In order to calculate how much to charge, you need to take into consideration that most nurseries are only open 38 weeks of the year and not the whole year as a result of holidays etc. However, their expenses are incurred over the full 52 weeks of the year.
How to work out your charges
If we look at the nursery which is registered for 20 children and has annual outgoings of £60,000 over 38 weeks, their weekly costs would be:
£60,000 / 38 weeks = £1578.95 per week
This means they need to make £1578.95 per week from their fees to break even.
If the business runs 6 hours a day, 5 days a week, with 20 registered places the total number of hours available are:
6 hours x 5 days x 20 places = 600 hours available
As they should aim for at least 80% occupancy , this means 80% of the 600 hours should be filled. To calculate this:
600 available hours x 80% = 480 hours should be filled on average.
The hourly charge should therefore be at least:
£1578.95 weekly costs/480 = £3.29 per hour minimum charge
Using this rate – the minimum occupancy should be no less than:
480 filled hours /6 hours / 5 days = 16 children a day
In other words they need at least 16 children each day to cover their bills. If they have more than 16 children they will be in profit, however with less than 16 children, you will be at a loss.
You can use these calculations you work out your hourly rate. From this you can calculate your monthly or termly charges.
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