If you’re on the hunt for a screen printing cost calculator or if you’re keen on learning how to price your screen printing orders effectively, then you’ve landed on the right article. Get ready for some insightful content!

For many new business owners, starting out in the decorated apparel industry, pricing can be very overwhelming because there are so many variables in our industry to consider. This can even be overwhelming to seasoned business owners as well, so please do not feel that you are alone.

The time to think about your pricing is before you open your business but don’t fret if you are up and running and are still trying to grasp how to be profitable. We are going to walk you through important things to know and then best practices on calculating your pricing.

First things First–What are you selling? Pick the title that best describes what you are doing.

1. Contract Printer (customer supplies the goods)

• The key here is making enough to cover overhead with a profit. Volume orders are key.

1. Apparel Sales, Outsource the embellishments

• You must make a good profit on the apparel and slightly markup the decoration.

1. Apparel Sales and Decoration in-house

• You can have an evenly balanced markup on both the apparel and the decoration.

1. Apparel Sales and some in-house decoration, some out-sourced decoration

• What’s the mix of in-house and outsourced decoration? If you are more in-house decoration, then a moderate markup on apparel is recommended. If your out-sourced decoration is higher than the in-house decoration, then the markup on apparel should be slightly aggressive to make up for the higher direct costs on outsourcing.

Now that you know what group you are in, let’s talk markup of apparel.

Pricing Your Way to Profitability:  Markup of Apparel

1. Contract Printer (customer supplies the goods)

• Because you are not selling the goods you have no markup to calculate here for goods. If you do buy some goods, then the best scenario is to determine what kind of profitability you want on the sale of the goods and then determine what the markup would be based on profitability. I have an amazing spreadsheet that helps you calculate this. Please email me at brenda@teesom.com and I will share with you. I also have other tools like a screen printing cost calculator, as well as one for embroidery.

1. Apparel Sales, Outsource the embellishments

• Your markup should be aggressive on lower cost items and decrease in aggressiveness the higher the cost of the item is. For example, a $2.00 would have a 175% markup, an $8 polo a 100% markup and a $200 Nike jacket would have a 40% markup.
  • Teesom allows you to create markups based on the cost range of items: https://youtu.be/duJHoz_2TKk?t=415
• Your markup on your outsourced vendor’s embellishment should not be aggressive, unless… with your markup your total pricing is still less than your main competitor’s pricing.

1. Apparel Sales and Decoration in-house

• You have the most flexibility on this one because you control everything. I recommend a markup by cost of item.
  • Your markup should be aggressive on lower cost items and decrease in aggressiveness the higher the cost of the item is. For example, a $2.00 would have a 175% markup, an $8 polo a 100% markup and a $200 Nike jacket would have a 40% markup.
    • Teesom allows you to create markups based on the cost range of items: https://youtu.be/duJHoz_2TKk?t=415
• But you also could do just a flat markup with quantity discounts.

1. Apparel Sales and some in-house decoration, some out-sourced decoration

• If you are more in-house decoration, a moderate markup that starts with key stoning, just doubling the cost, would suffice. But, if you out-source more than you do in-house decoration then the markup on apparel should be slightly aggressive to make up for the higher direct costs of outsourcing.

Pricing Your Way to Profitability:  Markup of Embellishments

1. Contract Printer (customer supplies the goods)

• Because you are not selling the goods you must have a decent price on the imprint to cover overhead and production labor costs. This is why volume is so key here. Calculating your minimum order is going to be key and then never sell a job below your minimum. If you need a screen printing pricing calculator for excel, let me know.

1. Apparel Sales, Outsource the embellishments
   • Make sure that you are getting contract pricing from your outsourced vendor. You may want to consider multiple outsourced vendors, i.e., one vendor has better pricing on small jobs and another vendor has better pricing on large orders. The problem with this is that now you are not bringing them good volume, so they are less likely to negotiate down a little more.But it’s always worth asking. Once you land on your contract pricing, now you must see what your competitors are charging and see if you can come close to that pricing with still making a profit. A good markup to start off with here falls in the 30-40% range. You really need to run the numbers on this one. If that $2 t-shirt is getting marked up 100% ($4) then your profit is $2. If you now add .77 that you are making on the embellishment that means; $2.77 x 24 shirts, for example, needs to cover your hourly expense and leave something for you.
2. Apparel Sales and Decoration in-house

• Because you will be making good markup on the apparel, you really want to focus on covering production on this one and putting in a bit extra for profit. Run through some scenarios on specific jobs and make sure you are covering your direct costs.For example, what would a 100-shirt job with one color cost me to run? Finding out your per minute price here and calculating how long the job would take to run in minutes will help you come up with printing price. The ink costs and screen charges will get covered in the markup along with profit. So, let’s say that 100 shirt job with one color takes me 200 minutes to run and my per minute shop minimum is $2.57, that’s now $5.14 per shirt to run that order. If the job takes me 100 minutes to run, now it’s $2.57 per shirt.

1. Apparel Sales and some in-house decoration, some out-sourced decoration

• The embellishment markup on this one is going to depend on what you are doing in-house and what are you doing for outsourced, as well as how much are you marking up the apparel. You want a good balance!
  • In-house markup on embellishment and apparel should lean to an aggressive markup on apparel and a moderate markup on in-house embellishments. This way you don’t have to change the markup of apparel when you switch to an outsourced embellishment.

Pricing Your Way to Profitability:  Other Factors: Know your Overhead

So how do I calculate my overhead. You need to get it all down to a monthly price.

In the burden rate, seen to the left, you may also want to consider maintenance of equipment, onboarding of staff, etc. It’s better to be covered for these things than to have unexpected costs along the way.

So, what can we do now with this $18,972.73 amount?

If you are expecting $250,000 of sales in your first year, we can calculate that the 18,972.73 will be 13% of your sales. Does that mean that the rest of the $231,027.27 is profit? Sorry, we have to deduct Cost of Goods out of there. Typically, your cost of goods should be around 42-50% of your sales. So, let’s subtract another 43% of sales out of the $231,027.27 to see where we are at.

250,000.00 x .57 (multiply by the reciprocal of 43%) = $142,500.00

Here’s where we are at right now:

$250,000 – 18972.72 (overhead) – 142,500.00 (Cost of Goods) = $88,527.28 (what’s left over-yay profit!)

Now if we divide $88,527.28 by the total sales of $250,000 = that gives us a 35% profit, pretty darn good since your target should be around 20-25% net profit.

If you would like a copy of my burden rate calculator, or any other spreadsheet, such as, screen printing cost calculator, email me at Brenda@Teesom.com

What else can we do with that overhead amount? Well, we can calculate our minimum order.

I once knew a business owner who was well-established, and his rule was to never sell anything under $200. Every order he took had to have a value of $200+ before he would agree to do it. How did he get away with this? When a customer who came in and just need one shirt embroidered, he would ask them, “What’s your next order going to be?” And if they said something to the effect of, “well I plan on hiring 3 employees, so my next order will be for 12 shirts (over $200), then he would say, ok, let me do this one shirt for you at no charge. That one shirt became a marketing expense. His cost, all in $12, which would lead to a $200+ job. As a new business owner, you really can’t afford to do this kind of tactic, so we need to make sure you are profitable from day one. Knowing your minimum order to be profitable is key.

Other Factors: Calculate your Minimum Order

We know our overhead expense is $18,972.73, let’s round this to 19k. Now ask yourself what is the fastest job you can do from start to finish? Let’s say it’s one embroidered shirt with a monogram. From start to finish, designing, hooping, running, etc. it takes me 20 minutes to do this job. I will now take the 19k and make it a per minute amount.

19k / 4 weeks in a month: $4750 / weekly

$4750 / 5 business days in a week: $950 / a day (rounded)

$950 / 8 hours of production: $118.75/ hour

$118.75 / 60 seconds: $1.97/minute

$1.97/ minute x 20 minutes = $39.58 = YOUR MINIMUM ORDER, NO PROFIT

—- wait…. what? I’m only profitable when I make $118.75 an hour!?!? Nope, guess what, you are just breaking even at $118.75, meaning that all you are doing is covering expenses. So, let’s now put a markup on our monthly expenses to cover our profit and cost of goods.

We said 19k/month was our total monthly expenses we can do a 1.2-1.6 markup to cover Cost of Goods and profit. So, 19,000 x 1.3 = $24,700

Now let’s do the calculations again

$24,700 and make it an hourly amount.

$24,700 / 4 weeks in a month: $4750 / weekly

$6175 / 5 business days in a week: $1235 / a day

$1235 / 8 hours of production: $154.38/ hour (rounded)—this is what you have to make an hour to be profitable.

Note: You can only divide by 8 if you are actually doing 8 hours of production a day, if that’s actually 7, then you need to divide by 7.

$154.38 / 60 = $2.57/ per Minute

20-minute job (the fastest job you can do) x $2.57 = $51.45 = YOUR MINIMUM ORDER, WITH A PROFIT

Other Factors: Know your Competition

If you haven’t done a market survey yet—DO IT! You have to know what your competition is doing and how much they are selling it for. The more you know the more you can set yourself apart from your competition. Guess what, they are going to do it to you, so you might as well know about them also.

Some things to find out:

1. What is your sweet spot order? Ask them to price that same job out to you. You don’t want to be more expensive, but you also don’t want to be the least expensive. Somewhere in that 80^th percentile.
2. Find out if they outsource any embellishment or artwork.
3. What is their customer service like?
4. How are they marketing themselves?
5. How do they deliver? Ship? Pickup? Courier?
6. How do they reward customer loyalty?
7. What can you find out about their staff?
8. How involved is the owner in the community?
9. What sets them apart from you?
10. How long in business?

Knowing the answers to the above questions will lead to confidence in your pricing. You may want to do things your competition is not doing to set yourself apart:

• A service no one else offers, i.e., folding, bagging, hang tags, etc.
• Guarantee of quality
• Referral program
• Make customers feel welcome in your shop—do an Open House
• Be a part of the community
• Connect your customers if they can help each other somehow
• Provide solutions, don’t just sell products
• Always look to improve and innovate—make use of Teesom’s Customer Portal

Finally, if you feel like you aren’t making money, you probably aren’t. Do not let it go, keep focused on profitability and confidence in your pricing. If you tell yourself in your head, “I would never pay that”, then more than likely you are going to price yourself out of business. If you can understand why you have to price things the way you do, your confidence in your pricing will lead to a successful and long-term business. Good luck all! We hope that Teesom Software will help you achieve your goals!