Additional Revenue Sources Every Early Education Owner Should Consider

In early education, revenue heavily relies on healthy tuition rates, full occupancy, and limited discounts (learn more in our recent How to Increase Revenue For Your Early Education Center Without Raising Tuition Rates blog). Beyond these primary sources, there are additional revenue streams that can supplement income and significantly strengthen your financial health. From fees to recoup the additional costs of running your center to federal initiatives and grants, exploring supplementary charges can provide stability, enhance profitability, and offer families added value. Consider the following possible additional revenue sources to diversify your income and boost your center’s financial resilience.

Registration Fees
An annual registration fee is a charge that parents pay when they first enroll their child in a childcare program, and once a year thereafter. This fee is separate from the regular tuition and is typically used to cover administrative costs, supplies, and enhanced program quality. It can also serve as a commitment fee, ensuring that families are serious about enrolling their child for the upcoming year. With thoughtful planning and clear communication, annual registration fees can be a valuable tool in sustaining and improving a childcare business. If you are not charging a registration fee annually, this is a good place to start utilizing supplemental fees to support your school’s financial health.

USDA Food Program
The United States Department of Agriculture (USDA) Food Program, officially known as the Child and Adult Care Food Program (CACFP), is a federal initiative that plays a crucial role in promoting nutritious meals and snacks for children and adults in care settings for schools that qualify. For childcare centers, participating in the CACFP not only helps ensure that children receive balanced, healthy meals but also provides financial assistance to support these efforts.

Schools qualify based on the family income of the population served in the school. In most qualified schools, the reimbursements will cover the cost of food, which is typically 5-6% of annual net revenue. The administrative burden to implement the program can be daunting, so if you do not have the team resources to accurately report and invoice for reimbursement, consider outsourcing this task to a specialized provider who can do it for you.

Late Payment Fees
Managing finances in an early education program can be challenging, especially when it comes to getting timely tuition payments from parents. An effective strategy to encourage prompt payments and maintain cash flow is to implement and consistently enforce a late payment policy.

The primary purpose of late payment fees is to motivate parents to pay tuition on time, which helps ensure consistent cash flow for the school, contributing to financial stability and enabling better planning and budgeting. Equally importantly, by reducing the number of late payments, administrative staff can spend less time on follow-ups and more time on other essential tasks such as teacher and program support.

Be sure that the fee is significant enough to encourage timely payments, that you clearly communicate the late payment fee policy to parents during the enrollment process and in written agreements, and that you apply the late payment policy consistently for all families. At the same time, be prepared to offer flexibility in cases of genuine financial hardship, prioritizing families who are communicating and following up and not sending Grandma in for pick-up to avoid talking to you.

When possible, consider using automated billing systems that send reminders and notifications to parents, and move toward monthly billing and automatic draft payments, if possible, in your parent group.

Late Pickup Fees
Implement a policy of charging a fee after the stated school closing time for late pick-ups. The cost associated with a late pickup — including possible staff overtime, infringing on staff personal time, and a possible upsetting experience for the child — makes charging a meaningful late fee a good idea. A typical fee is a dollar per minute after closing time. As with late payment fees, charge consistently and also be prepared with flexibility for situations that are unexpected with valued, long-term families.

Grants
Grant funds have been abundant since the COVID-19 pandemic, with most of the federal sources ending as support has shifted to state initiatives. In addition to government support, grants are available from businesses and non-profit organizations. Engage an interested team member to research and apply for grant funding or outsource the task to a professional grant seeker/writer. It is important to know what is available from the state and the employers that families work for, and to be timely in accessing opportunities for grants that might support expenses such as staff costs, facility improvement, or growth.

Fundraisers
Fundraisers are an excellent way to generate additional revenue, engage the community, and enhance the resources and programs offered to children. The most successful fundraisers tend to be for a specific stated purpose such as new playground equipment, educational materials, or facility improvements. When planning a fundraiser, ask for a team volunteer to lead the initiative, getting the collective team’s ideas and buy-in. It is important to promote the event, track progress, acknowledge contributions, and celebrate success!

Facility Rent
One effective way to maximize the use of your facility is to rent your building for other purposes during off-hours. Many early education buildings can be used during evenings or weekends to supplement income and provide additional community outreach. Some common rental opportunities include churches, birthday parties, fitness, or professional meetings. Some considerations when deciding to rent your facility are insurance and liability, security, compliance with existing leases or local regulations, and wear and tear on the building, as well as possibly the team. Hosting different groups and events can introduce your location to potential new families, increasing enrollment opportunities.

In today’s competitive early education market, generating additional revenue streams beyond tuition can be the key to building a resilient, financially sound business. By diversifying income sources, early education owners can create more stability, reduce reliance on tuition alone, and offer enhanced services to families. Whether it’s implementing supplemental fees, applying for grants, or even utilizing your facility for off-hours events, there are multiple opportunities to support your center’s growth and success.

As you consider these additional revenue sources, don’t hesitate to reach out to our HINGE Advisors team at info@hingeadvisors.com for more insights on sustainable financial health. We look forward to hearing from you!