The problem is that people are considering your grace period to be something that they can just use with no penalty and no that is not fair to you. I would be inclined to simply state it that way to people with the idea that the "grace period" was put in the contract to allow for the occassional time that there was extra traffic or a snow storm or an accident that slowed traffic on the way home and therefore a parent was later than their contracted time. Lately this policy has been abused and if pick ups continue to be more than 5-10 minutes late then I will be forced to change the policy or increase the penalty for late arrivals.

What that does is put the parents on their best behaviour of not abusing the grace period. Then if you are forced to change it they will have no one to blame but themselves. For sure change the policy for any new clients and change the grace period to 5 minutes but then use your discretion ie if there is a snowstorm, etc. in whether you give more time or charge from the 5 minute mark.