Why You Should Limit Your Discounts

Discounting tuition can often have a dramatic effect on the financial performance of an early learning school. Some schools discount up to 20 percent of their overall revenue. Not good. Our rule of thumb? Keep it limited! Eight to 12 percent of total revenue is within the industry norm.

Staff Discounts
The main discount the early education industry expends is the staff childcare discount. It’s an easy benefit to provide and what owners could, historically, afford to give. And while it is a great incentive for attracting quality teachers, there is a limit on how much you can do while remaining profitable.

One good idea is to limit the number of children an individual employee can have as discounted. Limiting age groups – like infants and toddlers – that can be discounted can be beneficial to your business as well.

Another good idea is to implement a limit on the number of children your school discounts. While issues can arise if you’re seeking a new hire who has a child, simply let them know you’re at your limit but they are next in line should a discounted child leave your facility. It’s a tough one but you have to stick to it.

Multiple Child Discount
This discount is typically market-driven, and most schools allow for a 10-percent discount on the child with the lower tuition rate. To remain competitive, it is hard to limit this particular discount.  

Industry Discount
If you’re discounting a particular industry in your area (typically 10 percent), be sure you’re getting value from that industry in return. Are they promoting you to their employees? Are they providing you with positive press? Are they driving traffic to your school or website? This discount could serve you well and help increase enrollment if executed correctly.

Subsidy Discounts
Some cities and states don’t allow early learning centers to charge full tuition rates to children in childcare subsidy programs, so you have to give discounts. But use this discount to your advantage by including it in marketing materials: “We provided scholarships of more than X dollars last year to better support families.”

Free Days
Your costs continue whether a child is physically at your center or not, so stop allowing parents to not pay for days their child does not attend. Tuition should be due in full each week regardless of attendance.  This discount is (thankfully) no longer an industry norm and makes a huge impact when removed from the school’s budget.

It is possible to limit your discounts without sacrificing competitiveness or enrollment. And the outcome can sometimes be greater than an annual tuition rate increase, so get started today!

Meredith Martin