Childcare is one of the biggest expenses American families face, and one of the hardest services to find. Child Care Aware of America (CCAoA) reports a national average price of $13,184 a year for care in 2025. That’s about 10% of a married couple’s median income and 33% for a single parent. Care for an infant and a four-year-old in a center costs more than median rent in all 47 states with data.
Supply is the problem
High prices haven’t brought a flood of new providers. In 2025, the number of licensed childcare centers fell 1%, the first decline after several years of growth, while family childcare homes rose 1.4%. Many communities, especially rural ones, have far fewer licensed spots than children who need them.
For an entrepreneur, that gap is the opportunity. But childcare is a mission-driven business with thin margins: staff wages, low child-to-adult ratios and families’ limited budgets all squeeze profit.
Business models
| Model | Startup cost | What to know |
|---|---|---|
| Home daycare (family childcare) | $2,000 to $15,000 | Licensed care in your home for a small group; lowest cost to start |
| After-school program | $5,000 to $25,000 | Care and activities for school-age children; may use school or community space |
| Childcare center | $100,000+ | Larger capacity, but high build-out, licensing and staffing costs |
| Nanny agency | $5,000 to $25,000 | Matches families with nannies; no facility needed |
Startup costs are Advanton estimates. Licensing requirements drive much of the cost.
Licensing and safety
Every state licenses childcare. Expect background checks for everyone in the home or program, health and safety training (including CPR and first aid), fire and safety inspections, limits on how many children each adult can care for, and rules on space, meals and records. Many licensed providers can join the USDA’s Child and Adult Care Food Program, which reimburses the cost of healthy meals and snacks. Your local Child Care Resource and Referral agency can walk you through your state’s process.
Risks to plan for
Thin margins. Price realistically, collect tuition in advance, and check whether you can accept state childcare subsidies.
Burnout. Long days and constant responsibility are hard. Plan backup care and time off.
Liability. Carry childcare liability insurance and follow your state’s rules exactly.
Our take
Childcare is hard work with modest margins, but demand is real and lasting. A licensed home daycare or after-school program is a practical start, especially in areas with long waiting lists. Talk to your local resource and referral agency before you spend a dollar.
Ready to start? Follow the Start a Business A–Z guide.
Sources
- Child Care Aware of America, Child Care in America: 2025 Price and Supply
- Child Care Aware of America, press release on 2025 findings
- Child Care Aware of America, Limited supply, high prices
Last reviewed October 17, 2026. Startup costs are estimates; check local prices, licensing and tax rules before you commit money.
