For Operators

You Know the Margin Should Be Better

You can see it in the funded hour rates that don’t cover cost. In the fee structure you haven’t reviewed in two years. In the occupancy patterns that look healthy on the dashboard but fall apart when you break them down by room and session. The margin is there. The question is where it sits and how to get to it without disrupting what works.

Where We Find Margin

  • 01

    Funded hour economics

    The gap between what local authorities pay and what it costs you to deliver a funded hour. Broken down by authority, by age band, by setting. Most groups have never calculated this at the level of detail required to know where they are making money and where they are subsidising the government’s childcare policy with their own margin.

  • 02

    Fee architecture

    How your fees are structured, how they compare to the local market, whether your consumables and add-ons are priced correctly, and whether your fee increases are keeping pace with cost inflation. Fee architecture is the revenue lever most operators underuse because they are worried about losing families. The data usually shows the opposite.

  • 03

    Occupancy and ratio

    Headline occupancy looks fine at 85%. But break it down by room, by session, by day of the week, and the picture changes. Morning sessions full, afternoon sessions half empty. Baby rooms at ratio, pre-school rooms overstaffed. The diagnostic finds the occupancy patterns that are costing you margin.

  • 04

    Workforce cost

    The single largest cost in any nursery group. Agency spend, overtime, sickness absence, staff-to-child ratios above statutory minimum, and the management overhead that sits on top. Most groups can find 2-4% of revenue in workforce cost without reducing headcount or quality.

  • 05

    Central overhead

    Head office cost, area management layers, shared services, professional fees, and the infrastructure that supports the group. As groups grow, central overhead has a tendency to grow faster than the settings it serves. The diagnostic benchmarks your overhead against groups of similar size and structure.

Each diagnostic is supported by specialists drawn from ten disciplines across operations, finance, regulation, quality, safeguarding, workforce, technology, and estates.

Calculate what your funded hours cost to deliver.

Cost Per Funded Hour Calculator | Litus Advisory

Cost Per Funded Hour Calculator

Calculate the true cost of delivering a funded hour across four layers of cost allocation. Compare your cost against the funded rates you receive from each local authority.

1

Staff Costs

Enter the average employment cost for a practitioner in your group. Include all on-costs. The calculator uses total employment cost, not hourly wage.

Above secondary threshold
Training, DBS, uniform, etc.
Typically 1,700-1,800 (46 weeks x 38-40 hours less training)
Total employment cost / productive hours
2

Room Configuration

Set the statutory ratios for each age band you want to calculate. These determine the direct staff cost per child per funded hour.

3

Room Overhead

Costs specific to the room but not to individual staff: consumables, food, cleaning materials, resources, utilities. Allocated to funded hours based on the proportion of hours that are funded.

Average across rooms in the setting
e.g. 20 children x 30 hrs x 4.33 weeks = 2,598
4

Setting Overhead

Costs at setting level that are not specific to any room: setting manager, administrator, building costs (rent, insurance, rates, maintenance), garden area, reception.

5

Central Overhead

Head office and group-level costs: central management, HR, finance, IT, marketing, professional fees. Allocated equally across settings. For single-setting operators, enter your non-room, non-setting overhead here.

6

Funded Rates by Local Authority

Enter the funded hourly rate you receive from each local authority. Add as many authorities as you operate across. Rates should be the base hourly rate before any supplements.

Authority 2yo rate (£/hr) 3-4yo rate (£/hr)

Your Cost Per Funded Hour

Unlock your full breakdown

Your four-layer cost analysis, visual breakdown, authority comparison and insights are ready. Complete the form below to access them.

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Thank you. Your full results are now available below.

The Margin Diagnostic goes deeper. It works with your data, at your settings, against benchmarks calibrated to groups of your size and structure.

Book a discovery call

This calculator provides indicative figures based on the inputs you supply. It is not a substitute for a full Margin Diagnostic.
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  • How It Works

    It starts with a conversation about where you are and what you are trying to achieve. If the diagnostic is the right next step, we scope it together and agree a fixed price based on the size and complexity of your group. The diagnostic takes two to four weeks. The output is a board-ready report with sized opportunities and a sequenced plan for capturing them. No surprises, no open-ended retainers, no ambiguity about what you are paying for.

  • Who We Work With

    Owner-operated and PE-backed nursery groups with 5 to 100+ settings. Groups where the founder or management team knows the margin should be better but needs an external perspective to find it, size it, and build a plan for capturing it. Groups where the board or investors want independent assurance that the operational performance matches the financial reporting.

Ready to Find the Margin?
Talk to us about a diagnostic
Book a discovery call 
OPERATOR FAQ

  • A structured examination of a nursery group’s P&L across five areas: funded hour economics, fee architecture, occupancy and ratios, workforce cost, and central overhead. It identifies where EBITDA is leaking, sizes the opportunity, and produces a board-ready report with a sequenced plan for capturing it.

  • Two to four weeks depending on the size of the group. A group with 5 to 15 settings is at the shorter end. Groups with 30+ settings or complex multi-brand structures take longer.

  • The diagnostic is a fixed-price engagement. Pricing depends on the size and complexity of the group. Contact us for a scoping conversation and we will provide a fixed quote before any work begins.

  • A board-ready report covering all five diagnostic areas, with a scored assessment of each area, sized financial opportunities, and a sequenced implementation plan. The report is designed to be used by the management team, the board, and investors.

  • No. The Health Check is a free self-assessment tool that gives you an indicative score across the five areas. It takes about eight minutes and gives you a sense of where to focus. The full Margin Diagnostic is a detailed engagement with access to your P&L data, setting-level analysis, and a comprehensive report. The Health Check is a good starting point if you are not sure whether a full diagnostic is right for you.

Free Tools

  • Try the Margin Health Check

    Score your group’s margin performance across the five diagnostic areas in about eight minutes.

    Go to Health Check

  • Calculate Your Funded Hour Cost

    Work out the true cost of delivering a funded hour, broken down by local authority, age band and setting.

    Go To Calculator