When is the last time you took a well deserved paid vacation?
As a childcare provider, there is no doubt you deserve paid time off. You work long hours (maybe over 10 a day). Allowing yourself time off to re-charge, and connect with family and friends, is imperative.
Over the years I’ve seen many situations arise in our chat group related to providers taking paid time off, and it usually looks like this:
They have a business model where they charge tuition for every weekday of the year, similar to a gym membership. The tuition each family pays each month holds their spot each month regardless of if they attend, or if the provider closes their doors for a holiday or vacation.
But invariably, on days they aren’t open, families are upset they still need to pay…..
If you find this happening to you, it’s most likely due to the fact, your clients feel you are providing them a “service” not a spot. So when you are closed, you aren’t providing them with a “service”, but they STILL have to pay someone else to provide this service for their children. It’s not that they don’t value you (or feel that you don’t deserve to be paid on your days off). They just feel they are paying double for care-this is just how most consumer’s minds view paying for a service.
If you use this "Gym Membership" model, this is how you’ve probably determined your daily rates:
You are open M-F for the 2017 year, which has 260 weekdays (you can find a link to a working days calculator here)
In this example, you’ve determined your operating budget to include:
Your annual salary is $54,900
Your expenses are $9600
For a total of $64,500
You expect to receive $4500 a year in income from the food program.
Leaving you needing to collect $60,000 in tuition from your clients each year.
You care for 6 children, so each child is charged $10,000/year at a rate of approximately $38.46 per child/day.
You need to collect this amount every weekday to pay for your expenses, and salary when you are closed.
There is another way...
What if I told you, you could still earn the same annual salary, and cover your expenses, without the hassle when you close for time off?
I know hold onto your seat! I want to shout this from the rooftops because when I first heard about this concept the clouds lifted, and it ended up being the best change I ever made in my business.
For this business model you calculate your rates based on the number of days you are open for the year (not the total weekdays in the year).
It's simple to figure out:
1. Figure out how many days a year you'll be open. I’ll choose 245 days for this example.
2. Divide what you need to earn in tuition by the days you plan to be open. For this example $60,000/245
In this model your client would pay you $40.81 for each day you were open providing care.
This minimally increases your clients daily rate (only $2.36 a day) -but keeps the amount you earn for the year the same. To a consumer who feels they are paying for a service, this makes much more sense. They pay when they are receiving a service, and don’t pay when they do not.
Moving to this model brought so many positive changes to my business. The biggest, being I didn’t feel guilty when I needed to take time off-which allowed me to take care of myself better. Parents were so happy about not being “charged” when I was closed, they never even balked about the minimal daily increase. As a bonus: even when I didn’t take all of my allotted days off, I was still being paid for them each year. These things made me much happier in my business.
If you decide to continue with the “gym membership” model, I urge you to spend more time upfront communicating how this works with your customers to avoid confusion. Spend extra time before they sign with you explaining how they are paying for a spot not a service, and are expected to pay even on days you are closed.
The symbiotic relationship you have with clients should be nurtured. You are providing reliable care for your clients so that they can go to work, and financially care for their families-and in turn pay you. Sometimes we need to analyze the challenges that we are facing in our business, come up creative ways to solve them, make it easier for customers to understand, while at the same time caring for ourselves and our business needs.
What can I help you find?