Written by

Kristen Cramer

May 30, 2025

Edited by

Tamatha Hazen

Fact-checked by

Tara Farmer

Running a daycare is a meaningful venture, but it's also a business that requires solid financial planning. While tuition makes up most of a daycare's income, relying solely on it for revenue can leave your business vulnerable to enrollment dips, seasonal changes, or broader economic challenges.

To achieve long-term success, daycare owners must think beyond tuition and explore strategic ways to grow their revenue. This article outlines practical methods to help you increase your daycare's profit margin while continuing to deliver outstanding care to the families you serve.

Are daycares profitable?

Yes, when well-managed, daycare centers can be highly profitable. The average daycare generates around $36,000 in profit annually, with top earners making over $60,000. Those with lower earnings typically rely on tuition alone and overlook alternative revenue streams.

To ensure financial stability, daycare owners must think beyond traditional models. Adding value through new services, programs, and partnerships helps protect against market shifts while increasing your income potential.

Practical ways to increase your daycare profit margin

Here are tried-and-tested methods for boosting your daycare's revenue without compromising on care quality:

Offer enrichment programs

Enrichment programs not only attract new families but also provide children with fun and educational experiences. These programs can be offered for an additional fee and may include:

• Art and music classes

• Dance or yoga

• Cooking and baking activities

• Foreign language instruction

• Fitness or sports programs

• STEM workshops

Use existing staff or collaborate with local instructors to run these programs cost-effectively. Enrichment offerings enhance your daycare's income, and you'll also position your center as a leader in child development.

Create a parent referral program

Launching a formal parent referral program with incentives—such as tuition discounts or small rewards like gift cards—can help bring in a steady flow of new families, driven by the trust your existing clients already have in your services. A parent referral program encourages your current families to spread the word.

Develop strategic partnerships

Forming strategic partnerships with community organizations and local businesses that service families can also be a powerful tool. These partnerships can offer mutual benefits—cross-promotions, discounts, or referral incentives that drive more families to your daycare center.

Consider reaching out to these businesses in your area:

• Children's clothing retailers

• Toy or book stores

• Family photographers

• Pediatric clinics

Offering those businesses' employees a discount on childcare or referring your own clients to their services creates a mutually beneficial relationship.

Expand your services

Another profitable approach is to expand your core services to include a variety of extras not offered by other daycare centers in your area. Consider offering these services or items as part of a premium package or individually for an added fee:

• Supplemental meals

• Organic meals and snacks

• Birthday party hosting

• Holiday celebrations

• Seasonal camps

• Tutoring services

• Customized learning plans

Providing early drop-off or late pick-up options appeals to working parents and can be a valuable revenue booster. Consider hosting occasional evening care events, such as monthly “parents' night out” programs. These added services cater to busy parents and set your daycare apart from competitors.

Offer paid courses for parents and childcare staff

Hosting in-person or online courses for parents on child development or behavior guidance can generate revenue while positioning your center as an educational resource. Similarly, consider offering professional development courses for staff, covering topics such as handling allergies in a childcare setting, managing difficult child temperaments, or technology in early childhood education.

Create branded products and keepsakes

Offering branded products and keepsake items not only provides an extra revenue stream but also helps build a strong identity for your daycare and fosters a sense of community and pride among parents and children. Consider introducing these items:

• Branded merchandise: Sell T-shirts, lunch boxes, or backpacks with your daycare logo.

• Activity kits for home: Offer curated educational kits parents can buy for weekends or vacations.

• Keepsakes: Create an annual yearbook or photo collection, graduation items, or holiday ornaments or frames featuring the child's photo and the daycare logo.

Use an online daycare management platform

Using an online childcare management platform can save time and reduce administrative expenses. Tools like TrustedCare's all-in-one system can automate scheduling, billing, attendance, and communications, freeing up resources that can be invested elsewhere.

Marketing strategies to increase profits

Increasing your daycare profit margin also means expanding your reach. Effective marketing helps fill enrollment gaps and attract new clients to your services. Follow these tips for a targeted marketing strategy:

Digital marketing & social media

Digital marketing remains one of the most affordable ways to reach potential families. A strong website, informative blog content, regular email updates, and a social media presence on platforms like Facebook or Instagram can help you showcase your new offerings and keep you in the minds of current and prospective parents.

Encourage word-of-mouth advertising

Encourage satisfied families to share their experiences through testimonials, reviews, referrals, and social media to extend your reach even further. Positive word-of-mouth, both online and offline, remains one of the most powerful marketing tools for childcare centers.

Ask parents to:

• Leave reviews on Google and TrustedCare.

• Share testimonials or social media posts.

• Refer friends and family (with a reward for each successful referral).

Networking & community engagement

Community involvement is another important strategy to grow your daycare business. Hosting events such as open houses, family fun days, or parenting workshops allows you to engage directly with local families. These events also provide a platform to introduce new services and gather feedback from attendees.

Distribute flyers and brochures with service details and special offers. Attend local fairs or expos to network with other businesses and meet new families. For greater impact, consider renting a booth at these events to advertise your childcare offerings. Offer a raffle with prizes as an incentive to get contact information from prospective parents and keep a stash of enrollment forms within easy reach to hand out.

Financial planning for long-term success

Before introducing new revenue streams, it's important to estimate potential income and compare it against expected costs. Some services, like early drop-offs or enrichment classes, may offer daily or weekly revenue, while others—like events, online courses, or holiday care—may be seasonal or occasional. Start with these tips:

• Categorize your income: Daily (e.g., late pick-ups), monthly (e.g., enrichment classes), or quarterly (e.g., parent workshops).

• Plan for seasonality: Some offerings will be more in-demand during school breaks or holidays.

• Analyze potential risks: Some offerings may require significant upfront investment or carry the possibility of cancellations and refund requests.

Assess the sustainability of each idea by projecting monthly and annual earnings, then consider the risks involved. Track promotional efforts, such as discount incentives, to ensure they don't reduce profitability.

Developing a clear financial plan will help you allocate resources wisely. Start by identifying your top goals, budgeting for associated expenses, and tracking the performance of each initiative. Monitoring actual results compared to your projections allows you to make data-informed decisions and pivot when needed.

Managing challenges and minimizing risk

Diversification comes with challenges. You may encounter issues like:

• Staff burnout from extra duties

• Higher operating costs

• Mistakes due to lack of expertise in new services

• Potential dilution of your brand

To address these challenges, begin with a well-defined vision. Align any new services with your core values and the needs of the families you serve.

Before fully launching a new offering, test it on a small scale and evaluate the results, and then scale up gradually. Monitor feedback and adapt quickly. Be sure to set clear priorities, provide training for new services, and avoid overextending your team.

Conducting research and seeking input from staff and families can help ensure you're making choices that are both financially sound and aligned with your community's needs. Being flexible and willing to adjust your approach will also help you avoid costly missteps and maintain a strong reputation.

Grow your daycare business

Increasing your daycare's profitability isn't just about raising rates—it's about offering more value, staying flexible, and meeting the evolving needs of your community. By adding enrichment programs, forming partnerships, expanding services, and embracing digital tools, you can diversify your revenue and grow a stronger, more resilient business.

Remember, sustainable success comes from continuous improvement. Stay informed, listen to your families, and never stop refining your operations.