What Is Market Rate
Market rate is the average price that childcare providers in your geographic area charge for a specific type of care. States use this data to set maximum reimbursement rates for the Child Care and Development Fund (CCDF), which means market rate directly determines how much subsidy your family can receive. If you're eligible for assistance, the state won't pay more than its established market rate, even if your chosen provider charges higher tuition.
How States Calculate It
Each state conducts market rate surveys every one to three years, gathering pricing information from licensed and license-exempt providers across different care types (infant, toddler, preschool, school-age) and settings (home-based, center-based, group family care). The survey typically captures data from at least 25 to 30 percent of active providers in each region. States then set their subsidy reimbursement rate at the 50th, 75th, or occasionally the 90th percentile of surveyed prices, depending on state policy. This means half the providers in your area charge less than the state's market rate, and half charge more.
Real-World Impact for Your Family
- Subsidy eligibility: If you receive CCDF assistance, your state's market rate is the ceiling. A provider charging $1,400 per month for infant care might be reimbursed only up to the state's market rate of $1,200, leaving you responsible for the $200 difference.
- Provider quality and staffing: Providers paying competitive wages to meet state staff ratio requirements and NAEYC accreditation standards often charge at or above market rate. Ratios in infant rooms (1 adult to 3-4 infants) and toddler rooms (1 adult to 4-6 toddlers) are labor-intensive and drive up costs.
- Geographic variation: Urban centers and affluent suburbs typically have higher market rates than rural areas. For example, infant care in a major metropolitan area might have a market rate of $18,000 to $22,000 annually, while a rural region's rate could be $8,000 to $12,000.
- Care type differences: Full-time center-based preschool care usually has lower market rates than infant care because preschool classrooms operate with larger groups and higher child-to-adult ratios.
Finding Your State's Market Rate
Your state's child care licensing agency publishes market rate surveys publicly. Search "[your state] child care market rate survey" to find the official document, which breaks down rates by county, age group, and care setting. Some states update their rates annually; others do so less frequently. Check the survey date to ensure you're using current data when evaluating provider costs or appealing a subsidy decision.
Common Questions
- Does market rate apply to providers without licenses? It depends on your state. Some states include both licensed and license-exempt providers in surveys; others survey only licensed facilities. License-exempt providers often charge below market rate because they have fewer regulatory requirements around staff qualifications, facility upgrades, and liability insurance.
- What if my provider charges above market rate? You can still enroll. The subsidy program won't cover the difference above the state rate, so you pay out of pocket. Many quality providers exceed market rate to fund lower child-to-staff ratios, specialized training in developmental screening, or enhanced facilities that support developmental benchmarks.
- How often does market rate change? States typically update surveys every one to three years. Your subsidy reimbursement rate may remain the same while actual provider prices shift, which can widen the gap between what the state reimburses and what providers charge.