[davidkanderson]

I'm seeing a lot of variation on pricing in this industry, unfortunately a lot of it is badly thought-out and bases way too much on what DTG machine makers' sales people are quoting as far as costs go.

Most pricing I hear also lacks the most important variable:
**Design height**
If your pricing isn't based on design height, it needs revising.

Each method of embellishment has a major factor other than qty that affects the true cost of making it. For embroidery, it's stitch count. For screen printing, it's # of colors. For DTG, it's vertical inches in the design. Why is this so important? Because DTG printers move back and forth super fast, but they creep down the shirt very slowly (with two passes required on most printers if white ink is involved).

How does this affect cost? For one, it approximately calculates your pre-treatment and ink costs. But more importantly, it dictates machine time. If you print designs that average 6" tall over a 5 year period, your machine will be able to make twice as many shirts as someone who prints 12" tall designs. And, while an efficient operator should be able to come up with something to do during that extra few minutes of each 12" shirt, even the best operator will spend much of that time just waiting on the machine. So, vertical inches directly determine your labor cost. If you are charging the same for a 12" tall print as a 6" tall print, you are giving away the farm.

Here's how to price your DTG printing. My model is this simple at heart:
Calculate all true costs (fixed and variable)
Determine a realistic profit margin
Add them together.
(Add your marked up shirt cost to that, but that's a different post, this is just for the printing).

What are the TRUE costs of DTG printing? Here's a comprehensive list:
* Actual Machine cost, including taxes and financing
* Machine parts and repair over the lifespan of the machine
* Downtime and wasted labor during machine repair
* Pre-treat costs (typically $0.40-$0.75 per shirt)
* Ink costs (from $0.01/shirt to $9/shirt or more, depending on design size, print mode, density, etc).
* Actual labor time to produce a shirt (realize that this is different on a day when your operator is in a groove with 50 shirts to print, vs when they have to use the machine during three different 1-shirt sessions in a day)
* Waste - if you mess up a shirt that's due today (using a style you don't stock), you're out not just the labor cost, ink cost, pre-treat cost, and blank shirt cost, you might have to drive across town or pay a courier to get your replacement shirt in time. We feel a good industry average waste number is 5%, with a competent operator and a good (by today's low standards) machine.
* Maintenance supplies (swabs, cleaning fluid, new tools, paper towels, sponges for waste tanks, etc)
* Maintenance time (labor)
* Training, experimentation, sample creation
* Art prep time (including time developing templates and training sales/art staff on how to receive/approve/prep art)
* Order processing time (customer interaction time, invoice processing, etc)
* Standard overhead costs (rent, electricity, internet, phone, advertising, taxes, inventory management, and so on)

Don't forget that you are in this to make money, so you should apply some sort of standard markup to all of your material costs (1.5x, 2x, whatever you feel covers your purchasing costs, shipping, waste, and a reasonable profit, and will still allow you to earn a workable salary in your locale.)

I'm going to address one of these in detail in this post, because most people are forgetting about it, and it affects that all-important vertical design size: Actual machine cost - how to recoup your machine cost

Let's say your actual machine cost is $20,000, and you are successful enough that you bought it cash, so there are no financing costs. Let's give it a generous useful life of 3 years. That means $556/month. Let's say you're open M-F, so you're looking at $26.46/day in recoup cost on the machine itself, not counting maintenance, parts, downtime, etc.
How many shirts can you do per day? Assuming you have customers lined up out the door, and your machine is at max capacity (it's running literally 100% of the time - yeah, good luck), this number is going to depend on two things: are you using white ink, and what is the average vertical size of your designs? If your printer (including doing it's little printer dance before it starts really dispensing ink, file processing, etc) can print on white shirts (no white ink) at 2 inches per minute (pretty typical), you can produce 960 vertical inches in an 8 hour shift. In other words, that's 160 shirts with a 6" tall design, or 80 shirts with 12" tall. Printing with white ink? Make that 80 6" shirts or 40 12" shirts. But your operator is not at maximum efficiency all 8 hours, and there will be some lag time between jobs even if your customer demand is really high. An aggressive number would be 30 12" shirts/day with white ink. So, if you're going to be really successful from Day 1 (more customer demand than capacity), if you have a good operator who needs no training, and you do 12" tall designs most of the time, you need to charge $0.89 per shirt just to recoup your initial machine purchase before the printer dies or becomes obsolete.
Surely you'd like that machine purchase to be a positive equity investment, so you'd really like at least $1/shirt. And let's be realistic: Some days, your machine is dormant, you just don't have demand for DTG that day. Other days, it's down, and other days, your operator is working very slowly (challenging design, new operator, etc). You're really going to need $2/shirt to make your DTG printer a decent investment in this scenario.

Are you charging that fee? If not, you're losing money. And you're lowering the bar - you're teaching customers that this product is cheaper to produce (and buy) than it really is. Stop ruining it for the rest of us!

Notice how that recoup cost is so dependent on design height? Do you keep track of the average vertical size of your customers' designs? do you even want do? I didn't think so. That's why you should calculate your recoup cost on a more typical design height (I use 6" as my baseline), and add a fee per vertical inch for anything bigger than that. I add twice as much per vertical inch for white ink prints (on darks) than for cmyk prints (on whites/lights), since the recoup cost and labor cost about doubles with white ink.

I'd be happy to elaborate on anything here, or provide clarifying numbers. I'm sure your mileage will vary, but I think anyone who has done DTG in a real production environment for at least 6 months will largely agree with my major points above.

In conclusion: start pricing DTG prints based on the vertical inches in the design and we'll all be able to be profitable at this.

 

[VTG]

Good post David, an interesting way to look at pricing DTG printing. I hope this gets a decent amount of readership and some additional commentary from other DTG printers. I'd love to hear what other people think.

One of my pet peeves about this entire industry is the fact that folks seem to be willing to give away their products, their time, and their energy for free ... it's utterly ridiculous.

Come on folks, the rest of us are in business to make money. By under-valuing your products and services, you're dragging us all down.

Happy holidays to all ... and best wishes for a PROSPEROUS year in 2012!

 

[davidkanderson]

Thanks for your reply. It has been baffling to me that DTG seems to be the "at or below cost" imprint method, in particular since it's the new, hot technology. Typically, consumers are willing to pay a premium for the hot new method, but for some reason so many printers have marketed this as the "cheap" option. I personally think it's because most people haven't done the math, and they haven't figured out they are losing money yet.

I have a competitor down the street, I've checked out his pricing. I know what his machine cost. Assuming his rent is free (ridiculous of course), he pays nothing for electricity/phone/internet, and he pays his staff minimum wage, by my calculations he'd still be losing money, even if were 5 times busier than he is (his shop is never busy and his machine is usually not running when I've poked my head in). At some point he'll burn through his capital and/or credit and disappear, but not till he's convinced a chunk of the marketplace that DTG should be cheap.

This is a premium product, and for certain designs, it's the best option by far. I have some DTG prints of dark photos that blow any screen print or transfer out of the water. Even ignoring the fact that they cost way more to make than SP or transfers, the quality should justify a premium price for them.

Let's not race each other to the bottom on this one.

 

[VTG]

This is a premium product, and for certain designs, it's the best option by far. I have some DTG prints of dark photos that blow any screen print or transfer out of the water. Even ignoring the fact that they cost way more to make than SP or transfers, the quality should justify a premium price for them.

Let's not race each other to the bottom on this one.

Completely agree with you.

Small runs + great quality = premium price.

Keep preaching the message!

 

[rwshirts]

So......the question still is......what would you charge for a 12" full color print on a dark shirt, and what blank (make and composition...100% cotton?) would you use in your market in LA? I am really thinking about a DTG purchase after the 1st of the year. Where do you drop pricing on quantity orders? 12? 24?. $12-$15-$20 a shirt? What equipment are you using?

 

[zoom_monster]

If you charge for time, you're going to be best off. This of course will depend on the speed of your particular printer and your labor and overhead costs, but $1 to $1.6 a minute is not unreasonable for the production part. Depending on what you charge for art prep and order processing, those "costs" will reduce as the run gets longer. So, if it costs 15 minutes to do up one shirt and you can print 2 shirts of the same design in few minutes more.... you can offer a Come along to a client where-by you multiply your profit with just a little more effort and investment.
One note, I would be careful of "published" prints per hour data as well a averaged ink use data. this is a very variable area. What you need to charge will really depend on what your plan is for your business. Put one together and try to look at the big picture, then find a specific machine that will do what you need.

By the way a 12" high design that's 1" wide will print faster than one that's wider. Also I can show examples of shirtboard buster prints that use pennies of ink and others that could use 3 or 4 bucks... but take the same time to print. Being savy to how the process works and how you quantify it to your price structure is key to making money.

 

[rwshirts]

Zoom Monster.....I like your web page "Optiq". And your pricing....it gives me something to work with. Are the Optiq designs you show standard programs that you already have programed into your printer or computer, or are they all customer designs?

My main business is in the carpet cleaning industry. I regularly make $100+ per hour of cleaning, but it's not an 8 hour a day schedule. Some bigger commercial jobs, I have made many times more than that figure, but that is with 2-3 helpers cleaning at the same time, thus cutting the time we are on the job. And the equipment and logistics of carpet cleaning is quite different than screenprinting! I don't have to be so precise like artwork and a printed product, but we concentrate on quality and doing a better job than the "Big" companys.

As for our regular screen printing, we've made $100's of dollars an hour for some of the big quantity jobs we have done, and not so much for the smaller runs. Everyone and their brother is a "basement" screenprinter around here.....they work for next to nothing just to get the job!

Thanks.

RW

 

[zoom_monster]

Zoom Monster.....I like your web page "Optiq". And your pricing....it gives me something to work with. Are the Optiq designs you show standard programs that you already have programed into your printer or computer, or are they all customer designs?

My main business is in the carpet cleaning industry. I regularly make $100+ per hour of cleaning, but it's not an 8 hour a day schedule. Some bigger commercial jobs, I have made many times more than that figure, but that is with 2-3 helpers cleaning at the same time, thus cutting the time we are on the job. And the equipment and logistics of carpet cleaning is quite different than screenprinting! I don't have to be so precise like artwork and a printed product, but we concentrate on quality and doing a better job than the "Big" companys.

As for our regular screen printing, we've made $100's of dollars an hour for some of the big quantity jobs we have done, and not so much for the smaller runs. Everyone and their brother is a "basement" screenprinter around here.....they work for next to nothing just to get the job!

Thanks.

RW

I hear you. Regarding pricing in your industry, when you bid a job or throw a price out there, you have a good idea of all the pitfalls that may happen so that when you do a job you'll n
know that you are not working for minimum wage. You know what you need to set aside for the once in a while mistake or machine breakdown/repair. You probably have learned over the years how to clairify your boundaries so that people don't take advantage of your time. The same will be learned by looking at all your costs, setting goals and re-adjusting as you learn more. You also learn what "gravy" jobs are and what are wasters. If you price for worst case, you probably scare customers off, If you give them incentives to steer them the right way and give then true value, they will return with more business.

The "Optiq" stuff is by an Artist who's in this forum that does one-off personalizations in photoshop and charges me a very reasonable fee. I'm sure he has his system of layers down as you can see by the choices, but it's all hand done, and quite cool.

 

[binki]

We use DTG primarily for the one-off value so $18-$30 and up to $50 on hoodies is the norm around here. At those prices printing size isn't a real concern for us unless we are doing darks with small images. Then the cost of ink is dramatically reduced.

Qty lights can go for as little as $6-$8 each if we are doing 100 or more. We used to do a single pass 5oz shirt for $400 for 100 shirts but the price of shirts has gone up so much we can't offer that price any more.

We also print on canvas so we start at $30 and go up from there depending on the artwork prep.

 

[Printmark]

Many of the factors mentioned above are built into my Estimating Software which includes DTG Estimating. However, I have intentionally left out the option to price using DTG on dark garments. It is still a very costly and slow process that is very difficult to make a profit on, unless you have the niche market where you can produce lots of very small runs at extremely high prices. However, DTG on light garments can be very profitable and priced competitively. Perhaps when I can say that about DTG on dark garments, I will include that option as well.

Printmark

 

[rlaubert]

I have only been in business about a year and mainly have been doing embroidery. I ma putting together the financing to get into DTG (I have sublimation and inkjet transfer). I have read several threads about pricing and find it very interesting that there is such a 'need' to reduce the price for large orders. WHY? Doing a 100 pieces for less than half the cost of one piece is a waste of time. Give me small orders at full price any day. I will reduce the price a little, but that is mainly because the garments cost less, so if I save 20% on the order I will reduce the price to the client maybe 15% BUT never to the levels I see here.
Also, I don't compete with screen printers. DTG quality is better and SP can't compete on number of colors. Can't compare apples to steak so why try to follow their pricing model? Comments?

 

[JeridHill]

Ideally you shouldn't have to reduce the price too much, ideally. Now look at reality. It's irrelevant if you believe you are competing with screen printing or not, because you are. With larger volumes, if there is too much of a difference in pricing between dtg and screen printing, people will go with screen printing. Sure you will have the occasional person/company that wants the best quality, but again, with larger volume, almost every time, they will go with the better pricing. I've done both and people are willing to suffer quality for cost.

I had quoted out a job for someone who wanted 150 shirts front and back using dtg. Later on they upped it to 450 and asked if my pricing would be better. Because I had already quoted 150 pieces, I couldn't go any lower than that pricing scheme. I knew my limitations in speed using dtg compared to screen printing so I already had dropped it down to the lowest price I could. They were fine with the explanation and we still ended up with the order. If they had ordered 25 shirts, it would have been a higher price, 10 even higher. It's the nature of the industry.

You can hope to achieve the best pricing for your printing and on occasion it will work, but the industry as a whole is what dictates the pricing scheme (not so much the prices) and in this case, if you don't budge, someone else will. Yes, I believe dtg should be priced higher than screen printing across the board. But if you choose to keep your prices marginally higher than the norm, IMO, you will be losing customers. Don't drop your prices too low, but not dropping them enough in this industry will cost you.

 

[rlaubert]

Tell me, does your rent decrease when you print more? Do your employees get paid less? Does your utility company charge less? Do your supplies get cheaper? What happens that people can drop their prices by up to 70 percent on large orders other than discounts on the garments?

It doesn't pay to compete on price if you start losing money. I will discount when I receive a break on garments but not to the levels that I am seeing. On the other hand, I am keeping these websites saved for when or if I get a large order. I will farm it out and make even more profit.

 

[JeridHill]

Ray, I've been printing since 1998 and am telling you what I have observed in this industry. You make a good point, but in the end, I have seen many customers use other companies with absolutely terrible quality because they were $1 less in cost per garment.

You can stand by your principles and not budge on price or you can adjust them reasonably. I'm not saying sell yourself or even price according to screen printing prices, I never do that. But in the tshirt industry, it is expected to get better pricing with larger volume. You can't use the same percentages that screen printers use, but I can tell you if you sell a single shirt for $20, you will not sell 100 shirts for $16 each. If you can, go for it, but you have a very steep hill to climb to get those kind of prices in the tshirt industry.

I would screen print large orders and use dtg for smaller orders, unless they needed a high end full color shirt, then I would go dtg. I believe in using the best of both.

 

[rlaubert]

Thanks, so far we have been able to do a good business without trying to compete with the screen printers. I do not have that capability and my niche is such that my customers for the most part could not meet the volume to use screen printers at a profitable level. I am looking into working with some non-profits where larger orders may be desired, but for now DTG seems to be the way to go for me.

 

[JeridHill]

A niche market is always better because you can justify the higher margins. In the end, do what works best. After almost 15 years in business and 80+ weekly work hours, I've learned to work smarter and not harder. Thankfully, I no longer put in these kind if hours....

 

[equipmentzone]

We tell all of our beginning customers the same thing. You are not in business to print shirts. You are in business to make a profit. It is something you need to always remember.


Harry

_

 

[Resolute DTG]

A niche market is always better because you can justify the higher margins. In the end, do what works best. After almost 15 years in business and 80+ weekly work hours, I've learned to work smarter and not harder. Thankfully, I no longer put in these kind if hours....

Good point, the idea of DTG is profit not pain ! If your going to drop prices to compete you need to work harder and longer, you also need the right level of printers and people to produce the orders in time.

After a lot of market research we found the magic figure in Europe is around £70 to £90 GP ( not turnover profit ) per hour per unit. For this you need the right kind of jobs and one operator per two units.

The point is, until the market is saturated there is no need to cut your profits to compete. We find most people struggling to keep up with demand here rather than difficulty competing on price.

 

[Tee Wiz]

Great posts here people.

I've been in the standard print game ( i.e. offset and digital ) for many years now and let me tell you volume discounting is the norm. With offset print technology your costs are largely in the setup of jobs so a few extra sheets of paper isn't going to 'cost' us much more. So in order to get more profit you discount the larger runs ( I said more 'profit' no higher profit margins ). Certainly for lower runs 'margin' is king.

 

[davidkanderson]

DTG is totally different than screen printing, however. After about 12 shirts (24 at most), there is no economy of scale. There's significantly less setup, and the machines run quite slow, and they cannot be sped up. So, my true cost/item on 100 shirts is about 95% as much as my true cost on 12 shirts. I feel the pressure to give volume discounts, but I can't do much in that regard and actually make a profit. What really makes this bad is the DTG printers who are losing money by quoting super low prices at high volumes. They are poisoning the marketplace by giving a false idea of what these shirts are worth. They eventually go out of business, but the barrier to entry on DTG is low enough that new entrepreneurs who cannot do math just keep getting machines and making the same mistakes. It's a frustration, to be sure.