November 7, 2022
With 4 young children at home I couldn’t help but keep hearing about Montessori education. All the chatter made me curious, and since my business is all about helping other people start their own business I wanted to learn all about how to start a Montessori school. So I am combining my curiosity for Montessori and my experience in startup finance to hopefully answer all of the tough financial questions you might have as you consider starting a Montessori school. Here is what I plan to cover:
- Montessori School Industry
- How much does it cost to start a Montessori school?
- How much revenue can a Montessori school generate?
- What are the typical expenses for a Montessori school?
- Typical operating costs for a Montessori school
- Salaries for Montessori Employees
- How Much Profit Does the Average Montessori Generate?
Throughout the article I will also be referring to our Montessori Financial Projection Template which we built in order to help organize all of these various financial numbers and help you create a financial forecast for your startup Montessori school. You can see a quick snapshot of some of the output of the model below:
With that, let’s dive into what I learned about Montessori!
Montessori School Industry
First just a little bit about the Montessori school industry. Some of the key questions that I had:
How many Montessori schools are there?
There are 15,000 Montessori schools worldwide and 3,000 to 5,000 Montessori schools in the U.S. according to the National Center for Montessori and the American Montessori Society.
How many students attend Montessori in the US?
We estimate that between 550,000 and 925,000 students attend Montessori in the US.
We calculated this estimate based on the average number of students per private school in the US of 185 students x the 3,000 to 5,000 Montessori schools in the US.
How to Find a Montessori School Near Me?
You can find a Montessori school near you with this interactive map from the Montessori Census.
The map below gives you a rough idea of where there are Montessori schools. I was really surprised to see that the Chicago area had the highest number of Montessori schools on the map.
How much does it cost to start a Montessori school?
The average cost to start a Montessori school is between $400,000 and $1 million based on our research below.
There are a number of assumptions that went into calculating an estimated startup cost for a Montessori school and I am going to walk you through my thought process so that you can use the same process to calculate your startup costs for your unique location and concept.
How much space do I need for a Montessori school?
You should plan to have 40 square feet of space per child in your Montessori school according to AMI.
So in order to calculate the amount of space needed for our example Montessori school we need to decide on what age groups we want to serve with our school and how much capacity we want to have.
In this example I am going to assume that we are starting a Montessori school that serves children from age 3 to age 12. In other words, we aim to have a preschool through elementary Montessori school.
Although there are home based Montessori programs, in this example we are going to assume a larger school in a commercial building.
Now that we have decided the age groups we want to serve, we need to decide how many classrooms we want to have.
How many students does the average Montessori school have per classroom?
The average Montessori school classroom has between 25 and 35 students according to The Montessori Foundation.
One unique thing about Montessori education is that the classrooms have students in a wider range of ages in each classroom compared to a traditional school. So you won’t need 25 to 35 students for each traditional grade level. This means you will also need fewer classrooms to be able to support ages 3 through 12.
What are the common age groups for Montessori school?
Typically Montessori students are grouped as follows:
- Age 3 to 6
- Age 6 to 9
- Age 9 to 12
So in theory the smallest Montessori school you could operate to serve ages 3 through 12 should have at least 3 classrooms.
If we assume that our average class size will have 30 children and we should aim for 40 square feet per child that means each classroom should be roughly 1,200 square feet.
If we assume that we will need 3 classrooms at 1,200 square feet plus we will need some common space, bathrooms, a kitchen and probably a check in area in the front. Let’s assume we need an additional 2,000 square feet for the non classroom space. This means that we need at least 5,600 square feet in order to operate a Montessori school for ages 3 through 12.
Now that we know we need 5,600 square feet, we need to estimate how much it will cost to build or renovate and lease a space.
How much does it cost to build a Montessori school?
It would cost at least $295 per square foot to construct a new Montessori school based on an estimate from Levelset.
Levelset estimated that the construction cost for a school would be between $295 and $756 per square foot. We are assuming that a Montessori school would be on the low end of the spectrum based on the larger classrooms and simplistic nature of Montessori. Based on this, our 5,600 square foot Montessori school would cost roughly $1,650,000 for new construction.
I am going to assume, you probably won’t want to build a new $1.6 million building, so let’s look at how much it would cost to lease a space for a Montessori school.
How much does it cost to lease a space for a Montessori school?
We estimate that the cost to lease a space for a Montessori school is between $20 and $30 per square foot in the US based on current daycare center facilities that are listed as available for lease on Loopnet.
This means our 5,600 square foot facility would cost between $9,333 and $14,000 per month to lease.
Now this is going to vary dramatically depending on your location, and the specific property that you are leasing. If you are leasing a space that is already built out with classrooms, bathrooms, kitchen etc then you are probably going to pay a higher rate. If you are leasing an empty space and then you are responsible for leasehold improvements to build out the interior of the space, you can expect a much lower rental rate per square foot, but you will have an upfront cost to renovate the space.
How much does it cost to renovate a space for a Montessori school?
It can cost between $40 and $60 per square foot to renovate a space for a school according to evstudio.
Now this is a bit of an old number from 2014, but it was the best I could find in a quick Google search. You should probably assume the high end of that range, so our space would cost $60 x 5,600 sq ft = $336,000 to renovate a building for our example Montessori school.
While the facility will be your largest startup cost, there are other startup costs you should consider.
Typical startup costs for a Montessori school
Startup costs for a Montessori school could include:
- Classroom furniture
- Security system
Profitable Ventures estimates that the total startup costs for a Montessori school would average $977,680. As outlined above this is heavily dependent on the size and location of the facility. We think the total startup costs for a Montessori school as outlined could cost you between $400,000 and $1 million assuming you are leasing a space.
You can see how I entered our example startup costs into our Montessori financial model.
In addition to these fixed asset startup costs, you will have initial operating expenses that we will consider part of your startup costs, but we will enter those in the operating expenses section.
If we are going to invest up to $1 million into starting a Montessori school, we should hope that the business can generate significant revenue in order to provide a return on investment. Let’s dive into revenue forecasting for Montessori schools next.
How much revenue can a Montessori school generate?
The average Montessori school can generate between $1,803,750 and $2,830,500 in annual tuition revenue.
In order to calculate the average revenue for a Montessori school we had to make a few assumptions. First we took the assumption that the average school has 185 children based on the national average for private schools.
Now in the example we have been using of 3 classrooms with 30 students each, our forecasted revenue would be between $877,500 and $1,377,000.
Then we found a few more data points to help us find a range:
How Much is the Average Tuition for a Montessori Pre-school in the US?
The average tuition for Montessori pre-school in the US is between $9,750 and $15,300 according to Montessori for Today.
How Much is the Average Tuition for a Montessori Elementary in the US?
The average tuition for Montessori elementary in the US is between $10,500 and $14,750 according to Montessori for Today.
Then in order to calculate the average revenue per Montessori school we just took the average tuition ranges x the 185 average students to calculate the average revenue for a Montessori school.
Of course you can easily calculate your own forecasted revenue by taking your tuition rates and multiplying by the number of students you expect to have.
What are the typical expenses for a Montessori school?
Now in order to calculate how much profit your Montessori school can generate we will need to first forecast operating expenses.
Typical operating costs for a Montessori school
The major operating costs for a Montessori school include:
- Rent / Building Costs
Let’s look at each cost in more detail.
Average Salary for a Montessori School Teacher
The average salary for a Montessori teacher is $37,295 per year according to Ziprecruiter. You can find state by state salary rates here.
For our example with 3 classrooms, we will need 3 teachers, 1 for each classroom, and then an additional teacher’s aid in the age 3 to 6 classroom.
Average Salary for a Montessori Teacher Aid
The average salary for a teacher's aid is $25,700 in the US according to Ziprecruiter.
You can see how we enter in salaried positions into our private school financial model below:
Cost to Rent a Building for a Montessori
The average cost to rent a building for a Montessori school is between $9,333 and $14,000 per month based on our research above in the article.
Utility Costs for a Montessori
The average cost of utilities for a Montessori school is .86 cents per square foot according to the U.S. Energy Information Administration. That is broken down between .67 cents per square foot for electricity and .19 cents per square foot for natural gas.
For our example 5,600 square foot facility we should expect $5,600 x .86 = $4,816 per year or roughly $400 per month for utilities.
Insurance Costs for a Montessori
General liability insurance for a Montessori should cost between $1,100 and $2,200 per year according to Fitsmallbusiness.
Food Cost for a Montessori School
The average cost to provide school lunch to students is $3.81 per lunch according to the School Nutrition Association.
With 90 students and an average of 22 days of school per month you can budget $7,500 per month to provide lunch to students.
Cleaning Cost for a Montessori
The average cost to clean a Montessori school is between $.07 and $0.17 cents per square foot according to Cleaning Business.
For our 5,600 square foot facility we estimate a cleaning cost of roughly $400 to $1,000 per cleaning. But you will want to clean some spaces every day and some spaces much less often. I am going to assume $4,000 per month for cleaning service.
You can see how we enter in operating expenses for a Montessori in our spreadsheet below:
How Much Profit Does the Average Montessori Generate?
Our example Montessori school is projected to generate a $244,000 profit in the first full year of operation based on the assumptions that we used. This amounts to a 24% net profit margin for our Montessori example. Keep in mind that this is before paying yourself as the owner, unless you are one of the teachers or administrators that is already accounted for in the model.
You can see our forecasted profit and loss at a glance from our Montessori financial model spreadsheet below:
Of course, in order to forecast how much your specific Montessori school can make in profit you will need to go through the financial projection process with your own specific assumptions.
Grab a copy of our Montessori Financial Projection Template here and get started today.
If you have any questions along the way, don’t hesitate to reach out!