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KPIs, or Key Performance Indicators, are crucial when understanding the health of your childcare business. These metrics give you insight into how different areas of your business are performing. By tracking them, you can make informed decisions about your center to increase revenue, efficiency, and family and staff satisfaction. 

In this article, we’ll outline the top KPIs to track, how to track them, and how you can use them to grow and improve your business.

Full-Time Equivalency (FTE)

Full-Time Equivalency allows you to understand your center’s enrollment and capacity in order to keep each classroom filled. 

This calculation accounts for various daycare schedules like full-day, half-days, or before and after school. 

(Hint: Kangarootime’s new platform automatically calculates this for you in our Enrollment and Attendance modules. Learn more about Kangarootime here.

To calculate Full-Time Equivalency follow these steps:

  1. Segment enrollments by registration types.
  2. Determine FTE factor per registration type. (ex: Full Day = 1, Half Day = 0.5)
  3. Determine the number of enrollments per registration type.
  4. Multiply the number of enrollments by the FTE factor.
  5. Add together. 

Use this calculation to determine where there are open spots in your center. Once you identify open spots, you can better understand how to fill them.

Enrollment Shortfall Revenue

Your enrollment shortfall is the amount of revenue your center is missing out on by not being at full capacity. \

To calculate your enrollment shortfall, subtract the number of students enrolled in your center from the number of children you’re licensed for. 

Next, determine your center’s average tuition. (Take the average of all of your offered tuition fees. This can be done in excel or by adding all of the fees together and dividing by the number of fees.)

Next, multiply your center’s average tuition by the enrollment shortfall. By understanding how much revenue your center can potentially add to your income, you can focus on refining your budget and increasing enrollment.

Employee Turnover

Hiring, retention, and turnover are common challenges facing childcare centers, daycares, and preschools. By understanding the percent of your employee turnover, you can better understand how your center retains staff. This can help you decide if you need to improve your hiring and retention process. Here’s more information on how to do that. 

To calculate employee turnover, identify the total number of positions then the total number of employees, both active and terminated. Divide the total number of employees by the total number of positions. This is your percent of employee turnover. 

Payroll Expense As a Percentage of Revenue

See how much you’re paying for payroll versus how much revenue you’re bringing in with this calculation. This allows you to understand if you’re in line with the industry average when it comes to payment. It also lets you see if you’re over or understaffed.

Note, the rule of thumb is that between 15% to 30% of your gross sales should go to payroll. 

To calculate payroll as a percentage of revenue, simply divide your total payroll expenses by your total gross revenue.

For more information on KPIs and how to track them, check out this webinar from our partner, Audra Wilson-Russell.

Kangarootime is the leading all-in-one childcare management software for daycares and preschools. With billing and invoicing capabilities, parent communication and staff management tools and classroom automation, Kangarootime helps childcare centers grow and scale. To learn more about optimizing your center with Kangarootime, visit

Marissa Schneggenburger

Author Marissa Schneggenburger

Marissa Schneggenburger is the Marketing Coordinator at Kangarootime and experienced in content marketing. Marissa attended St. John Fisher College and received a B.S. in Marketing with minors in Finance and Spanish. Marissa also completed her MBA in Strategic Marketing from Niagara University. Marissa is passionate about the childcare industry and providing informative and engaging content.

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