Last Updated on: 8th January 2021, 06:22 am
Running your embroidery shop requires considering your expenses and matching the prevailing industry pricing for stitch work. Multiple factors determine the approval or rejection of a quotation.
The simplest way to pricing your embroidery work is stitch count. If you are a newbie, you can start charging 50 cents per 1000 stitches and increase as high as $4 depending upon the design’s size. Moreover, you can also add other design attributes such as the number of colors, stitch length, order quantity, etc., and adjust the pricing accordingly.
Or, you can set hourly pricing. That is to say, you charge as per the number of hours you spent on the stitching work of the garment. This pricing constitutes the overhead expenses in embroidery and your profits.
If you have a home-based embroidery business, the most significant thing is — your overhead costs are too low. You do not have to pay rent or other monthly dues. You can easily set competitive pricing(slightly lesser than others). Thus, attracting more customers and increasing profitability.
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01. How to Calculate Your Embroidery Cost?
The thumb rule is you convert into stitches and calculate the number of stitches. What is a stitch, you ask? A stitch is considered when the needle penetrates once into the material. The finished design is produced in a file called the “tape.” The tape file will tell the embroidery machine where and how many times the needle had to go into the material to get the image.
The standard industry practice for embroidery pricing is of two types, i.e., ‘Pre stitch pricing’ and ‘fixed unit pricing.’
02. Per Stitch Pricing –
Most of the time and embroidery will price its work based on each stitch. He will breach the tape into the cost per every 1,000 stitches. The cost is typically set depending on the quantity or orders.
- Order – 50 caps
- Tape – 9,500 stitches
- Per 1000 stitch rate -$1 per thousand stitches.
- Per product cost – 9,500/1,000 = 9.5 X $1 = $9.5/product
- Product cost for 50 caps = $9.5 X 50 = $475
03. Fixed Unit Pricing –
Fixed pricing is set per “tape” design irrespective of the number of stitches. Depending on the design it could be both cost-effective or expensive for embroiders. On the other hand, customers get lured into this, and the embroiders would print a design with fewer stitches to save money, thereby giving it an incomplete appearance.
Running an embroidery shop is not easy and not cheap. It does manage to put some panic and fear into the hearts of small business owners. For the most part, business owners fail to price their services right for the following problems.
- Do I charge too much so my customers will go to my competitors?
- If I don’t charge enough, I will lose my business.
- There’s too much competition in the embroidery market, so I should charge less.
- It isn’t very comfortable to ask for more money.
- I am confused because I don’t have much experience in the industry.
Apart from the reasons mentioned above, other factors make product pricing difficult and could give you anxiety. However, if you follow a simple set of rules and do some simple math, you should be able to price your embroidery work right.
04. Pricing Method (Doing the Math):
The top things that go into determining your cost are:
- The actual cost of embroidery
- Profit margin
- The perceived value of the product
- Competitor’s pricing
- Selling price
First off, add up all your business expenses, especially the supply costs such as rent, equipment cost or equipment lease, labor cost, insurance, compensations, raw material, office supplies, phone, postage, etc. Next, you divide the total cost by the number of hours of the time period. E.g.
Embroidery Pricing Chart:
- Per day work hours – 8 hrs
- Workdays per week – 5 days
- Number of weeks a year – 52 weeks
- Total hours for 1 year – 8 x 5 x 52 = 2080 hours
05. How to price embroidery work?
Now add up all your expenses as mentioned above; for example, your total cost per year becomes $43,000. Then divide the total cost by the number of hours, which is $20.67 per hour. Now you have turned this figure into the price per unit. For embroidery, the best choice of unit is stitch count. For example, your machine can produce from 20,000 to 30,000 stitches per hour, which means for 20,000 to 30,000, it costs $20.67; so, for 1000 stitches, it cost between $0.68 to $1.03. Now, this should be your standard pricing per 1000 stitches.
Next, you have to add your profit margin per 1000 stitches. If you want the profit margin per year to be $70,000, then when you divide it by the total number of hours, you get $33.65. It is the profit margin per hour. For 1000 stitches, it will cost between $1.12 to $1.68.
If you do the math, your selling price per 1000 stitches should be nearly $1.8 to $2.7. So, for a product with 7000 stitches, the selling price should be $12.6 to $18.9. It is the cost per product. For a 1000 products order, the selling price should be $12,600 to $18,900.
A snapshot of our previous calculation:
- Total hours per year – 2080 hours
- Total yearly expense – $43,000
- Expense per hour – $20.67
- Number of stitches produced in an hour – 30,000
- Per 1000 stitch cost – $0.68
- Perceived profit margin per year – $70,000
- Profit margin per hour – $33.65
- Perceived profit margin per 1000 stitches – $1.12
- Final selling price per 1000 stitches – $1.8
- Number of stitches in a product – 7000
- Cost per product – $12.6
- Cost for 1000 products – $12,600
06. Embroidery is a different type of printing process:
Unlike screen printing, the automatic press can’t print 400 shirts an hour. It is somewhat slower and demands some time to set up and give attention to details.
Moreover, it’s not easy to provide high price breaks for large volume embroidery prints.
07. Each Embroidery Job is Different:
You may price your job based on the number of stitches, but you should also consider other complexities, such as the number of times machines have to stop to cut thread and change thread color. You will have to trim a lot of threads after it’s done. Moreover, some jobs such as embroidering a hat would be difficult compared to shirts, bags, and jackets. There’s no way to calculate these prices. Therefore, it has to be determined by you.
Embroidery is rather expensive both to create and to purchase. Many high-fashion brands still use embroidery for their brand logo. Embroidery is perceived as higher value and more professional than other printing processes such as DTG or Screen Printing.
When you decide to price your embroidery work, make sure you are making enough profit because otherwise, you could be losing your business if your products are not priced right.