Some basic Biz 101 here.
- Charge the highest price you can possibly get. The price you can get reflects the value of your product to your customer.
- Making money is not immoral. You are not ripping off your customer, you are expecting to be paid for the value of the product you deliver.
- Taking higher margin jobs will allow you to do less work for the same or better profit.
- You can start high and lower your price but it is much harder to raise it once you start negotiations.
- A dollar is a dollar on the bottom line.
In our neck of the woods, garment decorators are so thick you can throw a rock in any direction and hit 5 of them. Even with that, there is so much work out there that you can pretty much pick your price that you want to sell at and you will get customers.
I have a different approach than most. We price each job based on the value of the job to the customer. Some jobs are done very close to cost. Some jobs are done at a 1000% margin over cost. (This typically happens when the customer supplies garments. Our material costs for embroidery are pretty low so charging $25 to sew a design that takes 50c of material cost is a pretty good margin)
Overall, this business commands a net of 35%. Anything less than that and you should re-examine you pricing or find something else to do, more than that and I would say you are doing great.
So, here is an example:
100 shirts at $1.50 raw cost including shipping to you = 150.00 so you charge $300. You have a job to print one color on one location. The cost is $1 for the materials so add $2/pc for another $200. You are now at $5 per unit to sell for 100 shirts, that is one hellofa deal. What do you do if the guy wants 1000 shirts? You haven't much room to move down. I would sell that job for $6-$7/pc with personal delivery (I take the product to the customer for presentation if he is local).
One thing we also do is add 5-10% for waste depending on the size of the job. For 100 units I would normally buy 2 of each size shirt extra just in case I screwed a few up. We charge for that also. So our 100 shirt order might be 110 at $1.50 so our cost is now $165 so we charge $330 for the shirts.
So $770 for a material cost of $275 gives a net of $495. Now you have your variable costs such as utilities, trash, rent, misc supplies, waste, etc. that you need to spread across all jobs so your net is a little less.
So, with this pricing we are at a raw cost of $2.75/pc and selling for $7.70 each for a net of about 2.8 times raw cost.
The lesson is that if you just double your cost and charge that you are leaving money on the table, not getting what you should get, and not giving yourself room to get the order bigger by lowering your price if the customer ups the quantity.
I would also add that you should charge your retail customers more that your wholesale customers.
Finally, there is a lot of talk about how much you want to make per hour. This really shouldn't concern you until you are at 100% capacity. At that time, you should look at the higher $/hr jobs, but until then look at the last bullet point above. Unless you are going to go out and do sales with that time you should consider taking all jobs that make money, even if it is only a single dollar.