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I have always hated this expression from when my very first boss would use it. ‘If you pay peanuts, you get monkeys’ he’d say. The problem was, he DID pay peanuts. So every time he used the expression, he made me feel that was how he thought of me. He paid peanuts. He’d hired a monkey. Me.
Feeling that you are being paid peanuts is awful. Feeling undervalued in any job is demoralising, but when you are childminding it can feel doubly awful because you are the one who sets your own prices. It is not parents who are paying you peanuts. When you are self-employed, you are the one who decides what you are ‘worth’. You are no longer the victim of a horrible boss. You have undervalued yourself. If you let these feelings go ignored you can end up resenting the parents, your partner, other childminders and ultimately the children you care for.
But how much is ‘peanuts’? What is a GOOD hourly rate for a childminder?
This is a difficult question because childminding hourly rates vary enormously across the country from as little as £3 per hour (per child) to as much as £7 an hour. If you are childminding in many parts of London, for example, then you may feel you are being paid peanuts if you are paid only £5 per hour, when that same hourly rate would put you near the top of the hourly price range in many other locations across the country. So when you compare yourself to others, make sure it is to other childcare providers in YOUR area.
When you are just starting out, how should you decide a good hourly rate?
If you are new to childminding the best way to decide on an hourly rate is to look at what other childcare providers in your area charge. This will also give you a good idea about the ‘market’ in your area – in other words – what parents are looking for and what they are willing to pay. You should find out what both nurseries and childminders in your area charge per hour. As well as looking at the prices, you should also look at what is offered for those services.
Here is an example. It’s actually a real example of how I decided my original hourly rate TEN years ago in Slough (home counties) where I was trying to set up my childminding business.
The very cheapest childcare in my area were childminders who charged between £3.50 and £4.50 per hour. Next on the scale were many mid-range nurseries that charged between £4.50 and £5.50 per hour. The services these nurseries and childminders advertised all seemed very standard. The “best” nursery in our area (with a waiting list) that took the children to swimming lessons, had Ofsted outstanding and cooked lunches on the premises charged £5.50 per hour. The most expensive childcare in the area was an outstanding childminder who had been childminding for 15 years from her farm location outside of the city. She charged a massive £6.50 per hour and always had a waiting list.
So, where I lived, it seemed reasonable that parents would be willing to pay somewhere between £3.50 and £6 per hour for childcare, depending on the type of service I decided to offer.
How do you decide on your ‘price point’?
Once you have the range of prices in your area, you then need to make a decision about how you want to fit in on this scale. You also need to consider your ‘market’. Do you have lots of parents willing to pay high end prices in your area? Or do most people where you live want the cheapest childcare going?
Suppose you decide to become one of the most expensive childminders in your area? If so, you will be competing with the top nursery, nannies and other top childminders in your area. If you are going in at the ‘top end’ then what services are you going to offer to parents that will make your higher prices justifiable to them? How will you compete with the nursery that offers ‘swimming lessons’ or the ‘growing up on a farm’ experience offered by the top childminder? This is especially difficult if you are new to childminding as many top childminders and nurseries have years of experience and the reputation that goes with it, neither of which you have if you are new. One of the key benefits of deciding to offer a top end service is that you often attract parents who want longer hours for their children. So you get the added benefit of longer, contracted hours at a higher hourly rate. Getting rated ‘outstanding’ by Ofsted can be a huge benefit if you intend to go in at the ‘top end’ and there is no reason why you shouldn’t try to attract parents who are looking for ‘the best’ even if you are new as long as there are enough parents in your area looking for that service.
Alternately, you may decide to go in at the lowest cost end. You may want to try and offer cheap and no frills childcare – like Easyjet for parents! Parents bring their own food and snacks and children can come and go flexibly. Many childminders who offer a low cost childminding service are happy to be flexible regarding hours and this suits and helps many parents enormously. The low cost business model for childminding can make it easy to attract many parents, especially parents who have low paid jobs themselves where they are making only marginally more per hour than they pay you to look after their child. The downside is the lower rate, and the risk that taking children for five hour slots in a day can make it impossible to take on full timers.
Other childminders decide to go ‘middle of the road’ on their prices. Childminders who choose this option are not trying to compete with nurseries or nannies, or with childminders who offer low cost. If you go middle of the road with your prices then finding ways to stand out is crucial if you want to attract parents. You have to think very carefully about what makes your service unique. If you are neither the cheapest, nor the best, why else should parents call you, instead of the next childminder on the list?
When I had to make this decision ten years ago now, I decided that I wanted to go ‘top end’ and offer a quality service. I couldn’t possibly compete with the childminder with 15 years’ experience who raised children on her farm. But I felt that by having all-inclusive prices, home-cooked meals and weekly outdoor ‘Forest Childcare’ outings, I could easily compete with the top nursery in our area. So I matched my hourly rate to theirs offering ‘all the benefits of a nursery but in a home environment’. That was my tagline. And it worked for me.
Are parents really looking for the “cheapest childcare”?
Don’t get me wrong. Many parents really do choose a childminder because it is the cheapest childcare can they find. But for the vast majority of parents, price is only one small factor in the decision. Parents will pay more for childcare if you give them a reason to. They will find money if you give them a reason to spend it. So don’t start off by assuming that the only way you will attract new parents is by undercutting the competition. Setting your prices too low can result in you regretting it later on by feeling undervalued for the work you do.
Low prices may actually put some people off
Many parents think that they are looking for cheap childcare. But really they are looking for ‘the best childcare they can afford’. Many parents (people) believe that if they pay more for something that it must be better. They may actually seek out higher hourly rates because they will feel that if they are paying more, then what they are getting must be better.
Recently I had to buy a new toaster. I walked up and down the rows of toasters in the shops horrified at the range of prices and weird and wonderful extras I could get for an appliance that I essentially wanted to be able to ‘heat bread reliably at breakfast’. Did I buy the cheapest toaster? Even though it did exactly that? No, because somehow I allowed myself to believe that some of the extras I was being offered might be worth it. But more importantly because when I looked at the cheapest toaster I thought to myself ‘what’s wrong with it?’ Why is it so cheap? It must not be any good if they are selling it that cheaply. It will probably break in a year.
A parent who pays peanuts can get a childminder who feels underpaid and undervalued
Feeling respected is very important to people’s wellbeing. When you feel that you are being paid less than other childminders, this can seriously harm your enjoyment of the job. If other childminders in your area charge more than you, then think about the impression you are giving parents about the service you offer and consider putting your prices up.
Many childminders still charge the same fees per hour as they did 10 years ago. It is easy to say be brave and tell parents that you are putting your prices up. But this is so much easier said than done.
Give yourself a clause in your contract about reviewing your prices
If you are starting out, then make sure you put a clause into your contract that tells parents your prices are renewed annually at a certain date (1st April for example). Then it will come as less of a shock to parents that your prices are being reviewed and are going up. And you won’t feel guilty asking because it was in your agreement.
How to put your prices up if you don’t have a review clause in your contract
Putting your prices up takes a lot of nerve and you are right to feel nervous about it. You don’t want to upset families and drive them away. But you also don’t want to grow increasingly resentful of them (and their child) which can happen if you ignore your feelings.
If you look after just one family, then you may want to discuss your feelings regarding the pay rise with them and come to a mutually agreed amount. If you explain how you feel, perhaps in a letter, not in the morning as they are rushing to work, or when they are tired and their child is whingy at collection time, but when they can sit down and discuss this together, then you may all be able to come to an agreement that is reasonable and will keep everybody happy.
If there are multiple families involved then I wouldn’t ask their permission if I were you. Imagine if you were a nursery. Would a nursery send a letter home asking ‘look, I hope you don’t mind but I’m thinking of putting my prices up’ and it is demoralising to ‘ask them for a pay rise’ when you are self-employed. Just make the announcement like your nursery or any kids sports club would do. Parents will moan and groan, like you would do. But unless you are being unreasonable, they are very unlikely to actually leave you over a small price increase; they will most likely grumble, then do it, and then forget about it.
I have carried that expression on with me throughout my life. When I left my first job I made a promise to myself never to work for someone who ‘paid peanuts’ again because it left me feeling very bad about myself, including when I started childminding and became my own boss. When you are not being paid what you feel you deserve for your work, it can really get you down. If this is you, it’s time to take the brave step of asking for the money you feel you are worth. Good luck!
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About Kay Woods and Kids To Go
Kay Woods has been writing and selling childminding resources through her company Kids To Go since 2008. Her products include the Ultimate Childminding Checklist, the Learning Journey Plus for planning, observation and assessment and best practice resources promoting diversity, safety and childminding in the great outdoors (Forest Childcare). She is the author of the Start Learning book set published by Tarquin and she writes the free quarterly Childminding Best Practice Newsletter.
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