[LDD]

Hi all,

I've read through some of the older threads here on how to price our t-shirts, and for retail, people usually say mark-up 150 - 200% of the cost price.

Below are my start-up expenses so far:

Website programming (shopping cart etc.): US$240
Business registration + Virtual office address: US$50
Website domain + hosting for 1 year: US$60
Company logo design: US$73
7 T-shirt designs: US$320
Product and promo photography: US$300

Total: US$1043

I'm currently partnering with a POD company (NOT Cafepress, Zazzle, PF, PrintAura etc...), and it's the cheapest I can find so far:

Base cost of 1 t-shirt: US$13
(inclusive of printing, order fulfillment, 1 neck tag, 1 hang tag)

Now, assuming I mark-up US$10 on each t-shirt, each t-shirt would now cost US$23.

I figured that to break even, I would use US$1043 / US$23 = 45 t-shirts
Sell 45 t-shirts to break even! That's insane.

Now, I haven't even add in the marketing / advertising costs, which I intend to do monthly (advertising will be part of my monthly ongoing expenses).

Plus, I intend to get pay my designer to churn out 1 new design each month.

So, looking at things as they are, it's gonna be really hard to break even UNLESS there's some huge breakthrough in sales?

I need some experienced insight & advice on this so that I don't sink deeper.

Tks!
LDD

 

[BrianHahn]

Your startup expenses are 'fixed' costs that should be amortized over their useful life which will hopefully be more than 45 shirts.

If your gross margins are $10 per shirt then use $10, not $23 to cover your variable expenses, overheads and amortization of fixed costs.

 

[kimura-mma]

Brian hit the nail on the head.

Your fixed startup costs should be made back over time. What you want to focus on are your recurring monthly costs. That should be significantly less than $1043. But when figuring your profit, the retail price is $23. But $13 of it goes back to the POD site. So your cut is $10. So you need to divide your monthly cost by $10 to figure out how many shirts you need to sell to break even each month.

 

[treefox2118]

Don't forget to include your time as an hourly rate against total costs.

My P&L spreadsheet is pretty complicated, but it tells me if I should stay in this business or not.

I didn't even bother to consider profit the first 3-4 months I was in business. I worked only on brand recognition and customer building. I lost $10,000 in 4 months doing both but earned that back and then some by month 6.

If I worried about profit, I wouldn't have a dime to risk. Risk leads to profit.

Sent from my Nexus 7 using T-Shirt Forums

 

[LDD]

Thanks guys! That really cleared up a lot of muddiness.

Btw, is it a good idea to spend $$$ to hire a marketing consultant (maybe a freelance / part-time marketer that you find on those freelance websites) to do a study of my target market and help me plan out a marketing strategy? While I know roughly who I'll be selling my t-shirts to (people aged 16 - 35 who love bold urban t-shirts), I don't have a clearer clue beyond that.

I don't think blindly splurging $$$ every month on buying Facebook ads, Google ads etc is a good way to go.

 

[Mudtees1]

Hi there,

I'm starting my line of children t-shirts. I have been working with a few of the companies you ARE NOT using forr testing, but they seem to take too long in processing on test orders. I don't think any customer will wait 7+ days to receive their items. I have tried others, they are super fast but too expensive for a 1ea order start up.

Would you mind sharing the name of the POD you are using?

Thank you!

 

[BNCclothing]

Also in the same boat
Hey man I am new on here, and just released the beginning of our clothing line. We got the same kind of costs. What kind of T-shirts are you going to be printing on? Seems little expensive. I tried to message you, but your inbox is full. You can email me at [email protected]

 

[LDD]

@ BNClothing: I've just PM-ed you.

@ MudTees: Says your inbox is full. If you want, give me your email or PM me. I've just cleared my inbox.