competition

i would probably do it if i thought it'd take me two daze and i could squeeze out a $100 per day to put in my pocket.

see, that's why i hate figuring 'labour' into any formula where you own your own business, and *especially* one that's new. hey, news flash: a new business is a tough gig. lol. it's tougher because you *can't* compete with large, established outfits *because* you're just starting out, or at least newer to it, so to even be in the same realm you have to work that much harder to make up for your shortcomings. even if it took you an average of ten minutes for a single shirt, that's only 16.6 hours. you don't think i won't work 8.4 hours for a hundred bucks? what are you figuring that your hourly wage should be?

is it the best job in the world to get? no, but then again if they come back next year with the same order you'll have more experience, better processes and hopefully better buying power. i would, however, press for a set-up charge, but i'd keep it modest, and make them aware of the advantages you have over an out-of-state supplier.

don't misunderstand me, i won't work for minimum wage, but i'm not seeing how you would be. at worst, you'd be making somewhere in the $12/hr. range, no? if you think to yourself, 'well, i want to make $20 an hour, and i know it's going to take me a long time because i'm new at this,' you're thinking all wrong. the reason it would take you longer is because of your inexperience, and the customer shouldn't be made to pay for your inadequacies. besides, what else are ya gonna do, watch american idol instead?

lar said:

I want the business but dont see me making a profit, considering shirts ink cost,chemicals& labor!

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1) The #1 reason for being in business is to make a profit.

2) There will ALWAYS be someone (or some company) that is willing to do jobs for less than you.

No one can really answer whether or not you should take this particular job. It depends on a variety of factors that are entirely unique to your shop (i.e. your overhead, hourly wages, profit objectives, type of equipment, etc).

How have you positioned your business in the marketplace? Are you trying to be a Premium-tier, Mid-tier, or Low-tier screen printer (with respect to pricing)? In other words, do you strive to be known as the guy who does printing for the "lowest price" in town? If so, then you have to accept jobs with very slim margins ... but you'll have to do a ton of volume to make any money.

If you don't want to get a reputation for being one of the "lowest priced" players, then stick to your game plan and walk away from jobs that won't make you any profit. Instead, seek out customers who are looking for the "VALUE" that your business offers ... and who will pay the prices you've established for your service.

However, if you think this particular customer is one who will provide you with a substantial amount of future business ... on a fairly regular basis ... then maybe you should work up a quote (using your standard pricing) and see what happens.

Good luck.

ryan barker said:

see, that's why i hate figuring 'labour' into any formula where you own your own business

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??? I don't understand. Are you just kidding?

ryan barker said:

what are you figuring that your hourly wage should be?

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.

A very good question ... one that I wish more screen printers & apparel decorators would really take seriously with respect to determining their pricing. Why? It's simple really ...

1) Screen Printing is a business that requires a "financial" investment in special equipment that other folks (in the general public) don't have access to.

2) Screen Printing is a business that requires an investment in "training" ... or time invested in learning the trade ... in order to develop a unique skill that sets you apart from other folks (in the general public).

3) Screen Printing is a "labor" intensive process (especially if you're using a manual press) which should be compensated for appropriately.

4) If you hire employees to run your press, you generally agree to pay them an "hourly wage", right?

So the question is ... "Why wouldn't you, as a business owner, want to maximize your hourly wages ... and why wouldn't you include this in your pricing formula"?

In my opinion, if more shop owners took the time to determine the true cost of running their shop (i.e. their Hourly Operating Costs) ... and actually incorporated these costs into their Pricing Model ... and applied them consistently when quoting jobs ... more owners would actually be in a position to make a profit ... instead of "racing to the bottom".

You gotta have a reliable plan (and a good pricing strategy) if you hope to prosper in this business.

Again, good luck.

'??? I don't understand. Are you just kidding? ' not at all. there is no industry standard when it comes to how much you should pay yourself. to have someone bang out shirts? $10-12/hr., $25-35 for a designer. or whatever, that depends, but at least those costs are easier to know. figuring in someone else's labour, sure, that's easy to put into a formula (or at least easier as that's a fixed expense). but, how much is the owner's time worth? it's completely up in the air. personally, i'd be happy with $20/hr, but that's not going to happen with every job, and if i priced every job based on that then my prices would be ridiculous if i added up every single second i spent on a shirt. but, with experience, cost cutting and better processes, your personal labour rate decreases and you earn more. but, you can't expect to earn $50 an hour like a skilled screen printer might when you first start off.

if you figure your labour to be what you would pay to have someone screen print for you, and produce at an average rate of production, that would be fine, but no one thinks like that. or few do.

' "Why wouldn't you, as a business owner, want to maximize your hourly wages ... and why wouldn't you include this in your pricing formula"?' maximizing your hourly wages, again, comes with experience, controlling production costs and equipment upgrades. what dollar amount does that come to? it can lead to being unfair to the customer by overcharging him. if you know how long it takes you to run 100 shirts, but your competition can do it in half that time, and you base your pricing and/or jobs you take on $50/hr just because that's what you want to earn in an hour, you'll get run out fast. if you base it on what you pay your workers and can produce shirts in a competitive amount of time, i would agree.

i agree, it is labour intensive. we don't do tons of shirts, but i know if i knocked out 100 shirts i'm going to feel it, lol. then again, all new jobs come with aches and pains until your body acclimates better. i consider it paying your dues. dues which the customer shouldn't have to pay for as that's not their problem. still, it's not as if it has to all be done in one sitting. stretch it out over a week and i wouldn't feel a thing.

'In my opinion, if more shop owners took the time to determine the true cost of running their shop (i.e. their Hourly Operating Costs) ... and actually incorporated these costs into their Pricing Model ... and applied them consistently when quoting jobs ... more owners would actually be in a position to make a profit ... instead of "racing to the bottom".' that's just it, you can't possibly know what your operating costs are until you have the experience of doing them, and not just on paper. until you figure out what you're doing with 100 shirts, it's going to take the experience of actually handling it.

in all reality, doing this job from a time standpoint is going to be abysmal profit-wise. it's going to be worth it's weight in gold in terms of experience. the next 100 shirt order will be better as you've figured some things out, and your hourly wage will increase. simple math will tell you what your actual labour cost is (but you can't know that until you've got a baseline to improve from). with some experience, you'll figure out how much you can reasonably make on 100 shirts, and if that doesn't reach your hourly wage goal, you upgrade/cut costs even more. even if they agreed to pay the OP's price, he's still not going to hit his hourly wage goal the first time out. i think he'd be damn lucky if he came close. i think it's fair to assume that a lot, if not most, of us are going to lose these first time battles, hence why no one expects you to make a profit for a year or two. same job three years from now, and $6 may sound like a more reasonable amount to charge, no?

so, how much is a newer business owner's time worth? it's worth very little given the experience, methods and production costs. and all that shouldn't be a customer's burden to bear in price, eh?

to me this is simple ~ i'd do the job because 1) i'm losing time, but i'm not losing any actual money 2) my time will improve based on what i learned on the first job and 3) if i waited for someone to pay what i wanted (based on no empirical evidence, mind you), i might be waiting around for a long time to get the kind of experience that would have helped me in other parts of production from the start. that's how i see it, at least.

i agree, i don't want to race to the bottom, but at the same time experience is right there, and so is a couple of bucks if you can sacrifice some extra spare time, time which will lessen with experience. and i agree again with having a good pricing strategy. the difference is i don't think your strategy should be based on what you *think* you should get paid, which will change from job to job anyway by virtue of being the owner and not a worker.

now, if i sit down and have to spend 3 hours re-doing artwork, that's one thing. and i think a reasonable set-up fee is in order, particularly since they're saving a little in shipping. don't think i'm saying this needs to be a labour of love by any stretch: the next person that asks and your price is $7.25 or whatever, but that's not what's on the table for dinner, and if you're like me you're hungry for experience even if it's not my first choice of restaurants.

he said he didn't think he would make a profit and used his personal labour cost as one reason why, so i think that's at the very heart of it. if he thinks he should make $50/hr., then no, it's not going to be a good deal for him. if he's figuring $10/hr., then maybe he can 'make' a profit. the question is, imo, entirely based on what he figures his labour cost to be.

just ballparking here since no numbers were thrown out, but say $3 shirt shipped, say $5 a screen, that's $320. let's get crazy and just say $80 for ink and chemicals and utilities. time is the unknown factor here. regardless of how much time it actually takes, the OP can't actually lose money, just time. that's why i asked how much he thought an hour of his time was worth. at $50/hr., he's only got four hours to produce those shirts! lol. some of this boils down to how physically capable he is of producing 100 four colour shirts. i don't know ~ does he? so what exactly is the formula based on? i don't know how long it would take me, either, so that's why i would take the job, to find out, knowing i'm not going to really lose money, and that i might have to forego reruns of 'spartacus' over the weekend in exchange for this critical knowledge.

i actually answered his question. he asked how to make a profit. my answer is to dramatically lower the theoretical hourly wage, which is part of the formula being used.

ryan barker said:

he said he didn't think he would make a profit and used his personal labour cost as one reason why, so i think that's at the very heart of it. if he thinks he should make $50/hr., then no, it's not going to be a good deal for him. if he's figuring $10/hr., then maybe he can 'make' a profit. the question is, imo, entirely based on what he figures his labour cost to be.

just ballparking here since no numbers were thrown out, but say $3 shirt shipped, say $5 a screen, that's $320. let's get crazy and just say $80 for ink and chemicals and utilities. time is the unknown factor here. regardless of how much time it actually takes, the OP can't actually lose money, just time. that's why i asked how much he thought an hour of his time was worth. at $50/hr., he's only got four hours to produce those shirts! lol. some of this boils down to how physically capable he is of producing 100 four colour shirts. i don't know ~ does he? so what exactly is the formula based on? i don't know how long it would take me, either, so that's why i would take the job, to find out, knowing i'm not going to really lose money, and that i might have to forego reruns of 'spartacus' over the weekend in exchange for this critical knowledge.

i actually answered his question. he asked how to make a profit. my answer is to dramatically lower the theoretical hourly wage, which is part of the formula being used.

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I had missed where he mentioned labor, so I apologize. You bring up a valid point for him to consider, and how much he should factor in labor.

To that point, if someone gets into the habit of pulling out all of the labor (to live on) and to often has little or no profit above that he could run into trouble trying to grow his business. (paying for mistakes, expanding and adding new equipment, replacing worn and old equipment, paying taxes, etc).


Labor is part of COGS, and ideally a successful business will work on an appropriate profit margin above their true COGS.

But I am not entirely disagreeing with your point that for a new business, he needs to understand that he might benefit from working on tighter margins as he grows market share, and then working towards upping his gross profit margins as his business grows.

true enough, duane, they are likely to want the same deal or at least a discount. one way of getting around it is by saying 'no, thanks, my prices aren't negotiable.' then you can say that while you can't offer the same discount as you did last year, you'll forego the set-up fee on their next order. or give them a discount and split the difference. or just say you did that job because you were green and needed the work and you actually lost money doing it.

we get referrals mostly for the trophies we do. if we give a discount, we explain why. for example, one job to be picked up today was made with parts of other trophies because that's what their budget allowed for (you can't tell the trophies aren't brand spanking new). if someone came wanting that same price, i'd explain the situation so they know why i'm not going to give it to them. i don't give out discounts just because people ask. we might give one out to a good customer or, frankly, just because we like the person, then follow that up with, 'don't tell anyone what you paid for this, we'll just deny it, ha ha!'

and that's why i'd tell this customer, that the price you're giving them is not what you'd normally charge, so keep that close to your chest. without going into detail, i would explain to them that you're not making any money on this job and can't afford to keep doing them at that price until later when you're able to bring costs down and make an upgrade to your process, which hopefully won't take long, but won't happen next week, either. hopefully they'll consider it as a favour and remember you for the next time. and mark it on your calendar for next year, and give them a call.

it's funny: some people are clearly trying to take advantage of you. i've had more people say they can get shirts cheaper in the seven or eight months we've done shirts than i've had say they can get trophies cheaper in almost seven years. we've come to be able to recognize the scammers from a distance. it starts when they step out of their cadillac and greet you almost defiantly. right there you know this person, almost invariably a woman (not being sexest, just an observation), is going to be a PITA.

anyway, is there a way to get this down to a three colour job? do they have clean artwork? or do you have to design it, too?

as far as living off your labour, that's rather the point of working for yourself, but that doesn't say you're doing anything to help your business. i think a generic way of helping grow your business is taking a percentage of everything you make and set it aside for whatever purpose you deem is most important. that's in contrast to paying ourselves a salary. i think most of us have the intention of doing it that way (paying ourselves a salary), it's just that it doesn't happen like that to begin with usually, and when you eventually get to the point where that's possible you're already in the habit of doing it a different way.

heh heh. while writing this (started about two hours ago), one of my current major PITAs rolled up... in her caddy. the funny thing is that when i wrote the comment involving the car, i had no idea that's what she drove.

I know how tough it is starting out. I know you want to take every job just to keep the presses running, but we're all in this to make money. I haven't read the entire thread but I did see that someone mentioned that someone will always print shirts cheaper than you. That is exactly correct.

If your customers are only looking for the cheapest price then I would send them down the road because that's not the customer base that you want to build anyway. I would rather have my staff spend time printing 1 job that makes a great margin and spend the rest of the time cleaning than to print 3 jobs for pennies and work all day.

Our philosophy is that we have a set price and we are worth every penny. If you like it then we'll make your shirts, if not that's fine too. If you want us to print your shirts we will do it correctly, in a timely fashion and at the exact price we quoted. Just my $.02