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What the Rising Inflation Rate Means for Your School

Data chart illustrating the rising inflation rateThe current U.S. inflation rate is the highest it has been in the last 40 years. The effects of inflation are hitting the childcare industry especially hard. I don’t go a week without a preschool owner commenting how hard it is to find good employees in today’s market or about the increase in food costs.   Unfortunately, for now, this is something we all have to live with. Employee wages are not going back down to the level they were a couple years ago. If you increase an employee’s wage from $10 an hour to $12 an hour, that is a 20% increase. Increase that wage from $12 an hour to $15 an hour, that becomes a 25% increase. These are the types of increases I am seeing from school owners working to retain the teachers in their schools.

 

How to Combat the Effects of Inflation


As business owners, we cannot absorb these additional costs without reducing business profitability. To keep the same profitability, you must increase tuition rates to offset this expense.   Successful school owners have increased tuition rates and will continue to do so to help offset these increased costs. Historically, we have told schools to re-evaluate their tuition rates at least once a year by classroom based on enrollment and capacity. With the acceleration of the current inflation rate, you should be re-evaluating tuition rates at least twice a year to maintain profitability.    

A Closer Look: Why It's OK to Increase Tuition Rates


A school we were selling a few months ago did not change their tuition rates. It eventually got to the point where the school was no longer profitable and made it near-impossible to sell. So, the school owner relented and increased tuition rates 25% across-the-board for all students. They did not lose a single student because of this. While this is an extreme example, every school should make small adjustments to keep their school profitable before they feel the detrimental impacts of inflation.   If you are thinking about selling your school, trust the experts at Gateway School Sales to guide you through the process. Leverage our knowledge and experience in the industry to help keep your school profitable and ready to sell.  

Call us now for a free, no-obligation pricing analysis at (972) 267-9003