Should You Offer Childcare Discounts to Families? The Pros & Cons for Your Bottom Line
This post may contain affiliate links, which means I'll receive a commission if you purchase through my link, at no extra cost to you.Offering discounts can seem like a great way to attract families to your daycare, but is it actually helping or hurting your business? Many childcare providers struggle with setting tuition rates and feel pressured to lower prices to stay competitive.
When my husband and I ran our childcare center, we faced this same dilemma. We wanted to help families, but we also had bills to pay, staff to support, and a business to grow. I quickly learned that offering too many discounts can cut deep into profits, create enrollment inconsistencies, and set the wrong expectations with parents.
So, should you offer discounts to families? Not all discounts are created equal. In this article, I'll break down:
Which discounts are worth considering
Which discounts you may want to stay away from
How to structure discounts so they don't hurt your profit margin
Smart alternatives to tuition reductions
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Now let’s dive into whether you should offer discounts in your childcare center or home program.
The Case for Discounts: Which Ones Make Sense?
Discounts can be effective when used strategically, but they can also drain your profits if not implemented carefully. Let's dive into the most common discounts daycare owners offer and which ones I think are worth considering and which ones I'd rethink.
Discounts I Encourage
These discounts can help grow your business and create win-win situations for you and your families.
Referral Discounts
A one-time discount or credit when a current family refers a new enrollment. This rewards word-of-mouth marketing, which is one of the most cost-effective ways to grow a childcare business.
Quick Script: "We offer a $100 tuition credit when you refer a family who enrolls with us!"
Limited-Time Promotions
A short-term discount (e.g., "First Week Free," "50% Off First Month," or "Free Registration") can create urgency to fill open spots quickly. These should be temporary and clearly communicated so parents don't expect ongoing discounts.
Quick Script: "This month only, we're offering 50% off your first month's tuition when you enroll. We only have 3 spots available at this rate, so I encourage you to secure your child's spot soon!"
Employee Discounts
Offering a tuition discount for staff members' children can be a great incentive to attract and retain quality teachers while providing peace of mind for working parents. I love staff discounts and think you should offer at least 50% off for staff children.
Discounts to Approach with Caution
These may seem helpful but can hurt your business in the long run.
Sibling Discounts
While sibling discounts seem like a great incentive, most families would enroll siblings anyway—meaning you’re giving away revenue unnecessarily. Instead of offering a direct discount, consider adding premium perks for multi-child families, such as priority enrollment or exclusive program benefits.
If you really feel as if you must offer a sibling discount, keep it small—around 5%—to protect your profits while still providing a perk.
Do the Math: A $30 weekly sibling discount adds up to $1,560 per year per family in lost revenue. If 10 families receive this discount, that’s $15,600 annually—enough to hire a part-time teacher or upgrade your playground!
Looking back, when we opened our center in 2001, we offered this exact discount, thinking it would boost retention. But knowing what we know now, we wouldn’t do it again!
Absent Discounts or Credits
Some providers offer prorated tuition or credit for missed days, but this creates inconsistent revenue. Your expenses don't go down when a child is absent—you still have to pay staff, rent, and operational costs. Instead, emphasize that parents are paying for a spot, not just attendance.
What To Say Instead: "We understand that children get sick or families take vacations. However, our tuition is based on reserving your child's spot, not daily attendance. This allows us to maintain consistent staffing and quality even when attendance fluctuates."
Annual Vacation Credit – If you really want to offer some sort of credit but still maintain financial stability, consider an annual vacation credit. One option is to provide families with a tuition-free week after one full year of enrollment, to be used at a pre-approved time. This can be a great way to reward long-term enrollment while ensuring your policies still support consistent revenue and staffing.
Other Discounts to Consider-Your Choice!
Prepayment Discounts
Some daycares offer a small tuition reduction for families who pay for several months upfront. While this improves cash flow, it also means lower long-term revenue.
If you consider this, make sure the discount is modest (e.g., 3-5%) and doesn't put your business at financial risk. We personally never offered this because of the risk involved—if a parent gives a two-week notice (or whatever your policy states), you may be required to refund a significant amount, which can create financial strain.
Military or Essential Worker Discounts
Offering a discount to military families, first responders, or teachers can be a great way to give back, but it's not necessary to attract enrollments. If you do offer it, set a clear policy and avoid deep discounts that significantly reduce revenue.
Smart Approach: If you want to honor essential workers, consider a one-time welcome bonus rather than an ongoing discount. For example, "Active military personnel receive a waived registration fee and welcome package when enrolling."
The Risks: Why Discounts Can Hurt Your Bottom Line
While discounts may seem like a win-win, they can undercut your revenue and create long-term financial challenges.
1. Discounts Lower the Perceived Value of Your Program
Parents often associate higher tuition with higher quality. If you frequently offer discounts, families may question whether your program is worth full price.
Daycares or childcare centers that compete on price alone struggle to maintain long-term financial stability.
💡 Think About It: Would you trust a childcare center charging significantly less than others in the area? Many parents worry that "cheap" daycare means lower quality care.
2. Discounts Can Cut Deep Into Your Profits
If you give a 10% sibling discount, that means you are losing 10% of your revenue for that family every month.
If your profit margin is already low, this can make it difficult to cover expenses, pay staff, or reinvest in your daycare.
3. Discounts Can Set the Wrong Expectation for Parents
Families may expect discounts forever or negotiate for even lower rates.
Once you offer a discount, it can be difficult to remove it without upsetting parents.
True Story: Monica, a home daycare provider in Texas, offered a temporary discount during COVID-19. When she tried to return to her standard rates, three families threatened to leave! She had to phase out the discount over six months to keep families enrolled.
4. Discounts Won't Fix Enrollment Problems
If your daycare isn't full, the issue is likely marketing, positioning, or visibility—not pricing.
Parents choose childcare based on trust, quality, and safety—not just cost.
What Works Instead: Jamie struggled to fill her preschool program, so instead of discounting, she invested in a new STEM curriculum and better outdoor equipment. She highlighted these improvements in her marketing, and within three months, her program was fully enrolled at her regular rates!
How to Structure Discounts (If You Choose to Offer Them)
If you decide that certain discounts make sense for your business, here's how to implement them wisely:
1. Set Clear Time Limits
Always specify when a promotional discount ends. For example: "This enrollment special expires on August 31st."
2. Put Everything in Writing
Create a discount policy that clearly outlines:
Which discounts are available
Who qualifies
How long discounts last
Any conditions that might change the discount
3. One Discount Per Family
To avoid stacking discounts and losing too much revenue, make it clear that families can only receive one type of discount at a time.
Sample Policy: "Families may receive only one discount or promotional offer. Multiple discounts cannot be combined."
4. Calculate the Financial Impact
Before implementing any discount, do the math:
Calculate how much revenue you'll lose per child
Multiply by the number of children likely to receive the discount
Project the annual impact on your business
Determine if your profit margin can sustain this reduction
5. Plan for Phasing Out
If you want to discontinue a discount in the future, plan how you'll communicate this to families well in advance.
Communication Template: "Effective [date], we will be adjusting our discount structure to ensure we can continue providing the high-quality care and competitive staff wages our families expect. We are providing 60 days' notice so you can plan accordingly."
Click here to download my FREE Tuition Rate Increase Letter.
Smart Alternatives to Discounts
Instead of cutting tuition, focus on:
✔ Enrollment Incentives
Offer a welcome kit, waived registration fee, or 50% off their first month’s tuition.
Example: "New families enrolling this month receive our $150 registration fee waived and a welcome package including a center t-shirt and developmental milestone guide."
✔ Boosting Your Marketing
Improve your website, social media, and online presence to attract the right families.
Quick Tip: Create a virtual tour video of your facility that showcases what makes your program special. Share it on social media and your website to attract interested families who value quality care.
✔ Enhancing Program Value
To justify premium pricing, attract families, and stand out from competitors, consider adding high-value features to your program.
Here are some ways to enhance your childcare program:
Parent Workshops & Resources – Offer parenting workshops, newsletters, or online resources to support families beyond childcare hours.
Strong, Engaging Curriculum – Implement a research-based curriculum with hands-on learning, STEM activities, and social-emotional development.
Flexible Scheduling Options – Provide part-time, extended hours, or drop-in care to accommodate different family needs.
Enrichment Programs – Add music, art, yoga, foreign language, or nature-based learning experiences.
Healthy Meal Plans – Serve nutritious, high-quality meals and snacks, catering to allergies and dietary needs.
Parent Communication & Engagement – Use an app or regular updates to keep parents informed about their child’s day.
Real Example: Linda added quarterly parent education nights at her center, covering topics like positive discipline and early literacy. Parents reported feeling more connected to the center and appreciated the added value, even when tuition increased by 5%.
Helpful Resource: Want to bring in more revenue? Read my article: 10 Ways To Increase Revenue In Your Daycare Business
✔ Referral Programs
Instead of cutting tuition across the board, reward families who bring in new enrollments.
Quick Script: "Refer a family who enrolls, and receive a $100 tuition credit. Our top referring family last year earned over $400 in credits and helped us fill our program!"
Click here to download my FREE Parent Referral Program Letter
Helpful Resource: Want to convert more tours into enrollments? Read my article: How to Give an Amazing Tour Parents Can't Refuse.
Your "Should I Discount?" Decision Guide
Not sure if discounts make sense for your childcare business?
Ask yourself these questions:
□ Is my enrollment consistently below capacity?
□ Do I have a healthy profit margin that can absorb some discount costs?
□ Are my competitors offering discounts that are drawing families away?
□ Do I have a clear system to track and analyze the financial impact of discounts?
□ Have I explored non-discount alternatives to attract families?
If you answered "no" to most of these questions, you probably don't need to offer discounts!
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Final Thoughts: Should You Offer Discounts?
Discounts can be useful in certain situations, but if used incorrectly, they can harm your bottom line, lower your perceived value, and create enrollment issues.
Instead of cutting prices, focus on:
Providing exceptional care that parents are happy to pay for
Marketing your daycare effectively to attract the right families
Using incentives and referral programs instead of permanent discounts
At the end of the day, it's your business, and the decision is yours. Weigh the long-term financial impact before offering any discount.
Friend, remember that parents aren't looking for the cheapest childcare—they're looking for the best care they can afford. Focus on communicating your value, and the right families will find you!
Next Steps
Do you currently offer discounts at your daycare? Have they helped or hurt your business? Drop a comment below and let me know!
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Here are some other articles packed with valuable content you are sure to enjoy:
10 Ways To Increase Revenue In Your Daycare Business
6 Must-Do’s To Effectively Communicate To Staff
How To Avoid Burnout in Childcare
How To Screen Families For Your Daycare
6 Tips To Ace Your Licensing Inspections
30 Daycare Policies You Need in Your Parent Handbook
Important Daycare Forms You Need For Your Childcare Business
How To Deal With Parents Who Consistently Pay Tuition Late!
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