Daycare versus nanny: the real cost math

Families comparing daycare against a nanny usually start by comparing a center’s weekly tuition against a nanny’s hourly rate, but that comparison leaves out real costs on both sides. This guide walks through what actually belongs in each column.

What a daycare or family child care number already includes

The prices on this site’s state pages, sourced to Child Care Aware of America’s 2024 survey, are a full annual price for one child at a licensed center or a licensed family child care home. Staffing, space, insurance, and licensing compliance are the provider’s cost to manage, not yours. This is the number to compare a nanny’s true annual cost against, not a nanny’s hourly rate alone.

What a nanny’s hourly rate leaves out

A quoted nanny hourly rate is only the wage. As the employer, a family is generally responsible for payroll taxes (commonly called the “nanny tax”), which can add a meaningful percentage on top of gross wages depending on your state and whether you choose to pay legally. Many families also budget for paid time off, since a reliable, long-term nanny relationship typically includes negotiated vacation and sick days, and for backup care on the nanny’s own sick or personal days, since unlike a center, there is no substitute teacher automatically covering the room. A nanny watching more than one child from your household does not multiply proportionally the way daycare tuition does per child, which is one of the real advantages of a nanny for families with two or more children close in age.

The per-child multiplier

This is where the math flips fastest for larger families. Daycare and family child care prices are charged per child (with a sibling discount at some providers, typically modest), so a family with two children in center-based infant and toddler care is paying close to two full prices. A nanny’s wage generally does not double for a second child, so nanny care becomes comparatively more attractive as the number of children needing care at once grows, even before accounting for the tax and time-off costs above.

Convenience and flexibility, priced honestly

A nanny in your own home means no drop-off or pickup commute, more flexibility around irregular work hours, and one fewer illness exposure from a group setting, but these are convenience factors, not cost factors, and this site does not attempt to put a dollar value on them since that is a personal judgment, not a sourced statistic. What this site can do is give you an honest, sourced daycare or family child care number to put on one side of your own comparison.

Building your own comparison

Start with your state’s center-based and family child care prices from the cost explorer for the age band and care type you need. On the nanny side, add your local nanny wage estimate, an estimate for payroll tax compliance (a nanny-payroll service or a tax professional can give you an exact figure for your state), and any paid time off or backup care you plan to budget for. Compare the two annual totals, not the two headline rates, and factor the per-child multiplier if you have more than one child who would need care.