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Setting Your Childminding Fees

Updated by on January 19, 20112 Comments

Deciding how much to charge customers can be a difficult decision. If you set your fees too high then you may have difficulty attracting customers, but if you set them too low then you may be working just as hard as other childminders for less money and have difficulty meeting your expenses.

There are three main points to consider when setting your childminding fees: the cost of childcare in your local area, how much you need or want to make from childminding and the services you are providing for an individual customer.

Local Childcare Costs

Checking what other childminders and childcare facilities charge can give you a feeling for the going rate in your area. The table below is based on figures from the Daycare Trust survey ‘Daycare Costs’ published in 2009.

Nursery Childminder Out of School Club
Inner London £4.26 £3.76 £2.66
Outer London £3.69 £3.64 £3.46
South East £3.81 £3.50 £2.66
South West £3.14 £3.28 £2.40
East of England £3.26 £3.21 £2.46
West Midlands £2.87 £2.27 £2.66
East Midlands £2.76 £2.74 £2.93
Yorks & Humber £2.87 £2.87 £2.40
North West £2.82 £2.61 £2.46
North East £2.80 £2.98 £2.66
Scotland Average £3.01 £3.09 £3.26
Wales Average £2.88 £2.98 £2.73

Whilst these figures provide a guide, fees can vary a lot from area to area so researching costs in your immediate area will give you a more accurate figure. Try asking other local childminders, nurseries or parents about childcare costs.

What you Need/Want to Earn

When setting your fees what you are really deciding is how much money you will earn. Most people have a figure in mind for how much they need to earn to cover their household bills or a threshold at which the effort they put into childminding is not worth the money they make. To calculate what you need to set your fees as for you to generate the income you want, you need to take into account your business expenses (the cost of food, insurance, advertising, equipment etc.) and any tax/national insurance you need to pay. Here is an example:

Total you want to earn after tax and expenses £300pw
20% Income Tax on income over £129.50pw +£42.63 £300-£129.50 = £170.50 £170.50/80 x 20
8% Class 4 NI on income over £114.30pw +£16.15 £300 -£114.30 = £185.70

£185.70 /92 x 8

Class 2 National Insurance +£2.40
Weekly business expenses +£50
Total you need to receive in childcare fees £411.18pw

So, you need to charge a total of £411.18pw in fees to earn £300 income after tax.

Tax & National Insurance Notes: At the time of writing you will need to pay 20% income tax on any money you earn over the personal allowance (£6475pa). Most childminders also pay £2.40 per week Class 2 National Insurance and Class 4 National Insurance of 8% on income over £5715pa. The sum above divides these into weekly amounts presuming you work 50 weeks per year.

Childminding Fees per Child

This total is the combination of fees for all the children you care for. This may be more than one child and they may not all attend the same hours. To calculate how much per child per hour, you need to know the total hours you work each week for each child. For example:

Child 1: 25hrs per week
Child 2: 50hrs per week
Child 3: 40hrs per week

Total: 115 hrs

£411 / 105hrs = £3.57 per child per hour

You not have to charge the same fee for all children in your care. Your expenses may vary depending on the type of childcare parents require. For example, if you are expected to drive a child to school, you may want to charge more to reflect the travel expenses you will have. Parents that need shifts accommodated (or have part time hours that make it difficult for you to take on a second part-time child in the hours they don’t use) may restrict your income, so you may need to charge a higher rate to compensate. Some childminders also charge higher rates for ‘antisocial’ hours i.e. after 6pm or before 7am.

It is also a good idea to add a little extra to your rates to cover periods when you do not have all your spaces filled  for example if a child leaves or starts attending part time school.

Adjusting Your Rates

It is important to reassess your rates annually or when a contract is renewed to take into account changes in tax and expenses. The annual NCMA members survey found that on average childminding rates had increased 6% between 2009 and 2010.

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2 Comments »

  • Sarah says:

    I have 3 children in my care 1 I have for 17 hours a week an one hours can change from week to week my last one I have for 8 hours a week do I need to add all hours together per child even if I have them at the same time, when I am doing me expense do I do it per child per day as I get paid weekly do I add it all together at the end of the week then see what my income is after 4 weeks. Can u help with easy ways of doing things if its not right.

    Thank you hope u can help
    Sarah slater

    • Tamsin says:

      When you are recording your income, you would add up the total amount of money you receive – the sum of the cash/cheques/bank transfers.

      For most expenses you’d record the amount you paid i.e. the amount shown on the receipt.

      Calculating heating/lighting/water/rent/council tax is slightly different and is explained here Allowable Expenses.

      Basically you work out how many hours you are at work e.g. if you work Monday 9am to 4pm that counts as 7 hours work, even though if you have two children you’d bill them for 14hrs total.

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