Daycare
Daycare businesses face tight margins driven by mandated staff-to-child ratios and licensing requirements. Labor typically exceeds 50% of revenue. Tuition-based recurring revenue is stable, but capacity utilization is the main profitability lever since costs are largely fixed.
Key Benchmarks for Daycare
Net Profit Margin
5–15%
After all expenses, taxes, and overhead
Gross Margin
20–35%
Revenue minus cost of goods sold
Labor Cost
~55% of revenue
Total labor as a share of top-line revenue
Overhead
~20% of revenue
Rent, utilities, insurance, admin costs
Break-Even Timeline
~24 months
Average time for a new business to break even
Cost Split
70% fixed / 30% variable
Typical fixed vs variable cost ratio
Recommended Calculators for Daycare
Break-Even Calculator
Find exactly how many units or how much revenue you need to cover all costs.
Cash Flow Forecast
Project your cash position over 12 months with growth and seasonal inputs.
Employee True Cost
See the real cost of an employee beyond base salary – taxes, benefits, overhead.
Can I Afford to Hire?
Combines break-even, employee cost, and cash flow into one clear hiring answer.
What Daycare Business Owners Should Know
Margins matter more than revenue. A daycare business with 15% net margins on $500K revenue is healthier than one with 5% margins on $1M. Use the Markup & Margin calculator to find your sweet spot.
Know your break-even number. Most daycare businesses take ~24 months to break even. The Break-Even calculator shows exactly how many sales you need.
Labor is your biggest lever. At ~55% of revenue, labor costs in daycare are significant. Before hiring, run the Can I Afford to Hire? calculator.
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