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treadhead · November 21st, 2007

Hey folks!

Not sure if this is the right place to post this but most of the processes that I use are transfers so felt it was as good a place as any.

Rodney...if there is a better place to put this post...please feel free to do so.

I'm working on the final tweaks to my pricing matrix for custom work and was looking for some good honest feedback on the markup I am thinking of applying to my product. This markup would be what I charge above the material cost of the product (shirt, plastisol transfer, DTG ink, etc.).

I would apply the same markup to all my processes except perhaps screenprinting which I outsource at the moment. I'm considering applying a lower markup to stay competitive and also due to the fact that I am not doing most of the work. We currently do plastisol transfers, heat applied vinyl, DTG, & outsource screenprinting.

I would welcome your feedback as to whether I am about right, too high or too low in my thinking.

Thanks!

John

Proposed Markups

Qty. ======>$
1 - 7 =====>$7.00
8 - 15 ====>$6.50
16 - 23 ===>$6.00
24 - 35 ===>$5.50
36 - 47 ===>$5.00
48 - 71 ===>$4.50
72 - 95 ===>$4.00
96 - 143 ===>$3.50
144 - 287 ==>$3.00
288 - 511 ==>$2.50
512+ =====>$2.00

printandprint · November 21st, 2007

I don't know how others do it, but I prefer to maintain a particular retail margin, usually about 40% for smaller orders less than about 75 shirts (or 50% for jobs/customers that are known to be difficult, or for rush jobs)

Big orders with hundreds of shirts can be 30% or less, but it all depends on how the numbers work to cover overhead and how much a large order displaces your "regular" orders.

40% retail margin would be all your costs divided 0.6 which is the inverse of 0.4 or (1 - 0.4 = 0.6). For every dollar of revenue you bring in, 40 cents is gross profit.

If your costs per shirt is $6.50 then 40% is $10.83 which would be your price. Costs of $7.50 sell at $12.50. Notice that your costs went up by $1.00 but the retail price went up by $1.67.

With a margin approach, you get rewarded appropriately to scale for jobs that are more difficult to do, but you are also getting rewarded for taking a larger financial risk, or for floating a larger balance of your bills until the customer pays.

Suppose for two orders of 12 shirts: You should make more dollars of profit for doing a 4-color, 4-color job than you should for a 1-color, 1-color job. If your profit is a flat $6.50 for that job without regard to the job's cost, then as a business you are taking a penalty for more complex artwork when you should be rewarded.

If your costs as a shop or as a business are unusually low, and you find your prices consistently under everyone else, then raise up that margin a little bit until your prices are closer rather than giving away your advantage. Of course you have to decide how you want to position yourself, but be aware that setting a precedent of always the lowest price can eventually become a burden as your business grows beyond that model, or when you're trying to pay for a new piece of equipment, etc.

treadhead · November 25th, 2007

Thanks for the detailed response Printandprint. I'll take another look at my markups in light of your thoughts.

John

treadhead · November 25th, 2007

Anybody else willing to share there thoughts on my markups?

Is $5.00 / shirt for a 36 shirt job more or less than most other get for a job?

How about $3.00 for 144 shirt job?

I know there are many factors but I'm trying to get a general idea and would think most people here have an idea of about what they make per shirt when they are running them.

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Please review & comment on my proposed markups....