Chartered Financial Analyst specializing in service-based business models and operations.
Find out how many children you need enrolled to make your childcare or daycare center profitable. Enter any three variables—Monthly Fixed Costs, Avg. Tuition per Child, Avg. Cost per Child, or Breakeven Enrollment—to solve for the fourth.
Childcare Breakeven Calculator
Childcare Breakeven Formula
The breakeven formula for a childcare center finds the number of enrolled children (Q) required for monthly tuition to cover all fixed and variable costs.
Q = F / (P – V)
Solve for Monthly Fixed Costs (F):
F = Q * (P – V)
Solve for Avg. Tuition per Child (P):
P = (F / Q) + V
Solve for Avg. Cost per Child (V):
V = P – (F / Q)
Variables Explained
- Monthly Fixed Costs (F): Your total, recurring monthly overhead (e.g., facility rent, staff salaries, utilities, insurance, software).
- Avg. Tuition per Child (P): The average monthly tuition you charge per child.
- Avg. Cost per Child (V): The average monthly cost for one child (e.g., food, snacks, art supplies, diapers, insurance per child).
- Breakeven Enrollment (Q): The total number of enrolled children needed to reach $0 in monthly profit.
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What is a Childcare Breakeven Point?
A **Childcare Breakeven Point** is the exact number of enrolled children (Q) your daycare or center needs to cover all monthly operating costs. It is the minimum enrollment required to avoid losing money. Knowing this number is essential for setting tuition rates and managing staff-to-child ratios.
**Fixed Costs (F)** are your consistent monthly expenses, regardless of enrollment numbers. This is your biggest category, including rent or mortgage for your facility, full-time staff salaries and benefits, utilities (electric, water, internet), business insurance, and licensing fees.
**Variable Costs (V)** are the costs that increase *directly* with each child you enroll. This includes food and snack costs, disposable supplies (like diapers, wipes, art supplies), and any per-child activity fees or supplemental insurance.
The **Contribution Margin** (P – V) is the profit from a single child’s tuition that goes toward paying off your fixed costs. If your monthly tuition is $1,200 (P) and each child costs $400 in food/supplies (V), your contribution margin is $800. This calculator finds how many $800 “profit chunks” you need to cover your total fixed costs.
How to Calculate Childcare Breakeven (Example)
Let’s calculate the breakeven point for a new daycare center.
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Identify Monthly Fixed Costs (F):
Your facility rent is $4,000, staff salaries are $10,000, and utilities/insurance are $1,000. Your (F) is $15,000.
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Identify Avg. Tuition per Child (P):
You charge an average monthly tuition of $1,500.
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Identify Avg. Cost per Child (V):
Food, supplies, and other variable items cost an average of $500 per child per month.
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Apply the Formula: Q = F / (P – V)
First, calculate the contribution margin per child: $1,500 (P) – $500 (V) = $1,000.
Next, divide the fixed costs by this margin:
Q = $15,000 / $1,000 = 15 -
Conclusion:
You must have 15 children enrolled each month to cover all your costs and start making a profit.
Frequently Asked Questions (FAQ)
Staffing is a “stepped” fixed cost. Your staff cost might be $10,000 for 1-15 children, but jump to $15,000 when you enroll the 16th child (requiring new staff). You should re-calculate your breakeven point each time you cross one of these “steps” in your fixed costs.
You should use averages. If a full-time spot is $1,500 and a part-time is $900, and you have half of each, your **Avg. Tuition (P)** is $1,200. Do the same for your **Avg. Cost (V)**. Alternatively, you can treat “full-time-equivalent” (FTE) as your unit (Q).
Salaries for your core, full-time staff (director, lead teachers) are a **Fixed Cost (F)**. Wages for part-time or hourly staff that you *only* bring in as enrollment increases can be treated as a **Variable Cost (V)**.
Enter your (F) (e.g., $15,000), (V) (e.g., $500), and your target enrollment (Q) (e.g., 20 children). Solve for (P): `P = ($15,000 / 20) + $500 = $750 + $500 = $1,250`. Your tuition must be at least $1,250 per child to break even with 20 children enrolled.