Running a childcare business takes more than just a love for working with young children—it also requires smart financial planning. Whether you’re just starting out or have been in the industry for years, keeping an eye on the right financial numbers is key to staying profitable, running smoothly, and building a business that lasts.
When you truly understand your finances, you’re in a better position to make smart choices, secure funding if needed, and grow with confidence.
In this article, we’ll walk you through the most important financial metrics every childcare owner should keep track of. These numbers will help you get a clear sense of your center’s financial health and guide you in making strong, strategic decisions.
1. Revenue Per Child
This is one of the most fundamental metrics for any childcare provider. Revenue per child tells you how much income each enrolled child generates on average.
How to Calculate:
Total Monthly Revenue ÷ Total Number of Enrolled Children
Why It Matters:
- Helps identify whether your pricing structure is effective.
- Enables comparison across different classrooms, programs, or time periods.
- Assists in determining your break-even enrollment level.
Example
$224,000 total revenue collected, $19,000 Registration Fees, $5,000 uniform sales, $9,000 Government Stipend, Total Number of Children 151:
$224,000 – $19 – $5 = $200,000 / 151 = $1,324 Revenue Per Child
2. Occupancy Rate
Your occupancy rate tells you how full your center is compared to the number of spots you’re licensed to fill. Keeping this number high is one of the best ways to boost your revenue.
How to Calculate:
(Number of Enrolled Children ÷ Total Licensed Capacity) × 100
Why It Matters:
- A low occupancy rate might point to operational inefficiencies or gaps in your marketing efforts.
- Watching how it changes over time can help you plan ahead for revenue shifts or adjust staffing levels.
- A higher occupancy rate generally means more consistent cash flow—and stronger profits.
- Same Example as Above, Assume Total Capacity is 200 Children, (150/200)*100= 75%
3. Staff-to-Child Ratio Cost
Childcare centers must adhere to strict staff-to-child ratios for safety and compliance. However, staffing is also your largest expense, often accounting for 50–60% of total revenue.
Same Example As Above, Assume $101,000 Teacher & Housekeeping, $6,250 Director, $107,250 / $200,000 = 53.6%
How to Calculate:
Total Payroll Expenses ÷ Total Revenue
Why It Matters:
- Helps manage labor costs without sacrificing quality or compliance.
- Aids in scheduling staff efficiently during peak and off-peak hours.
- Identifies overstaffing or understaffing issues.
4. Monthly Recurring Revenue (MRR)
MRR gives you a snapshot of predictable, recurring income. In childcare, this typically includes tuition and ongoing program fees.
How to Calculate:
Sum of All Monthly Tuition and Recurring Fees
Why It Matters:
- Provides revenue stability and forecasting insight.
- Important for cash flow planning.
- Makes your business more attractive to lenders or investors.
Example
$224,000 total revenue collected, $19,000 Registration Fees, $5,000 uniform sales, $9,000 Government Stipend (assuming this is for services provided), Total Number of Children 151:
$224,000 – $19 – $5 = $200,000 MRR
5. Accounts Receivable Turnover
This metric shows how quickly you’re collecting payments from families. Long collection times can strain your cash flow.
Here’s how to use it to guide your business strategy:
How to Calculate:
Annual Revenue ÷ Average Accounts Receivable
Why It Matters:
- Helps ensure steady cash flow.
- Indicates the effectiveness of your billing and collections process.
- A low turnover rate may suggest late payments or billing inefficiencies.
6. Profit Margin
Profit margin reveals how much of your revenue becomes profit after covering all expenses. It’s a strong indicator of overall financial health.
How to Calculate:
(Net Profit ÷ Total Revenue) × 100
Why It Matters:
- Helps you evaluate operational efficiency.
- Reveals if pricing covers all costs and leaves room for growth.
- Allows benchmarking against industry standards.
7. Cost Per Child
This measures how much it costs you to care for and educate each child. It includes all expenses—staff, food, supplies, utilities, etc.
How to Calculate:
Total Monthly Operating Expenses ÷ Total Number of Enrolled Children
Why It Matters:
- Helps determine if your tuition fees are adequate.
- Enables better cost control.
- Assists in pricing new services or programs.
8. Cash Flow Forecast
While not a static metric, forecasting your cash flow helps you anticipate upcoming shortfalls or surpluses. It’s vital for planning and maintaining financial stability.
What to Track:
- Expected revenue
- Recurring expenses
- One-time costs
- Seasonal fluctuations
Why It Matters:
- Prevents overdrafts or missed payroll.
- Guides decision-making about expansion, hiring, or investments.
- Improves long-term planning.
9. Enrollment Growth Rate
Understanding how quickly your enrollment is growing—or declining—helps you spot early signs of trouble or success.
How to Calculate:
((Current Enrollment – Previous Enrollment) ÷ Previous Enrollment) × 100
Why It Matters:
- Directly affects your revenue and staffing.
- Helps with forecasting and capacity planning.
- Indicates effectiveness of your marketing and outreach efforts.
10. Customer Acquisition Cost (CAC)
Knowing how much it costs to gain a new family helps you assess your marketing ROI.
How to Calculate:
Total Marketing Expenses ÷ Number of New Enrollments
Why It Matters:
- Allows for better budgeting of marketing efforts.
- Identifies which channels are most cost-effective.
- Supports smarter, data-driven marketing strategies.
Final Thoughts
Keeping track of the right financial numbers is a big part of running a childcare business that’s not only profitable but also built to last—and aligned with your mission. While these figures might feel a bit overwhelming at first, the good news is that with a simple dashboard or childcare-focused software, they’re much easier to manage than you might think.
Financial know-how isn’t just for accountants—it’s a vital part of being a strong leader. When you understand your numbers and stay on top of them, you can make smarter choices, offer better care, and set your center up for long-term success.
At Radius Childcare Solutions, we make tracking your key financial metrics simple, accurate, and stress-free. Our all-in-one financial management platform is designed specifically for childcare providers—giving you real-time insights into revenue, expenses, enrollment trends, and more. Let us help you eliminate guesswork, improve profitability, and grow with confidence.
