but IMO they should be grateful for how long you let them get awesome service for so cheap because $700 a month or $168 is the 'average' rate in most communities ... and well basically their deal has been costing YOU $3600 a year in lost revenue that your family has had to do without :(

Charging them the suggested $2-3 rate would mean $600 a month and a $12/week/child or $2.4/day/child increase for the client and while that is a 'reasonable' increase in the field under normal circumstances ... that would continue to result in you loosing $2400 a year for the pleasure of serving them and being loyal to them?

Charging them $650 a month/child will in a $20/week/child or $4/day/child increase but it will still result annual income loss of $1200 for you for each year they stay with you at that discounted rate compared to everyone else?

Ultimately the choice is YOURS because this is your business, you know what income you need for your business to be viable and so forth ... personally I do not 'discount' my services for any reasons ~ I show my clients my appreciation for them staying with me year after year in many ways however my 'fees' are not one of them!

Thank you reggio! Very helpful, and shocking..lol. what would be good enough notice?????

I think you're being perfectly fair to consider increasing your rates. Hopefully your contract is worded in such away that you can introduce the new rates to your family on their anniversary. You may find it helpful to take some time and prepare a list of reasons why you need to increase the rates - reasons that are independant from the fact that you offered them a reduced rate when they first signed on. Maybe sending an e-mail to the parents would be easier than having a face to face conversation - I don't know what you're more comfortable with. I tend to have all conversations - the good and the bad - in person, but then again, I talk a lot ! LOL :laugh: I had to increase my fees last year simply because the cost of food had gone up - something any parent knows ! :yes: I simply explained that I wanted to continue to provide their child(ren) with good quality, nutritious food and that it was going to cost X dollars a day more for me to do so. It costs me (roughly) $77-$85 dollars a week to feed my crew here. You could also point out that there are also other costs associated with running a daycare - things like insurance. Now that you've done daycare for a couple of years you have an idea of what these things cost, and subsequently how much you need to charge to cover these expenses. I would certainly make sure that your family knows that you value their business - and the fact that you're providing them with a "family discount" should surely prove that fact to them - but at the end of the day you have to balance fair treatment of families with good business sense. :thumbsup:

I do plan to do some advertising previous to my increase, just so I'm not in the gutter. But I also need to do this for me, literally just a raise, no justifications. I do not think she would leave considering her kids would be devastated and she would end up paying the same price as my increase if not more.
Just how much time I should give them is the hard part. All this is in my contract/policies too.

Another way to do a larger increase is to do it in increments over a few months meaning you gradually build up to what you want but instead of suddenly paying an extra $50 they start with an extra $10 each month till they are up to where the others are.

Changes to Policies:
Changes may be made to these policies as needed with 2 weeks notice. The policies, contracts, consents, and forms will be reviewed and updated, if needed, yearly in January. Please give written notice of any changes that may occur, especially of name or address, or of updated immunizations.
This is what is in my policies, is it enough to increase my prices?
Playfelt, I was also thinking of doing it gradually, thank you

Quote:

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Originally Posted by Mom of 3

Changes to Policies:
Changes may be made to these policies as needed with 2 weeks notice. The policies, contracts, consents, and forms will be reviewed and updated, if needed, yearly in January. Please give written notice of any changes that may occur, especially of name or address, or of updated immunizations.
This is what is in my policies, is it enough to increase my prices?
Playfelt, I was also thinking of doing it gradually, thank you

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Yes ~ reviewing the 'contract' would include the FEES that are part of that contract!

I :wub: Playfelts idea of the compromise of giving them an increase each month to wean them up the the same as everyone else so that can get use to budgeting for it.

My guess is that they KNOW they have been getting an awesome deal for your service and when you go about informing them you will get a 'well it about time you are so worth even more' because we often under estimate our value to our clients!

Yay! I did it! I gave 2 months notice for an increase of $100 per child per month. Waiting for contracts to be signed and returned tomorrow.....

Awesome news - may the contracts be returned promptly without issue!!!