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Contract pricing

621 Views 14 Replies 6 Participants Last post by  Deric
For those of you that do contract embroidery how did you figure out your pricing? Also price breaks?

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For wholesale work we have a simple formula. No price breaks, it is just flat out 1-1000 or more pc's.

$3.50 for up to 5", $5 for up to 8", $10 for more filling work on the big hoops and by quote over 50K stitches. Add 50c for a second location on smaller items like shirts and hats.

We only have a few wholesale customers. They tend to be too demanding and we don't make that much from them. These prices are 75% of our retail pricing on the low end and 50% on the high end.
We like doing wholesale. we get about 66% of our retail price. We charge for second location and we also set a minimum price per location. We find that we can make easy money for not having to do the sale.This also allows the client to make a little money also. It has allowed us to purchase a new machine this past year and pay for it in cash. We get anywhere from $0.80 to $1.00 per thousand stitches, depending on how much work they bring to us, more they bring better the rate.
I have a potential customer who recently contacted me about taking over their outsourced embroidery contract. Their issue with the current company is that they won't fill short orders. (They are calling orders under 36 pieces short.) I haven't reached the place where I can afford to turn down short orders but I want to make sure I price the order correctly. For a left chest placement (crest size) the current company is charging $4 for the first 10K stitches and $.50 for every 1000 stitches over. They also charge $5 dollars for names on right chest placement. Another issue they have is that they must pick up and deliver their garments to the embroiderer which is 30 miles one way. They would like for me to pick up and drop off. Its only ten minutes away for me one way. They client is saying they have orders daily. I need the business but I want to price it correctly. Thanks for any help in advance. Deric
We do second locations like a name drop for $3 if they have the logo or company name on the shirt. We also do a 3rd location for $3. Logo is $8 and lettering only is $5. We discount that if they buy shirts from us but no discount for supplied shirts.
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I pay 2.00 (5k) for 12 pieces and up....Extra stitches are 0.20 per k.....Embroiderer picks and up delivers to/from garment supplier so garment supplier can ship on their freight discount....Sample is done in 2 days....Production is done in 3-5 days after sample approval....
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Depends on how many pieces they want. What if the want jus 2-3? Also how many heads do you have? Do you work out of a shop or at home?

You should definitely set a minimum at least 12 pieces. You need to add gas into the equation also as you are picking up and dropping off(that alone you may want to add a little more to your final price). You are saving them time n money here!

If you're at a shop make sure you are making enough for your overhead.

I would definitely try to get that account if they bring in jobs everyday that are atleast 12 pieces.
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I will find out what the average size order is tomorrow when we meet. I have a single head machine and I'm working from home. The shop is about 11 miles from me one way. What is a fair charge for pick up and delivery? I thought $10 a day. They have a sales team. It would seem rediculous to have someone out getting sales and them coming back with a 1-2 piece contract. But I guess anything is possible. People approach me all the time for "wholesale embroidery" but only want a few pieces. I have serviced some because of the potential referrals in their circle. Or I just sale it to them at my retail price. Thanks for the replies. Deric
You are going to attempt to do contract embroidery with a 1 head machine?....
I know........yes, I'm expecting to purchase a four head soon.....if I have the orders to justify it. I really don't know what the volume is going to be yet. I know I'm going to have to work around the clock this to pull it off. I guess my partner and I can work shifts to get it done.
I am not sure if my math will be correct but it should give you an idea of what I am talking about.....

Say you can do 4 pieces an hour at 4.00 each.....Deduct 1.00 each for wear & tear on your machine and supplies and you make 36.00 (12 x 3.00)....This works out to 12.00 an hour...Might be a little higher if you can do more pieces.....

Instead of 12 contract pieces, change that to a retail order of 12 shirts...Say on a shirt that costs 10.00....With the same 4.00 embroidery you should be able to charge at least 21.00+....So now you are making 3.00 on the embroidery and 7.00 markup or 10.00 each or 40.00 an hour...A far cry from 12.00 an hour....

So go out and knock on doors and sell retail orders....Then you make all the money for your effort instead of the other guys....Soory to say contract work on a 1 head machine (or even 4) is pretty much a losing proposition.....
I completely agree. Given the choice between retail and contract there is no comparison. Retail all the way. I charge $25+ on polos. What I haven't been able to do is build enough consistancy with orders coming in partially due to capital and other dynamics. My ultimate goal is to do conventions, and specialty shows like car, motorcycle, dog shows and the sort. I just need to get this ball rolling a little better and this contract may give enough consistancy to pull it off.
I got the contract at the pricing I wanted, plus $10/day delivery charge. We agreed to give it a few months to see how it works for both of us as their needs seemed to be all over the place. This is a uniform shop so they serve a lot of public service type orgs. (law enforcement, fire, transportation) The lower piece orders come from employees coming in and reordering. They usually order a weeks worth of uniforms. For large orgs those 5-7 pieces will hopefully add up. The orders generated by sales are of course larger. Thanks for the replies.
I know you have already set the terms for this new contract account, but this is what I do. For clients who bring in their own blanks I have a $15 minimum coming in to my shop. I charge $8.00 per left chest logo up to 10K stitches, .50 per 1K over. For logos that I run frequently (a couple of schools) I charge $5.00 per left chest since everything is already set up in the machine. These are maybe one or two items at a time. For 2nd or 3rd location text I charge $4.00 unless there is a minimum of 6, then it is $3.00. I want to cover my time for the set up and sample sew out.

If I am running a contract job, the lowest amount I charge is $3.50 per logo and I don't give price breaks. If I did not have the logo digitized myself, I make sure that the logo they are supplying sews well without stops or breaks and it looks good since it is coming from my studio. If it does not, I will not run it, or I suggest that it is redigitized.

I don't normally like to do contract work (I have 3 heads), but it can be good profitable work if you are running the same design on the same item and that item is not difficult to hoop.
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I have been asked by this company to give price breaks on quantity. I feel like if I'm doing their shorts we should keep the same price for larger orders too. The problem is they will probably shop the larger jobs to make more profit. I will give one price break but I'm not sure what number to start at. I'm thinking if they have over 100 pieces come down to $3.50. Any thoughts? Thanks Deric
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