Scottish ministers' policy of providing free universal childcare is "chronically underfunded", private nurseries have warned.
The National Day Nurseries Association Scotland said the issue, alongside increased operating costs, was making it "impossible" to provide affordable places.
The warning comes after a survey by the association found that, on average, Scottish nurseries receive an average hourly rate of £3.80 for three and four-year-old funded places compared to an overall cost of £5.52.
Loading article content
The survey found the lowest hourly rate paid to nurseries by councils was £2.80.
Overall, nurseries are losing an average of £1032 per child, per year on funded places for three and four-year-olds, the survey found.
Purnima Tanuku, NDNA Scotland's chief executive, said: "A shortfall of this extent threatens the sustainability of the sector and makes it impossible for nurseries to offer more places, despite having the capacity.
"We would urge a re-think on how places are allocated. Funding should follow the child, so as long as it is high quality provision, parents can choose the right nursery for their needs."
The association wants to see changes before the roll-out of the latest SNP policy, which will see supported places rolled out to two-year-olds.
A Scottish Government spokesman said: "It is the responsibility of local authorities to determine fair and sustainable settlements locally with partner providers, while securing high quality provision."