This article was written by our expert who is surveying the industry and constantly updating the business plan for a daycare.
Starting a daycare center requires substantial upfront investment across multiple categories from licensing fees to facility preparation.
Understanding these startup costs helps you create a realistic budget and secure adequate funding for your childcare business venture.
If you want to dig deeper and learn more, you can download our business plan for a daycare. Also, before launching, get all the profit, revenue, and cost breakdowns you need for complete clarity with our daycare financial forecast.
Opening a daycare center requires total startup costs ranging from $100,000 to $500,000 depending on facility size and capacity.
The largest expenses include facility renovation, equipment, and maintaining operating cash reserves for the first six months.
| Expense Category | Low Range | High Range | Notes |
|---|---|---|---|
| Licensing & Registration | $500 | $5,000 | Varies by state |
| Facility Lease/Purchase | $52,000 | $500,000+ | Down payment or 1st year |
| Renovation & Safety | $10,000 | $50,000 | Compliance required |
| Furniture & Equipment | $5,000 | $25,000 | Age-appropriate items |
| Playground Equipment | $5,000 | $50,000 | Commercial grade |
| Kitchen Facilities | $20,000 | $50,000 | If meals provided |
| Operating Reserves | $30,000 | $180,000 | 3-6 months expenses |
What are the typical licensing and registration fees for opening a daycare?
Daycare licensing fees range from $500 to $5,000 upfront, with most states charging between $500 and $1,000 for initial licensing.
Some states offer lower fees for family daycare homes, starting as low as $35, while large commercial centers may pay $1,500 or more. Many states also require a preliminary application fee under $100, plus background check costs of $2 to $30 per staff member.
Annual renewal fees typically range from $50 to $1,500 depending on your facility's capacity and local regulations. States like California and Texas have higher fees due to stricter regulatory requirements, while rural states often charge less.
Additional costs include fire department inspections ($50-$200), health department permits ($100-$500), and zoning compliance fees that vary by municipality. These one-time setup costs are essential for legal operation.
Budget approximately $1,000 to $2,000 total for all licensing and registration requirements in your first year of operation.
How much should you budget for leasing or purchasing a daycare facility?
Leasing a daycare facility requires monthly rent of $1,000 to $10,000 plus security deposits of $2,000 to $10,000, typically equal to one to two months' rent.
Commercial lease rates vary significantly by location, with urban areas commanding $15-$30 per square foot annually, while suburban locations average $8-$20 per square foot. A 3,000 square foot facility in a mid-tier market would cost approximately $3,000-$4,000 monthly.
Purchasing a daycare property requires down payments starting at $50,000 for smaller facilities and can exceed several million dollars for purpose-built centers. Most commercial loans require 20-30% down payments, making property purchase a significant capital commitment.
Factor in additional lease costs like common area maintenance fees, property taxes, and insurance, which can add 20-30% to your base rent. First-year facility costs including deposits often total $15,000 to $50,000 for leased properties.
You'll find detailed market insights in our daycare business plan, updated every quarter.
What are the renovation and safety compliance costs for a daycare?
Renovation, safety compliance, and childproofing costs typically range from $10,000 to $50,000 for most daycare facilities, depending on the existing condition and size of your space.
ADA accessibility upgrades alone can cost $15,000 to $35,000, including ramps, accessible restrooms, and doorway modifications. Fire safety systems including sprinklers, alarms, and emergency exits add another $8,000 to $20,000 to your renovation budget.
Childproofing requirements include outlet covers, safety gates, cabinet locks, and rounded corners on furniture, typically costing $2,000 to $5,000. Flooring must meet safety standards with non-slip surfaces and cushioned areas, costing $5-$15 per square foot installed.
HVAC systems require special filtration and ventilation standards for childcare facilities, often necessitating upgrades costing $10,000 to $25,000. Plumbing modifications for child-height sinks and additional restrooms can add $5,000 to $15,000.
Plan for unexpected issues during renovation by budgeting an additional 20% contingency fund beyond your initial estimates.
How much should be allocated for furniture and classroom equipment?
| Equipment Category | Cost Per Room | Quantity Needed | Total Range |
|---|---|---|---|
| Infant cribs and changing tables | $2,000-$4,000 | 1-2 rooms | $2,000-$8,000 |
| Toddler tables and chairs | $800-$1,500 | 2-3 rooms | $1,600-$4,500 |
| Preschool furniture sets | $1,200-$2,000 | 2-4 rooms | $2,400-$8,000 |
| Storage cubbies and shelving | $500-$1,000 | All rooms | $2,500-$6,000 |
| Nap mats and bedding | $300-$600 | All rooms | $1,200-$3,600 |
| Art and activity supplies | $400-$800 | All rooms | $1,600-$4,800 |
| Staff office furniture | $1,500-$3,000 | 1-2 offices | $1,500-$6,000 |
Quality furniture designed for commercial daycare use costs more than residential options but provides better durability and safety compliance.
What are the costs for outdoor playground equipment?
Commercial-grade playground equipment and installation costs range from $5,000 to $50,000, depending on the size of your outdoor space and features included.
Basic playground sets for 20-30 children cost $8,000 to $15,000 installed, including age-appropriate structures with slides, swings, and climbing features. Larger facilities serving 50+ children often invest $25,000 to $40,000 in comprehensive playground systems.
Safety surfacing is mandatory and costs $3-$8 per square foot for rubber mulch or $8-$15 per square foot for poured-in-place rubber. A 1,000 square foot playground area requires $3,000 to $15,000 just for proper surfacing materials and installation.
Fencing around the playground area costs $15-$25 per linear foot for commercial-grade materials. Additional safety features like shade structures add $2,000 to $8,000 depending on size and design.
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How much capital is needed for kitchen facilities and equipment?
Kitchen facilities for daycare centers providing meals require $20,000 to $50,000 for commercial-grade appliances, storage, and preparation areas that meet health code requirements.
Essential commercial kitchen equipment includes refrigerators ($3,000-$8,000), freezers ($2,000-$5,000), commercial ovens ($4,000-$12,000), and dishwashers ($3,000-$8,000). Food preparation surfaces and sinks add another $5,000 to $10,000 to your equipment costs.
Health department compliance requires specific ventilation systems, hand-washing stations, and food storage solutions that can cost $8,000 to $15,000 beyond basic equipment. Smaller facilities serving snacks only may reduce kitchen costs to $5,000 to $15,000.
Installation costs for electrical, plumbing, and gas connections typically add 30-50% to your equipment purchase prices. Plan for ongoing maintenance contracts costing $2,000 to $4,000 annually for commercial kitchen equipment.
What is the cost of curriculum materials and educational supplies per child?
Initial curriculum materials, toys, books, and educational supplies cost approximately $50 to $150 per child, with classroom setup costs of $1,000 to $2,500 per room.
- Age-appropriate books and reading materials ($300-$800 per classroom)
- Educational toys and manipulatives ($400-$1,000 per classroom)
- Art and craft supplies for ongoing activities ($200-$500 per classroom)
- Curriculum guides and teaching materials ($300-$700 per classroom)
- Sensory and motor development equipment ($400-$900 per classroom)
- Science and discovery materials ($200-$600 per classroom)
- Music and movement supplies ($150-$400 per classroom)
Specialized materials for infants and toddlers cost more due to safety requirements and developmental needs. Budget for curriculum material replacement and updates of approximately 20-30% annually as items wear out or programs evolve.
How much should be set aside for comprehensive insurance coverage?
Comprehensive daycare insurance packages covering liability, property, and workers' compensation cost approximately $1,100 to $4,000 annually, depending on facility size and enrollment capacity.
General liability insurance ranges from $800 to $2,500 per year and covers accidents involving children, parents, or staff on your property. Professional liability insurance adds another $300 to $800 annually to protect against claims of inadequate supervision or care.
Property insurance for your building contents and equipment costs $400 to $1,200 annually based on coverage limits and location. Workers' compensation insurance is mandatory in most states and costs approximately $2-$5 per $100 of payroll.
Additional coverage options include business interruption insurance ($200-$500 annually) and cyber liability protection ($300-$800 annually) for facilities using digital management systems. Many insurers offer package deals that reduce total premiums by 10-20%.
We cover this exact topic in the daycare business plan.
What are the expenses for recruiting and training staff before opening?
Recruiting, hiring, training, and certifying staff typically costs $3,000 to $10,000 before opening, depending on the number of employees and required certifications.
Background checks and fingerprinting cost $25 to $100 per employee across multiple agencies. CPR and first aid certification training costs $50 to $150 per staff member, while specialized early childhood education training can cost $200 to $500 per employee.
Recruitment advertising and screening costs average $500 to $2,000 depending on your hiring needs and local job market conditions. Many states require specific training hours before staff can work unsupervised with children, adding $1,000 to $3,000 in training costs.
Consider hiring costs for specialized positions like directors or lead teachers, which may require higher salaries and more extensive background verification. Budget additional funds for temporary staffing during your initial training period.
How much should be reserved for technology and security systems?
Technology investments for child management systems, security cameras, and communication tools typically cost $2,000 to $10,000 for initial setup and equipment.
| Technology Category | Setup Cost | Monthly/Annual Fees |
|---|---|---|
| Child management software system | $500-$2,000 | $50-$200/month per facility |
| Security camera system with monitoring | $2,000-$8,000 | $50-$150/month for cloud storage |
| Parent communication app platform | $200-$800 | $30-$100/month subscription |
| Check-in/check-out kiosk system | $1,000-$3,000 | $40-$120/month software license |
| Basic computer and tablet devices | $1,500-$4,000 | $100-$300/year for updates/support |
| Internet and phone service setup | $200-$600 | $100-$300/month for business service |
| Accounting and billing software | $300-$1,200 | $30-$150/month subscription |
Modern daycare centers rely heavily on technology for parent communication, child tracking, and regulatory compliance reporting.
What is the recommended cash reserve for marketing and community outreach?
Pre-opening marketing and community outreach budgets should range from $1,500 to $5,000 to build awareness and generate enrollment before your doors open.
Digital marketing including website development, social media setup, and online advertising typically costs $800 to $2,500 in the first few months. Print materials like brochures, banners, and direct mail campaigns add another $400 to $1,500 to your marketing investment.
Community outreach activities such as open house events, local fair participation, and partnership development with pediatric offices cost $300 to $1,000. Many successful daycares invest in grand opening promotions and referral incentive programs costing $500 to $2,000.
Ongoing marketing should be budgeted at 3-5% of gross revenue, but initial marketing requires higher investment to establish your presence in the community. Track enrollment sources to optimize your marketing spend effectiveness.
It's a key part of what we outline in the daycare business plan.
How many months of operating expenses should be planned as financial reserves?
Daycare centers should maintain cash reserves covering 3 to 6 months of operating expenses, typically requiring $30,000 to $180,000 depending on facility size and enrollment capacity.
Monthly operating expenses for smaller centers average $10,000 to $30,000, including staff payroll, utilities, food, supplies, and rent. Larger facilities serving 100+ children may have monthly expenses of $40,000 to $60,000 or more.
Most daycare centers require several months to reach full enrollment and positive cash flow. During the ramp-up period, you'll have full operating costs but reduced tuition income, making adequate reserves essential for survival.
Conservative planning suggests 6 months of reserves, while aggressive entrepreneurs might operate with 3-4 months if they have alternative funding sources. Consider seasonal enrollment fluctuations and potential emergency closures when calculating your reserve needs.
Cash flow management becomes critical once operational, as most daycare revenue comes from monthly tuition payments while expenses occur weekly or daily.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are encouraged to consult with a qualified professional before making any investment decisions. We accept no liability for any actions taken based on the information provided.
Starting a daycare center requires careful financial planning across multiple expense categories, from licensing fees to equipment and reserves.
Success depends on accurately estimating these startup costs and securing adequate funding to sustain operations until reaching profitability.
Sources
- Broward County Childcare Fee Schedule
- HelloSubs - Cost of Daycare License in Texas
- TrustedCare - How Much Does It Cost to Open a Daycare
- FinModelsLab - Daycare Center Startup Costs
- EmergentEd - Daycare for Sale Buy or Lease
- Dojo Business - How Much to Build a Daycare
- Dojo Business - How Much Cost to Open Childcare Center
- Serif AI - How to Start a Daycare Business 2025 Guide
- North Carolina Department of Health - Annual License Fee
- California Department of Social Services - Licensing Fees
