Payroll expense is the single, largest expense for childcare centers, pre-schools and Montessori schools. It’s also the expense that is most likely to get out of hand and ruin your profit margin.
Over the years, we’ve seen payroll costs (excluding payroll taxes) vary from a low of 38% of Gross Revenue to a high of more than 70% of Gross Revenue. Generally speaking, it should be about 45%. If it’s higher than 50% of your Gross Revenue, then you should analyze the expense and make sure your funds are being allocated appropriately.
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