How do nanny agencies make money, and what should a buyer check?

A nanny agency can look steady from the outside and still depend on finding new families all the time. Understanding the fee model tells you what repeats, what does not and what the owner promised families that you would now have to honour. Here is how the common models work and which records show them.

One-off placement fees

In the most common model, the family pays the agency once when a nanny or housekeeper is hired. Some agencies also charge the family a registration fee when it signs up. This revenue is earned placement by placement, so it only continues if new families keep arriving. Ask for a list of placements by date, with the fee type for each, so you can see how the work is spread through the year.

Guarantees and refunds

Many agencies promise a replacement or a refund if a placement ends early. Those promises are obligations a buyer may inherit. Ask for the written terms, a list of guarantees still open and a history of refunds and replacements. Ask your accountant how fees later refunded or redone are shown in the financial statements.

Ongoing and repeat revenue

Some agencies earn recurring income from payroll help, back-up care or a monthly service. Others rely on families who return for a second child or a new caregiver. Ask which clients came back and how the agency tracks that. If the model resembles temporary staffing, read how bill and pay rates are checked, but remember that a placement fee is not a margin on hours.

Records that show it

• Placement log, invoices and receipts matched to the bank deposits
• Fee schedule and the terms families signed
• Refund, credit and replacement history
• Source of each family, such as referral, website or repeat client