What do I do? - competitor says embroidery digitizing prices too high
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What do I do? - competitor says embroidery digitizing prices too high
What do I do? - competitor says embroidery digitizing prices too high
I recently spoke to a competitor of mine who was thinking of using me for her embroidery. I say competitor, because she offers screenprinting and embroidery in addition to promotional products, graphic design, vinyl, and paper printingm but uses other companies for her screenprinting and embroidery. They've been in town for around 15 years or so, so all of the businesses in town know who they are. For embroidery they've been using a direct competitor of mine but wanted to see what I could do for them. She sent me 2 logos for embroidery, that I sent for a digitizing quote.
The first was for 5000 stitches at $35 to digitize. 14 shirts
The second was for 11,000 stitches at $77 to digitize. 50 shirts
I told her my price would be $1 per thousand and $50 to digitize the first.
For the 2nd, $0.85 per thousand and $90 to digitize.
She provides the shirts so I don't make anything on those.
She says, "I think that those prices are correct for the industry, but let me tell you what your competition is doing so that you'll be aware"
Much to my surprise, she says the other embroidery shop charges $5 to digitize, and if the logo is simple, she doesn't charge anything. And $4 per left chest regardless of the stitch count, thread changes, or number of pieces. She has a 4 head machine while I only have a single head, but even so, at those prices I don't see how she pays her bills.
The area that I'm in is veeeeeeery picky about pricing, but I refuse to undercut myself to the point that I make almost no profit just to be competitive. However, that's the kind of pricing that my demographic wants to have.
Any suggestions?
__________________
Hard labor kills, make t-shirts instead.
Re: What do I do? - competitor says embroidery digitizing prices too low
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She sent me 2 logos for embroidery, that I sent for a digitizing quote.
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Much to my surprise, she says the other embroidery shop charges $5 to digitize, and if the logo is simple, she doesn't charge anything
It sounds like you are outsourcing your digitizing while the other shop is doing it themselves.
When you do it yourself, there are things you can do to attract business, like removing fees that you know your customers may balk at, even if you have to make the actual print costs higher in some cases.
When you are outsourcing it, you have to either find a better source for the digitizing, or make up the costs some other way.
In this case, I don't think your focus should be on "contract" embroidery with your "competitors".
I think your focus should be on selling your embroidery services directly to the public.
It doesn't seem like your margins aren't high enough now to handle the contract (business to business) clients.
Re: What do I do? - competitor says embroidery digitizing prices too low
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Originally Posted by Rodney
It sounds like you are outsourcing your digitizing while the other shop is doing it themselves.
When you do it yourself, there are things you can do to attract business, like removing fees that you know your customers may balk at, even if you have to make the actual print costs higher in some cases.
Yes but at what costs would I be attracting that other business? If I'm barely breaking my bottom line, I'm not really making any money. She has more equipment, more rent, and 4 employees that I don't have. Even if I did my own digitizing right now, I wouldn't spend 1 hour digitizing for $5 or for free.
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Originally Posted by Rodney
In this case, I don't think your focus should be on "contract" embroidery with your "competitors".
I think your focus should be on selling your embroidery services directly to the public.
It doesn't seem like your margins aren't high enough now to handle the contract (business to business) clients.
My focus is not on contract embroidery, this was just a single example. But I know that on several occasions this woman has given rediculous pricing, that everyone on this board would laugh at.
People in my area do 2 things: Price shop and go with the lowest price. Regardless of anything else, 9 of 10 will go with the lowest price. I can't make a living lowballing my competition.
__________________
Hard labor kills, make t-shirts instead.
Re: What do I do? - competitor says embroidery digitizing prices too low
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Originally Posted by tim3560
Yes but at what costs would I be attracting that other business? If I'm barely breaking my bottom line, I'm not really making any money. She has more equipment, more rent, and 4 employees that I don't have. Even if I did my own digitizing right now, I wouldn't spend 1 hour digitizing for $5 or for free.
My focus is not on contract embroidery, this was just a single example. But I know that on several occasions this woman has given rediculous pricing, that everyone on this board would laugh at.
People in my area do 2 things: Price shop and go with the lowest price. Regardless of anything else, 9 of 10 will go with the lowest price. I can't make a living lowballing my competition.
Did you know this before starting your business?
It seems like that's part of the business plan (scoping out the competition and local market demographics and see if you can compete and gain customers).
She obviously has a handle on what the market can bare, and is making the pricing changes to make it work and stay in business.
You'll need to do the same. Decide whether or not you will compete locally based on price, or try to offer something different.
You're going to have to figure out why a customer would want to buy from you and not them.
Re: What do I do? - competitor says embroidery digitizing prices too high
what other types of services does this competitor do? maybe that is where she is making her profit. That is what alot of people will do to get people in the door is offer a great price on one service and make it up on other services later.
Re: What do I do? - competitor says embroidery digitizing prices too low
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Originally Posted by Rodney
Did you know this before starting your business?
It seems like that's part of the business plan (scoping out the competition and local market demographics and see if you can compete and gain customers).
She obviously has a handle on what the market can bare, and is making the pricing changes to make it work and stay in business.
You'll need to do the same. Decide whether or not you will compete locally based on price, or try to offer something different.
You're going to have to figure out why a customer would want to buy from you and not them.
Yes and no. I knew that she had some low pricing but she's never constant. If 2 people walk in wanting the same thing she'll price one at $5 and the other at $4.50. There doesn't seem to be any rhyme to her reason. I also noticed that no one here has a sense of loyalty. When I was selling from my home, it didn't matter who they were with or had used in the past, if I was there, they gave me a shot.
You're right, she might not be making any money, but she's got the majority of my city's business. When we opened the store a few weeks ago we decided to do a gift shop as well. We have an array of things that can be monogramed or embroidered or that people can just take with them. Hopefully once the word gets out, people will come for the retail side if nothing else. I've also decided that I'm probably going to have to go to the internet as well.
__________________
Hard labor kills, make t-shirts instead.
Re: What do I do? - competitor says embroidery digitizing prices too high
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Originally Posted by sunnydayz
what other types of services does this competitor do? maybe that is where she is making her profit. That is what alot of people will do to get people in the door is offer a great price on one service and make it up on other services later.
Bobbie
She does mostly embroidery but can do up to 4 color screen printing. But those 2 things are all she does.
__________________
Hard labor kills, make t-shirts instead.
Re: What do I do? - competitor says embroidery digitizing prices too high
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You're right, she might not be making any money, but she's got the majority of my city's business.
I never said that she wasn't making any money.
Quite the opposite. I think she's probably finding ways to still make money on other services like Bobbie suggested.
Like webhosts who will give away a free domain name if you buy webhosting. It actually costs them $6.62 (at a minimum) to get that domain for you, but they will take it as a loss leader because the web hosting account has very little overhead and a big profit margin. GoDaddy has a huge TV campaign going right now selling domains for $1.99 if you buy a non domain related service. They realize that by losing money on the domain, they will make it back on the "non domain related service" (read: hosting).
Of course that business model may not work for all companies, but you may need to think of creative ways to set yourself apart from her and still get jobs.
Free personal pickup and delivery of all jobs?A website that makes the ordering process easier? Something that sets you apart.
Also keep in mind that if you keep turning away all lower priced jobs, you may not have any jobs to run or any business to keep the doors open.
I'm all for not underpricing your services, but as Fred(binki) likes to point out, unless you're at maximum capacity, your machines are just sitting there. You may not be in the same financial position as others who say you should just turn down the lower paying jobs.
Re: What do I do? - competitor says embroidery digitizing prices too high
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Originally Posted by Rodney
I never said that she wasn't making any money.
Also keep in mind that if you keep turning away all lower priced jobs, you may not have any jobs to run or any business to keep the doors open.
I know you didn't, but I did. I may be wrong or she may have just decided what salary she wanted to get out of her business, and doesn't have any desire to grow past that.
I haven't turned ANY jobs away, I just gave a quote and the customer was nice enough to tell me what I was up against. I just did a $5 job on Friday and a $19 job earlier in the week. I'm all for any jobs at this point.
__________________
Hard labor kills, make t-shirts instead.
Re: What do I do? - competitor says embroidery digitizing prices too high
One thing to keep in mind is that customers will lie. If they think they can convince you to do a job for almost nothing they will tell you whatever they think will work. She may be doing the jobs at the cost they say or she may not. Call and ask what her prices are or if she knows you and will not discuss prices, have someone you know call and check her prices. I know what my competition charges and what their quality level is and I know I am not the cheapest game in town but my prices versus quality make my work one of the best "Values". So when someone shops price alone I tell them if that's what they want go for it. Chances are you are better off without them because price only shoppers are usually the biggest complainers. As someone maybe on this forum or one of the others I use said " You have price, quality, and delivery, which two do you want?"
Perhaps you seem to be apologizing for your prices in some ways you don't realize. Perhaps your body language or confidence level or something else says you are unsure. If people sense that they think you are overcharging even if you aren't. When you work from your home people assume you are new to the business and they want to help. Once you open a shop you are no longer an amatuer and you are viewed differently and being confident is a big part of the image you need for people to buy from you.
Re: What do I do? - competitor says embroidery digitizing prices too high
I look at thing this way. I just bought my dtg a couple of months ago, before I was doing transfers and it didnt cost alot to not have that many jobs when I was doing transfers, now I have a minimum of $500 a month just for my lease on my machine plus cost of inks and everything else to run it. So now I will take work even if I dont make that much because it gets my name out there, brings me new customers to build a client base for my new printing and establishes me as a reliable source for getting their work done. Later once I have established this printing service I can be more picky about what jobs I take to make a profit. Right now as long as I am not losing money and my machine and supplies are paying for themselves I am happy.
Re: What do I do? - competitor says embroidery digitizing prices too high
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One thing to keep in mind is that customers will lie. If they think they can convince you to do a job for almost nothing they will tell you whatever they think will work.
Re: What do I do? - competitor says embroidery digitizing prices too high
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Originally Posted by sunnydayz
I So now I will take work even if I dont make that much because it gets my name out there, brings me new customers to build a client base for my new printing and establishes me as a reliable source for getting their work done. Later once I have established this printing service I can be more picky about what jobs I take to make a profit. Right now as long as I am not losing money and my machine and supplies are paying for themselves I am happy.
Bobbie
The problem here is what happens when your price suddenly increases? People will say "It only cost this much before" and that word will travel twice as fast as how reliable you are. The key is to do some research on your costs and the competition's prices and come up with a realistic price. That way there are no major price changes when you find out it is no longer enough to just pay for the machine and supplies. To do all jobs at a low cost just to pay for the lease is short term thinking and it usually ends up being a short term business. If you are running a business run a business, if it's a hobby call it that and try not to run a lot of serious businesses out because of your lowball prices.
Re: What do I do? - competitor says embroidery digitizing prices too high
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The problem here is what happens when your price suddenly increases?
Price increases are not uncommon in most industries. Garment prices increase, workers comp insurance increases, energy prices increase.
If you explain your pricing professionally and stand behind why you made the choices with each price, then people will have a better time understanding.
If you hem and haw when they ask you about pricing, they will think it's arbitrary and that you're just trying to gauge them unfairly.
Re: What do I do? - competitor says embroidery digitizing prices too high
Terry, I dont low ball anyone, I have realistic prices that are not the highest nor the lowest, somewhere in the middle. It is not a hobby and I dont run it like one. I am in business to make money and I do so, I just dont charge the top of the line prices. My prices for dtg are higher than screen print and I let people know that they are higher because it is a totally different type of printing. What I am talking about as far as taking jobs that I would normally not take is due to quantity in orders and has nothing to do with trying to low ball anyone. It is common sense that the more of a product a person buys, the better the price gets with quantity. What I am talking about is the fact that I have taken a few jobs with higher quantity than I normally would to get my name out there, and when I take these higher quanity jobs with dtg printing all that does is make my cost the same but the customers better because of price break on higher quantity. I also let them know that I dont normally take orders with high quantities but that I will do it for them this one time. I never said in my post above that I was under bidding anyone and I am right in line with others prices.
hope this helps you to understand my post better.
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What do I do? - competitor says embroidery digitizing prices too high 
