In a field where every dollar impacts the quality of care, the way you manage your school’s finances can make or break your ability to serve your school community today and your broader community in the future.

As an early childhood education leader, you already live and breathe the constant balancing act of maintaining high-quality programming, supporting your staff, meeting family expectations, and staying financially sound. What you may not realize is just how much clarity and confidence you can gain by using one simple tool — financial benchmarking.

When you’re operating on thin margins, even small inefficiencies can ripple outward, affecting everything from staffing and morale to classroom quality and enrollment. Financial benchmarks offer powerful reference points that ultimately help sharpen your fiscal decision-making.

What Is Financial Benchmarking and Why Does It Matter?

A financial benchmark is a standard or point of reference that allows you to compare your center’s financials against other similar, financially healthy schools in the industry. Think of it as a financial “report card” — a way to measure how you’re performing relative to industry standards, see where you’re excelling, and determine where you have opportunity to improve.

Why does this matter in early education? Whether you’re running a single-site preschool or a multi-site operation, benchmarking offers valuable insights, especially when the data is tailored to your center’s size and structure.

At HINGE Early Education Advisors, we’re continually reviewing the financial performance of childcare companies small and large, single and multi-site, for-profit and non-profit, play-based and specialty curriculums, in rural and urban markets. What we’ve learned is that while strategies change like new curriculum approaches, different staffing models, and innovative pricing structures, the core financial benchmarks generally remain steady over time.

The Power of Benchmarking

Benchmarking is all about visibility. When you compare your numbers to industry norms, it shines a spotlight on financial blind spots that might otherwise go unnoticed.

You may discover you’re overspending on non-teaching wages, undercharging tuition compared to your market, or running below-average classroom utilization. These numbers are signals pointing you toward action steps that can strengthen your business.

Benchmarking also encourages alignment across all decision-making processes. You can make more informed choices when it comes to staffing levels, program investment, tuition adjustments, and facility planning. In time, you’ll find that benchmarking lets you act not only on instinct but with even greater intention.

Ultimately, financial benchmarking builds on the great work you’re already doing by giving you the data and confidence to go from strong to even stronger. It helps you identify opportunities to refine your operations, exceed industry averages, and position your center for long-term sustainable growth.

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Key Financial Metrics Every ECE Owner Should Track

So, what are the most important numbers you should be tuned in to? Here are the core financial metrics to track and compare to others using benchmarks:

• Break-even point: Do you know how many children you need to enroll just to cover your costs?
• Occupancy/utilization rate: Are your classrooms full? If not, why not?
• Cost of care tuition rates: Are you charging the tuition that reflects your cost of care or aligning with others in your market?
• Labor costs as a percentage of revenue: This is typically the largest expense. Keeping this in check is critical to maintaining a healthy margin.
• Spending on supplies, food, and administration: These costs should align with, and not exceed, what high-performing schools spend.
• Operating profit margin: How much is left after expenses? A strong margin provides room for reinvestment.

How to Compare Your Numbers to Industry Benchmarks

Once you know which financial metrics to track, you’re well on your way to putting benchmarking into action. Follow these key steps:

• Gather your numbers for each key metric — ideally covering at least the past two years.
• Compare those numbers to benchmark ranges that reflect high-performing schools similar to yours. If you need help, our Framework™ app allows you to generate free baseline benchmarks based on your center’s licensed capacity, occupancy, and average weekly tuition.
• Look for gaps in areas where you’re not aligned with benchmarks as well as areas where you need to investigate performance further.
• Ask why. For example, if your labor costs are higher than the benchmark, is it due to unnecessarily low ratios or a recent pay raise you haven’t adjusted tuition to support?

Building a Benchmarking Mindset Across Your Team

While many believe a school’s financial health is solely the owner’s responsibility, it can — and should — be a team effort given everyone’s vested interest in how the organization supports its staff and students. To embed benchmarking into your culture:

• Make it collaborative: Involve your leadership team in reviewing benchmarks, setting goals, and tracking progress. When your team understands the “why” behind financial targets, they’re more invested in hitting them.
• Build understanding: Help staff see the connection between a financially strong school and things that matter to them — competitive pay, benefits, high-quality materials, and a positive environment.
• Be transparent with families: You don’t have to share your balance sheet, but you can educate parents on how tuition supports your mission, your team, and their child’s experience.
• Support industry-wide change: When you know your numbers, you and your team can advocate more effectively for realistic funding, smarter regulations, and better recognition of the value you provide.

Start Benchmarking Today

Whether you’re preparing for growth, evaluating your performance, or just want a better handle on your numbers, benchmarking is one of the simplest and most effective tools you can use to improve your center’s financial health and operational decisions.

Remember, you don’t need to do it all at once. Start small, pick a few metrics to track monthly, compare them to industry standards, and use that insight to guide your next move.