How much does it cost to open a daycare?
How much does it cost to open a daycare?
$5,000 – $20,000 average cost to open an in-home daycare
$25,000 – $100,000 average cost to open a daycare center
Cost to open a daycare
How much does it cost to start a daycare? That depends on the size and location of your business. Home-based daycares may need $5,000 to $20,000 to get off the ground, while larger daycare centers often spend $20,000 to $100,000. Starting a daycare franchise or building a new facility can cost $100,000 to several million dollars.
| Startup expense | In-home daycare cost | Center-based daycare cost |
|---|---|---|
| Facility costs | N/A (Existing home) | $1,000 – $10,000 per month lease |
| Security deposit | N/A (Existing home) | $2,000 – $10,000 |
| Renovations & decor | $1,000 – $5,000 | $5,000 – $40,000 |
| Licensing/permits/fees | $100 – $500 | $500 – $1,000 |
| Daycare insurance | $400 – $1,500 | $1,100 – $4,000+ |
| Furniture & equipment | $1,500 – $5,000 | $5,000 – $20,000+ |
| Supplies (initial stock) | $500 – $2,500 | $1,500 – $2,500 |
| Curriculum, books, software | $500 – $2,500 | $1,000 – $2,500 |
| Advertising / marketing | $0 – $1,000 | $1,500 – $5,000 |
| Legal & accounting fees | $1,000 – $2,000 | $1,500 – $5,000+ |
| Average total startup cost | $5,000 – $20,000 | $20,000 – $100,000 |
Facility costs
For an in-home daycare, there are no new facility costs if you use your own house. However, you may need to get permission from your landlord if you rent or from your homeowners' association (HOA) if there are rules about running a business from home. This avoids problems later and is often required by licensing agencies.
For a center-based daycare, you'll spend about $1,000 to $10,000 per month to rent a commercial space that is safe, accessible, and meets childcare licensing rules. Renting a space lets you care for more children but adds a major monthly cost.
Security deposit
For in-home daycares in a home you own, you don't pay a security deposit. If you rent, your landlord might charge an extra deposit if you run a business from home. Always check your rental agreement or ask your landlord what's required before starting.
Center-based daycares pay $2,000 to $10,000 (or one month's rent) as a deposit when they sign a lease on a commercial property. This money protects the landlord from damages or unpaid rent, so it's often non-negotiable and must be factored in during planning.
Renovations & décor
Setting up an in-home daycare means spending about $1,000 to $5,000 on childproofing, painting, fixing rooms, or adding fun decorations. The right features help create a safe and welcoming place for children.
Center-based daycares need more work, often costing $5,000 to $40,000+. Some spaces need walls built or removed, new bathrooms, commercial flooring, or approved outdoor play areas. These renovations help the center pass safety inspections and attract families.
Licensing, permits, and fees
In-home daycares pay around $100 to $500 for state licenses and permits. This includes application fees, background checks, and inspections to meet health and safety rules.
Center-based daycares need extra permits and pay $500 to $1,000 or more. They are inspected more often, may need local fire marshal or city approval, and pay higher fees due to the number of children served.
Daycare insurance cost
Home daycare insurance costs $400 to $1,500 each year for an in-home daycare. Basic coverage protects you if a child has an accident in your care or if something in your home is damaged.
Daycare insurance costs for a center average $1,100 to $4,000 per year or more. There are more risks when caring for several children in a public space, and you'll need policies for property, liability, and possibly workers' comp if you have staff.
Furniture & equipment
Home daycares spend $1,500 to $5,000 on furniture and equipment. You'll need child-size tables and chairs, cubbies, cribs, toys, baby gates, and other safety gear.
Daycare centers for larger groups spend $5,000 to $20,000 or more to equip multiple rooms with furniture, play equipment for different ages, and everything needed for state licensing.
Supplies
In-home daycares need around $500 to $2,500 to build an initial stock of supplies. This covers essentials like snacks, diapers, cleaning items, and paper goods, as well as toys and art supplies.
Center-based daycares spend $1,500 to $2,500 for initial classroom and daycare supplies. Daycare centers need larger quantities of supplies to serve more children, including bulk cleaning products and all the classroom basics.
Curriculum, books, software
To keep children learning, in-home daycares spend $500 to $2,500 each year on curriculum, activity books, and educational software. You don't need to buy everything at once, but you will want to include this recurring expense in your daycare budget.
Daycare centers work with more kids and may offer specialized programs. Annual costs run $1,000 to $2,500 or more to provide a full library and digital learning tools for every age group.
Advertising / marketing
Home daycares can launch with $0 to $1,000 in marketing, relying mostly on word of mouth. However, a small budget can help you set up a website, print flyers, or list your service on parent groups.
Center-based daycares put $1,500 to $5,000 into advertising before opening. With more spots to fill, they use signs, local ads, and online campaigns to reach as many families as possible.
Create a free profile on TrustedCare to increase your chances of being discovered by local families searching for child care.
Legal & accounting fees
In-home daycares should budget $1,000 to $2,000 for legal and accounting help. This covers things like registering your business, preparing contracts, and setting up basic bookkeeping to keep your finances in order.
Center-based daycares need $1,500 to $5,000 or more for these services. With more staff and complex finances, professional help ensures you meet all requirements, manage payroll, and handle taxes and compliance properly.
Cost factors for opening a daycare
When starting a daycare, several factors can impact costs:
Type of daycare: Home-based providers spend less on facility costs since they are using their existing residence. Daycare centers require a bigger investment for space, classroom equipment, and potentially staff.
Location: Urban and high-cost-of-living areas have higher rent, insurance, and wage requirements. Centers in residential neighborhoods or lower-cost regions spend less on real estate and payroll.
Facility and renovation needs: Building or renovating a daycare space pushes costs higher, with construction and remodeling often among the biggest single expenses.
Licensing and permits: Every state requires specific licenses, safety upgrades, and compliance investments which can add up quickly.
Staffing: Hiring qualified professionals to meet state-mandated staff-to-child ratios is essential. Wages vary by region and the staff's training and experience.
Equipment and supplies: Childproof furniture, toys, learning materials, technology (like computers and tablets), and cleaning supplies are all required.
Insurance and legal: Daycares must carry liability, property, and workers' compensation insurance. Legal counsel for contracts and human resources may also be necessary.
Marketing and administrative expenses: Building a website, printing flyers, and registering your business all create additional costs.
Utilities and maintenance: Water, electricity, waste removal, and building upkeep contribute to monthly operating expenses.
FAQs about starting a daycare
How do I start a home daycare?
To start a daycare at home, first check your state and local licensing rules and ensure your home meets safety standards. Prepare your space with the right equipment and supplies, apply for the necessary permits and insurance, set your schedule and rates, and let local families know about your daycare so you can begin enrolling children.
What certifications do I need to open a daycare?
To open a daycare, you'll need specific certifications and paperwork required by your state and local authorities. These requirements may include:
State childcare license
Childcare training courses
First aid and CPR certification
Background screenings
Are daycare centers profitable?
Daycare centers can be profitable, with average profit margins ranging from 10% to 20% and many owners earning annual salaries between $30,000 and $85,000, depending on enrollment and expenses. Success depends on careful cost management, market demand, and maintaining high enrollment, making strong business planning crucial.
Check out our free guide about how to make your daycare more profitable.
Questions to ask yourself
Before starting your daycare, ask yourself these essential questions to help prepare for your biggest expenses and legal requirements:
What is my total budget, including a contingency for unexpected expenses?
Are there grants or financing options available in my state or city?
How much working capital should I set aside for the first few months after opening?
Do I need permission from my landlord or HOA to operate a daycare from home?
What's included in the commercial lease for a daycare center (utilities, maintenance, insurance)?
What renovations or safety upgrades does my facility need to comply with local codes?
How much do background checks, fingerprinting, and annual renewals cost?
What types of insurance are mandatory, and which are optional?
Does my homeowners' or renters' insurance cover my in-home daycare, or do I need a separate policy?
What are the local staff-to-child ratios, and how do they impact payroll costs?
Are there minimum wage laws or training requirements that affect my hiring and budget?
Which furniture and equipment items are required for licensing, and which are optional?
Should I buy supplies in bulk, and if so, what storage space is available?
What are the average ongoing monthly costs (utilities, supplies, payroll, rent)?
Using our proprietary cost database, in-depth research, and collaboration with industry experts, we deliver accurate, up-to-date pricing and insights you can trust, every time.