The ECEC Financial Benchmarks You Need to Be Aware Of

“A wise person should have money in their head, but not in their heart.” — Jonathan Swift

The ECEC sector is widely regarded as a stable industry in Australia, benefiting from structural factors that provide resilience against economic volatility. Government subsidies, particularly the Child Care Subsidy (CCS), create a protective buffer that makes the sector less sensitive to economic downturns compared to other industries. This stability stems from the essential nature of childcare services in supporting working families.

Ongoing demand for childcare services remains strong, driven by the reality that most Australian families require dual incomes to maintain their standard of living. This consistent need translates into steady enrolments and predictable long-term revenue streams for service providers. The demographic trends supporting this demand—including workforce participation rates and urbanisation—suggest this stability will continue.

From an investment perspective, many view childcare services as attractive assets, often commanding high valuations in the market. The combination of government-supported revenue streams, essential service provision and property ownership potential makes ECEC businesses appealing to both owner-operators and investors. The Child Care Subsidy ensures that families can access affordable care regardless of their financial circumstances, which in turn provides enrolment security for providers and makes ownership more appealing from a business sustainability standpoint.

Woman sitting at a laptop, perhaps reviewing the ECEC financial benchmarks for her service

Maybe you’re new to the early childhood education and care (ECEC) sector. Or perhaps you’re considering how to develop your existing ECEC service in a financially prudent manner. Either way, some critical ECEC financial benchmarks should always be front of mind. This is a quick summary to help you focus on the most important ones.

Staff costs are one of your most significant ECEC financial benchmarks

Staff costs typically represent 65–75% of gross revenue in well-managed ECEC services. This is your largest expense category, so managing it effectively is crucial for sustainability. To optimise this percentage:

Maximise occupancy—Higher occupancy rates spread fixed staffing costs across more children, improving your cost efficiency.
Strategic owner involvement—Owner-operators who work directly in the service can reduce external staffing costs while maintaining quality.
Efficient rostering—Use data-driven approaches to match staffing levels with demand patterns throughout the week.

Educator-to-child ratios

Understanding mandatory ratios is essential for workforce planning and cost management:

Ages 0–2: 1 educator for every 4 children
Ages 2–3: 1 educator for every 5 children
Ages 3+: 1 educator for every 10 children (15 children in some jurisdictions for preschool programs)

Note: Some states have specific variations to these ratios, so always check your local regulations.

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Staffing requirements and qualifications

Services must maintain specific qualification mixes as outlined in the National Quality Framework:

Educational Leader—Required for all services, responsible for curriculum development and educational programs
Qualified educators—Mix of Early Childhood Educators (Bachelor’s degree), Diploma-qualified educators, and Certificate III staff
Relief staff—Maintain a pool of 2–3 casual educators to cover sick leave, annual leave and unexpected absences

Professional development costs should be budgeted at approximately 1–2% of staff costs annually.

Occupancy targets

Break-even occupancy varies by service size and cost structure but typically ranges from 85–95%. Key occupancy strategies include:

Consistent attendance—Encourage a minimum of 2–3 days per week per child to improve revenue predictability
Waitlist management—Maintain active waitlists for all age groups to fill vacancies quickly
Retention focus—It’s more cost-effective to retain existing families than constantly recruit new ones

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Fee structure considerations

Important: Childcare fees are GST-free, but this doesn’t apply to additional services like excursions or extra meals.

Current market rates vary significantly by location, with metropolitan areas typically commanding higher fees. Rather than providing specific dollar amounts (which become outdated quickly), consider these pricing factors:

Local market research—Survey competitor pricing in your specific area
Government funding—Factor in Child Care Subsidy (CCS) and any state-based funding
Value proposition—Premium services can command higher fees if the value is clearly demonstrated
Cost plus margin—Ensure fees cover all operational costs plus a reasonable profit margin

Additional ECEC financial benchmarks to consider

Regulatory compliance costs—Budget for quality assurance, professional development and regulatory reporting requirements.

Technology and resources—Modern ECEC services require investment in management software, educational resources and safety equipment.

Marketing and enrolment—Allocate 2–3% of revenue for marketing activities to maintain enrolment levels.

Remember this when it comes to ECEC financial benchmarks

Successful ECEC financial management requires balancing regulatory compliance, quality care delivery and business sustainability. Regularly reviewing these benchmarks against your actual performance will help identify areas for improvement and ensure long-term viability.

For the most current regulatory requirements and financial guidelines specific to your state or territory, consult your local regulatory authority and consider engaging with an ECEC-specialist accountant.