How can anyone not know what they need to keep the doors open? It only takes a few minutes and a calculator, or a pencil and some scrap paper if you are really frugal.
Here is a quick example based on a one person shop. Your numbers will be different, but the concept is universal.
Static Costs:
Rent/Lease/Mortgage - $1500
Utilities/Phones/I4.3 we I srnet - $600
Insurance -$200
Office/Cleaning/Bathroom Supplies - $100
Equipment Lease - $1100
Total - $3500
Non Static Costs - these will vary drastically depending on the business, how long it has been open, the model it uses, it's location etc.....but you should know what they are for your situation, just plug in the numbers.
Marketing - this could be a zillion numbers. It could be a certain dollar figure of every shirt you sell, it could be a % of gross or net sales, it could be a set static amount (bad idea btw), or something else. For this example let's assume a new shop with little to no sales. Because of this they budgeted a monthly marketing allowance of $1200 for the first year, after that they will move to a % based program.
Business Expansion/Emergency Repair Fund- how much do you want to set aside for new equipment to grow the shop? Or in an emergency fund to fix equipment failures? Let's assume one new piece of equipment for either expansion, or just to keep up with technology every 30 months. This can also be done on % or on a static number. Once again, new business, so we will use a static amount of $500.
Community Involvement - this is an important item often overlooked. Local kids sports teams or band sponsorship, yearbook ads, etc..... $50 per month to start.
Marketing - $1200
Expansion/Emergency - $500
Local Community Involvement - $50
Total - $1750
Grand Total - $5250
Notice I have not included material cost. That will be calculated into individual job qoutes. It will vary greatly from shop to shop. Some shops will have much less waste, and errors in the printing process than others. You just need to know yourself.
Now let's discuss the number of actual production hours you have in a month. Every month has 4.3 weeks. Assuming 5 work days at 10 hours per day, that is roughly 215 work hours per month. Notice I wrote work, not production hours. Let's trim it down to a realistic level.
10 hours per work day -
30 minutes opening shop and preparing equipment for the work day.
30 minutes closing shop and performing daily maintenance.
This may seem like too much time, but if you calculate all the little things that must be attended to on equipment during the day,(mixing pretreatment, chabging bobbins, threading needles, shaking ink, etc...)I think you will find it accurate.
60 minutes marketing - this is new marketing, not answering the phone, following up on qoutes, etc....New marketing only - website, print, social media, chamber lunches, etc....
60 minutes dealing with walk ins, phone calls (business and personal), follow up emails, etc....
120 minutes for lunches, smoke/coffee/soda/tea breaks, bathroom breaks, etc.....
Half your work day is gone with ZERO production. That leaves 5 hours a day, or 110 per month.
Sooooooo, what do we need to charge?
Take our $5250 and divide by 110 and we get $47.72 per hour just to stay open. That includes zero dollars for our salary. Add even a modest $22.28 per hour and you get $70.00 per hour.
Let's assume the fictional order is for 60 single sided digitaly printed black shirts. Let's assume we can do 20 per hour. We need to charge at least $3.50 per shirt, over and above costs. And this assumes no waste.
Order Quote
$2.50 - blank shirt
$2.50 - ink & pretreatment
$3.50 - labor
$8.50 minimum. .......
I know several of you will give me grief over only five hours of production per day, and I am sure many of you exceed that, but I am sticking with it for a start up one person operation who wishes to grow quickly.
My costs may be much higher than some of you, but I think they represent a good starting point for working out of a commercial location.
Zilla
