Setting nursery fees against staffing ratios that fix your costs

2 days ago
3 min read

Updated: 2 days ago

Introduction

A nursery's cost base is unusually rigid. Staffing is determined by the age of the children present and by statutory ratios, not by how many parents happen to have booked a given afternoon. A room staffed for twelve two-year-olds costs the same whether ten or twelve are there, and the ratios differ by age band, so the economics of a baby room and a pre-school room are not comparable.

That means fees cannot sensibly be set as a single hourly figure across the setting. The cost per child per hour genuinely differs by room, and a nursery charging one rate is cross-subsidising its youngest children with its oldest.

Ratios and funding arrangements differ by jurisdiction, so check your own before applying any of this.

1. Setting nursery fees against staffing ratios means costing each room

The room, not the setting, is the unit.

Work out staff cost per child per hour by age band

Ratio, wage cost including employer contributions, and non-contact time. Include cover for breaks and training. The baby room is materially more expensive per child. Frequently twice the staff cost per place.

Add the shared costs on top

Premises, food, insurance, management, consumables, apportioned per place rather than per room. Do it once a year properly.

2. Price by age band, not by one hourly rate

A single rate misprices both ends.

Charge more for the youngest children

It reflects the ratio and it is straightforward to explain. Parents understand that babies need more staff. Say it in those words.

Do not let the pre-school rate subsidise the baby room

If the older rooms are funding the younger ones, growth in the baby room makes the business worse rather than better. That is worth knowing before expanding.

3. Make session patterns fit together

Occupancy is where the money is won or lost.

Sell patterns that combine

Full days or consistent half-day blocks. Ragged bespoke hours strand capacity you are already staffing for. Publish the patterns you offer.

Price the least-wanted sessions to move them

A small difference between a Monday and a Friday afternoon fills places that would otherwise sit empty. Look at your own occupancy by session first.

4. Charge properly for wraparound and lateness

These extend the staffed day.

Price early drop-off and late collection

Both require the same ratios and lengthen the day. They should carry a fee rather than being absorbed as goodwill. Say so at registration.

Apply the late collection charge consistently

Its purpose is deterrence rather than revenue, because late collection creates a staffing problem. Applied sometimes, it deters nobody. Put it in the parent handbook.

5. Review fees annually against wage costs

Wages move every year and fees frequently do not.

Set the review to follow wage decisions

Once you know your staffing cost for the year, set the fee. Doing it the other way round guarantees a squeeze. Most settings do it backwards.

Give parents proper notice

A term's notice at a natural boundary. Parents budget monthly and accept a rise they were told about. Give the reason in one sentence.

Conclusion

Cost each room separately, because ratios make a baby place genuinely more expensive per hour than a pre-school place, and a single hourly rate across the setting means your older rooms are quietly funding your youngest.

Add shared costs per place on top, then price by age band and explain it plainly — parents understand that babies need more staff. Sell session patterns that combine cleanly rather than bespoke hours that strand staffed capacity, price the least-wanted sessions to shift them, and charge properly for early drop-off and late collection while applying the late charge consistently. Then set fees after you know your wage costs for the year, with a term's notice to parents. Check your own jurisdiction's ratios and funding rules first.