Should you charge for artwork? YES!
With screen printing customers I give them a choice. You bring in 'camera ready art' and no extra charge to the package.
If you want me to create simple lettering, I will do it for $25. If there is a logo or graphics, I charge $40 an hour. (We sell them one hour to get them started, then call them when I get a chance to determine how many hours will be needed for the design).
Some people are to cheap to spend the $25 and they bring me trash they created with a Microsoft word 'special effect'.
Others are happy to pay someone else to do the work, they just want the shirts. They end up with nice shirts. (IMHO) I often send them two or three choices in a pdf to choose from.
You can roll basic art into the price of the shirt, but it works well to let the customer choose what works best for them.
Do not be afraid to charge the customer for added value.
On one up custom shirts, use the setup fee as an upgrade tool. "Buy five (or 10) shirts and get the setup free". I sell a photo transfer on my T for $19.99, that includes up to five words on or around the photo, (not to exceed 8.5"x11") Get 2 or more of the same photo for $17.99 each.
In my market, people light up when they hear how low the price is. Perceived value is higher $20. I guess the price will go up to $24.95 next year.
