Our daycare was a federally subsidized center (meaning it received space, utilities, and janitorial services), and even so, looking at the budget, it was pretty clear that the infant room was a loss leader. The staffing ratios required meant that they were not making money on infants, even though that was the most expensive tuition. They did turn a profit on the older kids, particularly those in the threes and fours room. Location, utilities, supplies, staff salaries and benefits, admin costs (including costs of compliance), and training and programming expenses eat up money at a well-run center.