Pricing Guidelines

Understanding the Basics of Embroidery Pricing

Quick Considerations:

If you price your embroidered products at the same price the average department store sells an equal quality product you should meet expenses and profit. Remember the largest competitors of all embroiderers are the department stores. That is where most potential customers purchase their clothing.

  1. Know your expenses
  2. Know your production capabilities
  3. Know your profit requirements

Pricing Factors:

1. Expenses: The sum of all expenses directly related to the running of the business.

  • Equipment H. Insurance
  • Rent I. Inventory
  • Labor J. Business and Embroidery Supplies
  • Utilities K. Designs
  • Management L. Education
  • Shipping M. Savings
  • Advertising N. Etc.

2. Production Capabilities: Number of products produced and sold during a specific period. The AVERAGE number of garments embroidered and sold. This number must be realistic and actually produced in order to correctly set prices.

  • Average number of stitches per hour per head = 20,000
  • Average number of stitches per minute (spm) = 350
  • Average design produced = 7,000 stitches
  • Average number of designs produced in 8 hour day = 25

3. Profit Expectations: Equals the amount remaining after salaries and expenses are paid. This is often confused with owner's salary. The profit is actually the amount left over after all expenses are paid and everyone including the owner and managers are paid. Profit: The amount that can be placed into a savings account and is not required to meet expenses.

Calculating Pricing:

  • Expense + Profit = Total Cost: Knowing your production capabilities you can now calculate the necessary fees needed to meet expenses.

Total Number of Garments:

  • Total Stitch Count: Every stitch adds to the cost of embroidery.
  • Number of Letters: Consider the area required for the number and size of letters requested.
  • Number of Colors: Colors exceeding the number of needles add to cost.
  • Total Cost: Make customers aware that every factor above affects the total cost.
  • Delivery Time: Delivery time requirements.

Customer Education and Understanding:

It's important when establishing any business relationship in embroidery that the customer becomes familiar with embroidery limitations and your business policies.

Make sure the customer knows what can and cannot be done with embroidery. That stitches cannot exceed certain lengths and letters cannot be made smaller than 3/16" tall. Column widths less than 1mm do not embroider well on knits and that a large designs, high stitch counts, and color changes increase cost dramatically.

Most importantly make sure the customer knows your policies as to payments, deposits, delivery times, rush orders and signed agreements on every order. Each order form must be completed and signed by the customer, noting all details of the order and until the order is delivered to your office all quotes and comments are estimations only.

It is a good policy to accept no responsibility for any damage or spoilage of products brought into your office and that under no circumstances will compensations of any kind be given for damages that occur.

Good Ideas to Consider

  • Get deposits large enough to cover the costs and shipping of garments necessary for each order.
  • Require COD on all orders at completion.