to try and explain why nursery fees are so high

[SunsetCurtain]

I opened a nursery two years ago, in an area that desperately needed one. It was all over the local papers at the time about the local childcare crisis, and families were having to relocate etc. I thought I was doing a nice thing.

Since I've opened, I get weekly - sometimes daily - criticism and occasionally abuse about the "extortionate" fees we charge. I've been called a filthy capitalist, a con-artist and endure many, many comments about "printing money" etc.

I cannot comment IRL, I'm in a closed community that would deliberately misunderstand and I'd get even more flack. So please allow me my vent.

Childcare ratios are as follows:
For every 3 children under 2 years old, we require 1 staff member.
2 - 3 year olds is 4 children to 1 staff.
Over 3s is 8 children to 1 staff.

50% of staff must be qualified at all times - that's a Level 3 childcare diploma or higher, which is typically 2 years of college study. I've done it myself very recently and whilst it isn't "hard", it is extraordinarily detailed, long and - frankly - dull.

I pay our Manager £13.50ph, Deputy £13.00ph and all other staff £12.50ph. Excluding employer's contributions. We pay well for the industry, which is typically minimum wage (£10.42ph) - our salaries are reflective of our less than popular area.

All staff are legally obligated to attend a 2 hour long training session run by the local council 4 times a year, with our SENCO and DSL staff required to attend additional specialised sessions again. It is expected - at a legislative level - that each staff member does an additional 20+ hours of CPD a year.
It is also mandatory to have a monthly staff meeting (so add 1 hour extra per staff member each month), and a monthly supervision meeting per staff member (so 2 hours for Manager + staff member).

We obviously have to pay staff to open the nursery 30 minutes before children arrive, and they stay for roughly 1 hour after children have left to complete paperwork, clean and lay out activities for the following day.

The Manager needs 10+ hours a week on top of the time she spends with children for more paperwork than God himself needs to complete. She only gets away with 10 hours a week because I do the majority of the heavy stuff, for free.

I have calculated, roughly, that for every hour a child is in the nursery - it "costs" us 1.4 hours of labour, when including the above.

A minimum of 2 staff must be on site at all times, meaning that the staffing cost per hour is at a minimum of £35 per childcare hour (taking into consideration the training etc.)

If those 2 staff are taking Under 2s (2 staff = 6 babies) - that brings the cost per baby to £5.83ph
2 - 3 year olds would be £4.38ph
Over 3s would be £2.19ph

This is, of course, assuming that there are the maximum number of children per staff member - which is rarely the case.

This does not include - surplus staff for illness, lunches, outings and annual leave.
Overhead costs such as electricity (for us this is roughly £400 a month in Summer), rent and business rates.

I don't really know what I'm trying to achieve here but honestly, I'm going insane. All I seem to see online is people complaining about the cost of childcare, and I know that it is often directed at the gov, but it's also often directed at Nursery owners and I really don't think people have sat down and looked at the maths.

Setting up this nursery cost £75k, and I was doing it on a tight budget with family doing a lot of the renovation.
I have never drawn a salary, and in fact subsidise it by several thousand a month with a full time job.
(Yes, I'm considering closing it - but I know it will make me even less popular in town).

Rant over. Congrats if you've read all the way though <3

Ive seen a model of one degree qualified lead with two nursery nurse or equivalent to 16 kids working.
In other parts of the world nurseries are purpose bulit and amazing with lots of outdoor space and woodland or living where I am ( Middle East) beautiful indoor garden spaces to beat the heat.
The cramped convertered houses I saw in the UK put me right off having kids there.
More nurseries could be added to schools but the government doesn't have the foresight to implement.

They could, but I bet they'd only do term time, like all but one of the school nurseries round here!

@Caspianberg 3 adults with 20 18 month olds? Seriously? Sounds very unsafe to me I’m afraid, and definitely not in the best interest of the children. At 3 fine, but definitely not at 18 months. Nappy changes? What if a child is ill?

I think the early years sector needs more money not less, but with the cost of childcare being more than many wages pay, it’s just not practical to come from parents. If the government want people with children to work and utilise their skill sets, while providing children with a high quality education, they have to fund it better.

I belong to a group of parents that run our nursery in a country where childcare is subsidized. We get 250k euros a year for 16 kids (staff is 4 educators, a cook, a cleaner, a support worker). Food and supplies are covered by extra top up payments from parents. The parents also pay an additional income-based fee to the government to pay back into the overall pot. It’s definitely not 15.5k per year per child though, which is the government funding. So costs are high but the government steps in.

Maybe parents should be offered something like a student loan for that is paid back when their income goes over a certain level, that way we wouldn't get the, "it cost the same as one parent's (usually mum) pay so they give up work"

Payment split between both parents.

Interesting notion but I’m unlikely to even pay my actual student loan back 😂

@Italiandreams - it works. It’s not 20 18 month olds either, it’s 18months-3 years ( as in up to 4 years potentially) in that’s group.
Ie when Ds started he was 2 years 4months. He was already toilet trained. At a guess over half were toilet trained in September already, presumably more over the last year now.

Its max 20 children. Most days some will be off ill or other reason, and Ds class currently has 18 children registered on the class. So it’s 6 per adult.

There are 4 classes within the building, so 10 ish teachers. Plus the main school is in same building with lots more staff. If one was taken seriously ill, there would be someone to take over temporarily.

I haven’t heard any complaints from anyone regarding care, and most of the staff have been there for 10+ years. They provide really thorough care, outside and indoor.

OP, I think people are just stressed, broke, frazzled and exhausted after living through the rollercoaster that has been Brexit/COVID/Trussonomics/cost of living crisis in recent years. I’m a GP and I’ve never seen people so on edge and irritable generally. And so they lash out at any group they perceive to be making their life more difficult in the moment. I’m not saying that’s ok, it’s not…

It’s not that they really think through your costs the way you do, it’s more just that it just takes a substantial chunk of money for something that isn’t optional for most people! I remember feeling so frustrated about how much I was spending on nursery fees when my child was that age. But I did sit down and work out the hourly cost and was actually surprised it was so reasonable and started to wonder how they made any profit! It’s just as someone else said that you need a lot of hours and it all adds up.

The press doesn’t help, constantly going on about certain things and recently there has been a lot about the cost of childcare and how it’s not good enough in this country (and I agree but I think it should be government subsidised). So it’s at the forefront of people’s minds. The same way that my working part time as a GP is now frowned upon and queried by patients when it’s actually none of their business why I work part time at this particular moment in my life. I’ve worked part time for many years but this has only become an issue recently because of all the GP bashing in the press.

Ignore them. You know you’re doing your best (in all honesty it sounds like you’re doing way too much actually, this doesn’t sound sustainable as a business, you definitely need to take a salary and make some sort of profit, from what you say you need to put your prices up if anything).

It could be worse, you could be a GP like me🤣 Imagine the grief I get on a daily basis! Or I have a friend who is a mortgage advisor, also not having a great time dealing with the public right now!

For me it was a business challenge, and when I did the market research a lot more parents came forward saying they'd use it, but when we opened a good chunk of them melted away.
The numbers at the time added up, it was going to make a small profit each month and I was prepping to leave my job eventually and work in it.
Predominantly it was a learning opportunity for me combined with a community service.
However, on top of the financial criticism - my eyes were opened to how vicious and unreasonable many parents can be with nurseries (sickness policies and late collection policies for example) and I'm significantly less inclined to work there now, as at least with my job I get a bit of a break from it.

I did also make some mistakes when doing the business model - I assumed we'd have more older children, whereas in reality the vast majority are Under 3.
I calculated based on standard wages, but found that it was extremely slim pickings.
The poor recruitment selection (as an PP said, theres definitely a low work ethic in the younger generation) has meant thousands have been spent on repeated recruitment, which wasn't budgeted for etc etc

@ZoChan surely a huge part of the reason people aren’t interested in early years as a career is precisely because it doesn’t pay well or offer much in the way of career progression. When I was a teenager it’s what I wanted to do originally. Then I did work experience and found out what a nursery nurse earned. And couldn’t work out how someone could possibly live off that and afford just the basics of life (I didn’t understand about benefit top ups etc. at the time). I decided I didn’t want to live my life on the edge of grinding poverty and ended up studying medicine instead. Now that I’m a single parent following an abusive marriage living in an expensive part of the country, I’m very glad I didn’t go down that road (not saying my job is a dream because it’s not and the pay isn’t what it was either but it’s better than minimum wage). But honestly I still think in a communist utopia where all jobs are paid equally, a nursery nurse is what I’d love to be.

YANBU! It sounds like you're doing an amazing job and running a brilliant nursery. I don't think people understand how hard and expensive it is to run a nursery. The government needs to do a lot more!

YANBU, OP.

Thank you for the interesting and informative post.

You are exactly right, and we have turned away people for sessions for this exact reason - because their child would mean bringing in another member of staff which would then set us back financially.
This has not gone down well

I understand why people are saying raise fees, but I already have a very large group of parents who bemoan the current fees.

For very obvious reasons, I can't disclose where we are and I'd be very grateful for people not investigating but yes, the mandatory training is true for our area.

I've just caught up.
Thank you so much to everyone for being so kind to me. I was actually expecting a bit of a bashing.
It's made me a bit emotional so I'm going to go and chill out but I'll check back in a while in case there are new posts x

But somehow this doesn’t apply to other countries…

So? Society will still benefit from your children getting a good start in life and even if you don't pay the loan back you would be able to work and pay taxes.

YANBU. I’ve never understood the opposition to making sure that the people looking after your child - doing the most important job - are well paid.

Agree Delatron. It’s the same with healthcare, schools, public transport etc - big problems like those of the UK aren’t happening.

Those pampered pooches 😂😂😂

OP I do understand feeling that you can’t put fees up because people will moan. Unless you have a nursery across the road at half the price with loads of spaces though they may moan but they’ll pay it as they need it. They’re moaning anyway?! I don’t think you have a lot to lose. Please note I’m NOT saying be greedy/fleece them. But ultimately you’re not doing them a favour by not increasing fees in line with costs to the point where the nursery risks folding or you’re literally having to run it basically as a charity with your own money going into it to keep it afloat. If you don’t have the income from fees to make it profitable you have to find another way of upping income surely as it sounds like you can’t easily cut expenditure further. I think it’s very reasonable for you to take a salary for running a nursery! This is a huge responsibility. I don’t understand why you think you should be doing it for free or actually worse than free!

I agree, your prices actually sound too low if your genuinely running at a loss.

If your not getting any government subsidy, You will simply have to look at how to reduce staff costs a fraction ie no 1hr ie extra time in evening, cleaning to be done whilst children around. And only 1-2 staff stay the extra hour for paperwork or additional stuff not all of them. And fees will have to increase.
It’s not nice, but it’s not greedy to say it’s simply not paying for itself with extra increases so the option is increase price or close.

@Wenfy how are they riff raff?
That must be me! Haha!
15 hours at a school nursery, it's not for childcare though. It's for pre school.

Thankfully I work shifts that cover a 24/7 service and my husband can work flexi time.

OP I agree with @ChineseFakeaway people don't see childcare as work! You want a service (your child to be cared for by a person who is qualified and to keep them safe and protected whilst parents are working) and some people just aren't willing to pay for that.
They probably think because their precious little darlings are so precious to them that you would want to do it for free!

Your fees aren't extortionate!

Honestly, it sounds way more hassle than it's worth. I'd be looking to get rid of it. Someone might buy the business & then you won't have to worry about the financial loss or criticism anymore.

You could look at selling the business to try and recup some of the losses.

Life's too short OP.

That's very cheap child care for babies! I'd love to have your nursery as an option

YANBU and your charges are lower than many nurseries charge.

But I do think it's interesting that you have such disparity here:

Babies under 2 - cost to care = £5.83ph, price = £7 ph, margin = 20%
2 - 3 year olds - cost to care = £4.38ph, price = £6.50ph, margin = 48%
Over 3s - cost to care = £2.19ph, price = £6 ph, margin = 173%

I don't dispute that you need those margins to cover the fixed overheads and pay back the capital that it took to start it all up, and you especially need the price for over 3s to have a hefty margin because I know the amount you get from the government for the "free" hours is woefully inadequate so you have to balance the books somehow. However it seems odd that the difference in your costs for over 2s vs under 2s is 25% less (compared with 2-3yo) but you are only charging a differential fee of 7% less. Similarly comparing under 3s to over 3s the cost difference is 50% less but the fee difference is 8% less. It's obvious that these percentage changes shouldn't be exactly the same as your fixed overheads aren't an hourly cost, but the gap could perhaps be narrowed a little.

For comparisson the nursery we used to use, in a popular and expensive area admittedly, currently charges £8.65ph for babies and £7.74 ph for older kids (2-3 and 3+ are the same) so you seem astonishingly cheap to me, and I know it gets even more expensive elsewhere.

But I wonder whether it would be feasible to do a big song and dance about revising your fee structure, emphasising that you are listening carefully to feedback and value the community input, and declaring that yes, under the old structure you had assumed that the community would value a relatively flat fee structure without dramatic changes between year groups, yet your own costs do have dramatic changes in the staffing ratios between age groups, so this did mean under the old structure that effective the fees for the youngest age group were being partially subsidised by the fees for the older ones. (not that this is a bad thing because it will all even out across the years as the children grow). So then you maybe try offering care for babies under 2 at £7.75ph, keep 2-3s at £6.50ph and make over-3s £5.50ph. Would your books still balance then?

YANBU to charge a sensible amount bearing in mind what it costs to run the service, and to pay your staff well. Parents are not obliged to use your services if they think you are too expensive they can seek out a cheaper alternative or set themselves up in competition and find out for themselves what the costs are like.