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Pricing Your Daycare Services
What’s the best way to price your day care
service? What are the things that you need to take into consideration when developing a pricing strategy for your daycare
services?
Most daycare business owners who are not very sure what to do will simply use their competitor’s
pricing and either price below it or above it. The question to ask then is, how would you know that they have adopted a pricing
strategy that is profitable for your daycare business? Let’s look at the factors you need to take into consideration when determining the right pricing for
your daycare business.
PRICING OBJECTIVES
First, you need to determine your pricing objectives. It basically defines what we want to achieve for your
day care business. There are 3 pricing objectives to consider. - Revenue-Oriented Pricing
It is setting a price for your daycare service that will
maximize revenue from the target market. For example, if your day care business is offering something which other daycare
businesses are not able to offer, such as a particular curriculum, then you can consider this objective.
- Operations-Oriented Pricing
It seeks to balance supply and demand for your daycare service. It introduces cheaper
prices during the lull periods (or when demand is low) and raisedprices during peak periods (when demand is higher). For example,
during the holiday season, when parents do not send their kids in, you can offer short courses / electives.
- Target Market Pricing
It uses different prices for different target markets. For example, you can offer parents who put more than one child
at your daycare centre a discount from parents who only place just one child at your centre.
PRICING STRATEGY
Next, you need to think about the pricing strategy you are intending to adopt for your daycare business.
A pricing strategy defines how you are going to achieve your daycare business pricing objective set above. There are 3 different
strategies in which you can adopt.
- Market skimming
Do you think that your daycare
business or its services generates added value? Do you think your daycare customers will be able to afford it? Are you the
only or selected daycare business that is offering it? If you answer is yes, then you can consider market skimming. It basically
involves charging the highest possible price for a unique daycare service. You will need to decide if whatever you are offering
is something which the customer values. For example, you are offering a particular curriculum which other daycare businesses
are not offering and you think that this value added curriculum is something which your customer will be willing to pay for.
Or your daycare business is the only daycare business in town that closes at 8pm and it is something which you think your
customer values and is willing to pay for. To charge a higher price will also mean that you need to communicate that to your
potential customer through effective promotional means.
- Market penetration
If there are a number of daycare businesses and all of you are offering basically the same curriculum or daycare
service, then you should consider penetration pricing. It basically means keeping the price low in order to gain a greater
market share.
- Price adaptation
The
last and most complicated strategy is price adaptation. It is offering different prices to different target market. For example,
parents who places 2 or more children at your daycare centre is offered a discounts. But what happens when one of the sibling
becomes of school going age. It might be difficult to revert back to the higher price.
Pricing strategies is something which plague many daycare business owners. Whilst pricing lower might
mean higher chances of increasing recruitment, the low prices might mean that you need to cut back on some luxuries such as
quality meals or curriculum, which could impact the image of your daycare centre. Therefore, it is important to think very
carefully before setting a price, especially at the initial stage when you start a daycare, because in most instances,
it’ll be difficult to reverse that decision.
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