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Discussion Starter · #1 ·
Hello there,

I know there's tons of questions on this topic. However none of them really seem to fit exactly the calculations I have setup.

I have been selling DTG shirts online for sometime now, and I am just beginning to market to retail shops to sell at wholesale.

What I am trying to figure out is exactly how much to offer prices and discounts to them.

Basically I have a spreadsheet calculating my costs plus a percentage markup that I can change. Typically I shoot for 35-50% markup.

However my prices from the print shop drop every 25 shirts. So that causes the retail prices to drop as well. Should I change the percentage calculation to vary depending on what quantity category they fall into?

These shirts are dark Navy, 3 color front print, and custom screenprinted tag.

My costs:


Retailer costs:


The reason I ask is because if I have a 40% markup and someone buys 99 shirts, I make about $338 in profits. But if they buy 100 shirts I make $300. Any thoughts on how to change this, or is this good?

Any suggestions would be great. Thanks,
Lorne
 

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I not following your numbers, in your 99 shirt example.

If your cost is $7.25 and you sell for $10.15 isn't that $287.10 of profit not $338?

Also, and this is very important. make sure you understand the difference between mark up and profit margin. If after you have calculated all your fixed cost and determine you want to achieve a gross profit margin of 40% you need to mark up your cost at 67%.

Back to your example: cost is $7.25 @ 40% markup = $10.15
Profit = $2.90 which is a gross profit margin of only 28.5%

If you want to run your business at a GM of 40%:

$7.25 @67% markup = $12.11
Profit = $4.86 which is a gross profit margin of 40%
 

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Discussion Starter · #5 ·
Thanks for the replies. Yes so I didn't account for any overhead costs etc. This is my first day at the "rodeo" so to speak. I didn't know where to begin.

This helps, but I already gave one retailer my prices lists with discount pricing, because I had a meeting and had to throw something together. So perhaps I may have messed up my first retailer! My biggest concern was offering my shirts too high and not getting a sale, so I just plugged some numbers in assuming they would sell them for roughly $20-25 a piece at retail.

So basically I've screwed my first opportunity with a retailer huh?

I'm thinking the biggest issue, I keep putting off is my business and marketing plan which will give my overhead costs I need per sale correct? Because right now I have no idea what my overhead costs are and what I should include in each sale.

How do I remedy my situation, it's good to know I should not give discount prices to retailers, however I also assumed they wouldn't purchase my product if I didn't have low prices.

Sorry for jumping around and being confusing, my thoughts are all over the place.

Thanks,
Lorne
 

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Because right now I have no idea what my overhead costs are and what I should include in each sale.
In any business if you don't know your cost, and don't understand how they relate to your gross profit and mark ups you can run yourself out of business without seeing it coming, or understanding why it is happening.

Before you concentrate more efforts on expanding, you really need to learn and understand your business.
 

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You haven't screwed anything up, because they may still place an order. But you seem to have your info all over the place and not yet figured out to make sure you are properly selling at a sustainable profit. I'm going out on a limb here and will suggest that you're probably not doing enough volume to really profit by selling wholesale. If you want to go this route, you will need to absorb low margins until your volume goes up.

Anyway, it may help to take a step back and fill us in on a few things. Are you doing your own DTG printing? Or you have them outsourced to a print shop? And the product you are selling to retailers, are they your own branded shirts? Or are you doing custom designs for the retailers?
 

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'How do I remedy my situation, it's good to know I should not give discount prices to retailers, however I also assumed they wouldn't purchase my product if I didn't have low prices.' ~ just to be clear, you give your retailer the wholesale pricing, but you don't give them a volume wholesale price.
 

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Discussion Starter · #9 ·
Guys, thanks for the replies.

I agree I need to take a step back and figure out my business. I am going to work on a business plan and marketing plan. Do you have any suggestions or examples of where to start?

Also I am outsourcing my DTG prints. I sell DTG online here: www.activestatedesigns.com. Reason for outsourcing, is I'm an architect by day. Tshirt designer by night. I don't have the resources or start up cost to print my own. But bulk orders that come thru I use a local screen printer. Good quality, custom tags, etc. speaking of my site, I also need to make the flow of purchasing on my site more smoothly (open to suggestions).

Also with the wholesales to retailers I am selling my designs with my custom tags. I'm not selling designs they wanted. So it will continue to be branded with ActiveState on the merchandise and my original designs.

And good to know not to give them a volume discount. I will account for that in the future.

Thanks for your comments. I'm welcome to anymore helpful advise!

Lorne


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