Effectively Communicating Price Increases to Parents
Back in March 2022, we shared an article on how to effectively communicate price increases to parents. At that time, nurseries were dealing with new funding rates, and unfortunately many were left financially strained. The significant gap between funding rates and the rising costs of providing quality childcare made sustainability a challenge for nurseries and childcare providers. With wage increases at the time, many providers found themselves with little choice but to increase fees for parents.
Following the Spring Budget 2023, the Government announced an expansion of the free childcare offer to support more parents returning to work after maternity/parental leave. This marks the largest investment in childcare by the UK government, doubling the annual budget from around £4 billion to approximately £8 billion over the next few years.
Starting from April 2024, childcare support was set to expand gradually:
- By September 2025, most working families with children under 5 will get 30 hours of childcare.
- April 2024: Eligible working parents of 2-year-olds get 15 hours of childcare.
- September 2024: 15 hours extended to eligible parents of 9 months to 3-year-olds.
- September 2025: Eligible parents with 9-month-olds to school age get 30 hours.
These changes require nurseries to reassess their business models to maintain financial viability while continuing to provide high-quality childcare. The combination of increased government funding, a sharp rise in staff wages (nearly 20%), and insufficient funding to cover rising utility expenses poses a significant challenge for childcare providers across the nation. Consequently, many providers are left with no choice but to raise fees, causing confusion and concern among parents, who thought the funding expansion would alleviate the strain of the cost of childcare.
Increasing fees puts nurseries in a difficult position, but one that they can’t easily avoid. The process can be painful for both parties, particularly as parents have a lack of understanding of the issues faced by the sector and their cost of living is already causing concern. While the tips from our original article remain valuable, we’ve updated it to provide additional guidance for effectively communicating price increases to parents in the current context.
How to effectively communicate price increases to parents
Be upfront with price increases
Make sure you’re sending clear information to parents. You’ll always receive questions from parents, but the clearer the information they receive is, the less likely they are to be confused.
Don’t hide price changes, you should send formal letters to inform your parents of the fee increase.
Tell them in advance so that they have enough time to get their head around their new prices, this way they will be less likely to make emotional decisions. You should give your parents at least a month’s notice. A month should provide them with time to update their payment methods (for anybody who pays by standing order) and should give you the chance to address any issues or concerns.
Writing the letter...
It’s never easy to approach these things and if you’re struggling, think about using the ‘compliment sandwich’ technique for your letter.
- Focus on the positive factors and what you’re giving to parents in return.
- Present the fee increase.
- Thank your parents for choosing you to care for their child and offer them the opportunity to discuss.
The National Day Nursery Association (NDNA) has created a helpful letter template that carefully explains the implications and challenges of the Government-funded childcare rollout. It covers inflation of food costs, energy bills, learning resources, and statutory minimum wage rises. The letter includes facts, research, and graphics to help communicate this important information, enabling nursery providers to convey the message simply yet professionally. You can find the letter from the NDNA here.
Focus on the positive factors and what you’re giving to parents in return
When communicating price increases to parents, it’s beneficial to consistently highlight the enhanced value of your childcare services. Remind them of the importance of your early years setting; show the benefits of your nursery, tasks you’ve already accomplished and plans for any relevant upcoming investment that the parents will feel is a benefit for them and their child (and the staff team that looks after them).
Here are some things you could mention:
- Current Ofsted rating.
- Awards you have won (Nursery World, NMT, NDNA etc).
- Increase in staff resources.
- Again, it’s important to mention the Minimum & Living Wage increases. Sharing figures like this helps parents to quantify the value of care in your setting.
- Staff Knowledge/CPD – raising the quality of the care offered.
- More equipment or resources.
- Improved technology to make staff more efficient so that they can spend more time in their care.
- SEND equipment.
- Refurbishments.
- Quality of meals and kitchen hygiene ratings.
- Calculate each individual’s fees for them so they know exactly what to expect, including grants and extra charges and show how you worked it out.
- Tell them how you are charging against the local competition (if it’s beneficial) and take into consideration added extras, like paying for nappies, food, resources and outings.
- Include evidence of the current funding crisis, you could even link this to a piece from the media about rising costs in childcare and the increase of settings closing. Use a reliable source like Nursery World, which is included in the NDNA letter template mentioned above.
- Share any special offers that you might have, like sibling discounts, or reduced rates for undersubscribed sessions.
Thank your parents for choosing you to care for their child
Parents are just as much a part of your business as your staff and children. Thanking them not only shows appreciation but also strengthens your relationship with them. By expressing your gratitude, you convey a positive impression of your communication style, making parents feel valued and respected. This proactive approach can reduce potential concerns and build a supportive, collaborative environment. Remember, a simple thank you can go a long way in building trust and ensuring strong parent partnerships.
Allow your parents to discuss price increases
For many parents, personal communication with your staff is essential. After you’ve clearly explained the price increase to your parents (and provided ample notice), it’s important to offer them the opportunity to discuss this change with you if they wish.
Ensure that all staff members are informed about the upcoming price increases, as parents might bring this up during their interactions with practitioners and nursery staff. While all staff should be aware of the price changes, it’s crucial to designate specific team members who are available to discuss pricing details and how parents can contact them. This information should be included in your price increase letter and any related communications to parents. By doing so, you provide a clear and supportive channel for parents to express their concerns and receive the information they need.
Although increasing your nursery fees can be uncomfortable and something you’d rather avoid, it’s necessary for maintaining financial sustainability. This enables you to support your staff and continue providing high-quality care for children and their families. The cost of childcare is a significant topic of discussion currently, but it’s important to remember that we’ve seen price increases across many aspects of daily life, from food and fuel to utility bills. While you aim to support parents by offering affordable childcare, it’s crucial to position your nursery in a way that ensures long-term viability for your business and staff.
Transparency is key—being open about the reasons for fee increases shows your commitment and loyalty to parents. You have nothing to hide, and by communicating openly, you build trust and understanding with the families you serve.
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This article will also show you how to update your prices within Connect Childcare.
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About the Author
Content Marketing Executive at Connect Childcare