by The Embroidery Coach | | Embroidery Pricing
The exact formula for embroidery and creating a profit seems to be different for every embroiderer that I work with. The information that they have received from other embroiderers and the information that is available on the internet can be very controversial.
There are many ways to figure pricing and the markup on your embroidery and the items that you are selling with embroidery. I have always figured a 50% markup on goods after I have added the shipping cost and then the embroidery can be marked up to whatever your market will bear or what you want for a profit on it. You must make a profit. That is Business! If you are counting on working with embroidery alone and not selling items to markup, you must mark up your embroidery higher to make up the difference.
Some embroiderers markup their products double what it costs them from the distributor and then they will give the embroidery at cost. It is your choice as to how you want to figure your markup, but you must make a profit or do not bother to stay in business. It will be a losing battle for you that you will not win under any circumstances.
When you are figuring your pricing, do not be fooled by thinking that you can charge for the stitch count only. If you have taken my how to price embroidery course then you know exactly what I mean. If you have not, then you will need to add to your stitch count cost, all of the other items that go into the process to actually figure your pricing. If you charge by stitch count alone, you will find very quickly that you are not making enough money.
The cost for each embroidery is based on the hourly cost rate that you must have to break even, plus, plus, plus! This is a must!
Can A Small Business Embroiderer Make Money Doing Contract Embroidery?
I always advise my students not to take in contract work. Does this mean that you do not do any items that are brought in to you! No, I mean do not think that you are going to run a successful embroidery business on doing items for other people alone. This will not work. You must have a mix of selling your own items and doing items that are brought into you.
Many times you are approached with the idea that if you do large quantities for other people and work on a slim margin, that you will make the money you need because you are keeping your machines busy. This approach is not a good one. You are better off going out after your own work and concentrating on selling your own items, marking them up and adding your embroidery. This is how the successful embroidery shop owners operate.
When you have retail customers that bring in their own items, this is fine, but you want to remember to add more of a markup for the embroidery because you are not making a profit on the item that they brought in. Many times you will find that it costs you to do that one item so you need to establish a minimum charge for someone that brings an item into your shop for you to add the embroidery. My minimum charge is $20.00. You must figure yours. This means that if they bring in one item even if it is just a single name on a jacket, it is $20.00. It all depends on the actual embroidery, the price and how long it takes to do it. You must be paid for your time.
Here Is A 10 Step Formula For Creating Embroidery Pricing That Will Make You A Profit!
Step 1: Figure all of your base costs so you will know exactly what your breakeven point is per month. Figure what your breakeven point is per hour to cover all of your overhead costs.
Step 2: Divide that cost into minutes and then into seconds.
Step 3: Go through all of your processes to determine how much time each process takes and what the cost actually is for each process. Multiply the time for each process by the cost per minute or seconds. (This is your production cost, hooping, steaming, packing, waiting on customers, planning, etc, beyond your stitch count running time)
Step 4: Add those figures together to figure out what your actual production cost is per minute beyond the stitch count.
Step 5: Multiply your costs per minute by how many hours you run your business per day to get your daily breakeven point. You now know exactly what it costs you per day to operate your business.
Step 6: Figure out how long you are actually running your embroidery machine per hour. (How many minutes of the actual hour your machine is running) If you are only running your embroidery machine 30 minutes during the hour, your breakeven point is going to double for the hour. If you are charging by the minute when the machine is running and not for the time that it is sitting there doing nothing, you are losing money.
If you figure out that on an 8 hour day your machine is running a total of 4 or 6 hours, you must divide your total daily breakeven point into the 4 or 6 hours to arrive at your true breakeven cost per hour. Divide that cost up into minutes. You will now have a true cost per hour that you figure your pricing on for stitch count per minute of machine running time.
Step 7: You will have to figure out how long it takes to run a design on your machine by the stitch count. Multiply that running time by your cost per minute. When you are timing your designs, do not forget the color changes and trim times. You are actually figuring the total time, start to finish, not just the stitch count run time.
Step 8: Add the Stitch Count cost to the Production cost in Step 4. You will now have your true cost per design for however many stitches are in your design. You just cannot figure your pricing on stitch count alone. It does not work and will not make you any money.
Step 9: Figure what you want to add for a markup. Without a markup, you do not have any profits to build or grow your business on. You cannot do it just charging for your costs. After your markup, you now have the selling price of each embroidery per stitch count.
Now you can Create your price list based on the actual cost of each design. You will need to experiment and run several stitch count samples to come up with a good cost per thousand stitches for your price list.
Step 10: Create a price list for the items that you sell. Take your purchase price from the distributor and add the shipping cost for your true cost and then add a markup. Add your embroidery to create your total selling price.
I hope that this formula will help you to think about how you figure your pricing. This formula works. Pricing your embroidery for a profit is not hard. It does take time to get this all figured out, but you must take the time to do it in order to make a profit with your business. If you cannot make a profit there is no point of staying in business! I know that this sounds like you are going to have a very high price for your embroidery, but that is what you should be charging for your embroidery! Most embroiderers are not even covering their costs, let alone make a profit!
To get more information about how to price your embroidery and get access to my simple system of pricing, go to http://HowToPriceEmbroidery.com You will be able to create your own profitable price list quickly!
by The Embroidery Coach | | Embroidery Business Marketing
Have you really thought about your business card and what that first impression says about you and your Embroidery business? The first impression that you leave with your new prospect or customer is extremely important and if you do not leave the right impression or a positive impression, you will not have the opportunity for another chance. What does that first impression say about you and your Embroidery Business? That first impression is the lasting impression and you want it to be the one that they will want to remember you by and tell others about you. Here are some questions that you need to answer that will help you to create a good first impression.
- Do you look like you have an Embroidery Business?
- Does your logo give an indication of what your business is about?
- Do all of your Marketing pieces flow with the same look?
- Do you advertise your product every place you go?
- Is your appearance reflective of your workmanship?
- Is your Showroom neat and organized ready for customers at all times?
When you talk to your prospect or customer that first time, you need to have a marketing piece to hand to them. Most generally, this is your business card, but it can also be a brochure or postcard. What does your marketing piece say about you? Is it leaving the kind of impression that you want to make.
When you are creating or having your marketing pieces created you need to make sure that they gook great, let the customer know exactly what it is you do and how it is going to benefit them. What do your marketing pieces say about you? Are they leaving the kind of impression that you want to make?
You Must Tell Your Prospect What To Do!
What is it you want your customer or prospect to do? You must let them know by the marketing piece that you hand them.
- Do you want them to call you?
- Do you want them to visit your website for a FREE gift or coupon?
- Do you want them to come to your place of business to receive a FREE gift, coupon or discount?
You want to make sure that your message is clear and that you are giving them a call to action. You must give them a reason to come to you! Your business card is the first item to take into consideration. What does your business card look like? Is it one that they will remember? You want your marketing pieces to be items that they will look at and say “WOW! I need to check these people out!”
Many people overlook the importance of a high quality business card, one that will actually leave a great impression. Remember, the first impression is the lasting impression Most people will buy the cheapest business card that they can, never thinking of what an impression that is actually leaving with the new prospect. Many have a standard logo or a logo from a company that is printing them on the back of the card. Do Not Ever Do This! A cheap business card with no real thought behind it says that your business does not pay attention to detail. Bad mistake!
What Does Your Business Card Say About You?
Thank about how your Business Card is representing you and your business. Here are the important components that need to be your business card.
- Business Name
- Logo
- What you do (Your tag line)
- Address (if applicable)
- The best way to contact you (email-phone or both)
- An offer on the back (You can send them to your Facebook Fan Page or your website for a FREE offer!)
Only have 500 Business Cards printed up the first time. You may want to make a change on it. You can then make the changes and have more printed. Give it some color. Use a color that you love and one that you are going to use in all of your marketing materials including your website.
Have a coating applied to the front side. Do not put coating on the back. You may want to write a note on it. The colors that you choose should be part of your branding process. Yes, you will make changes. You may want to change your offer or your message. I did this several times until I came up with exactly what was working the best.
Here is the Front of my Business Card Here is the Back of my Business Card
I get a lot of compliments on my card. You can see that I have all of the information on the front that is important and I have an offer on the back. This has worked very well for me and has brought in many prospects. I had my business cards printed on line through a company that offered overnight service. I did not choose the overnight option, but their service was excellent and fast.
You can also have a postcard created with one lead product or some type of promotion on it that you can hand out at different functions that you go to. It can really work for you. Again, make sure that you have an offer on it, one that they cannot resist! It does not have to be expensive, just something that will make them take action. If you have a post created make sure that it is 4″ x 6″. I have learned that people do not pay as much attention to the normal sized 3″ x 5″ postcards as they do the larger ones.
Remember, that first impression is so important and if you want the opportunity to create customers out of your new prospects you absolutely must create a great first impression!
by The Embroidery Coach | | Embroidery Production, Embroidery Tip
The finishing of your garments after you have embroidered them is very important! These important details in the embroidery finishing process can help to raise your level of customer service. There is far more to finishing than just removing the backing and folding up the garment. There are many details in your Embroidery Finishing Process that if you pay close attention to; will increase the value of your business.
When you are going through the finishing process there are many details and problems that you need to look out for.
- Thread Tails
- Missing Stitches
- Stray Threads
- Loops in the Embroidery Design
- Is Embroidery Straight?
- Garment Stains
- Damages
- Buttons Missing
- Zippers Not Working
- Bobbin Pull Up
Thread Tails: Trim off as closely to the garment as possible but be careful not to cut off any lock knots.
Missing Stitches: If you find some stitches that have been skipped and are missing, they will need to be repaired. The easiest way to do this is to thread a hand sewing needle with a double strand of matching embroidery thread and do a satin stitch by hand to fill in the missing stitches.
Stray Threads: Thread that sometimes get caught during the embroidery process trail across the embroidery. Trim as closely to stitching as possible being careful not to cut off any lock knots. Gently remove with tweezers.
Thread Loops: If you see thread loops that appear in the same direction as the stitching – DO NOT TRIM LOOP! Use your fingernail to scratch loop to backside of garment. Use ONE DROP of Fraycheck on back of stitching where loop has been scratched back. Do Not Allow Fraycheck to get on garment! ALWAYS USE FRAYCHECK ON BACK OF GARMENT-NEVER ON THE FRONT OF THE GARMENT!
If thread loops in a different direction than the stitching, it is usually safe to trim. Trim as closely as possible to stitching.
Crooked Logo or Embroidery: If the embroidery appears slightly crooked, lay the garment flat on the trimming table. Steam embroidery area. While embroidery is warm, lay the palm of your hand flat on top of embroidery and gently twist or turn your hand in the opposite direction that the embroidery is running. Do this a couple of times. Allow garment to dry and check embroidery again. If embroidery is not straight, repeat the process.
Spots/Stains on Garments: There are various methods for spot removal depending on the type of material and type of spot. Most spots can be removed with a drop a dish soap and water. If this does not work, once the garment is dry, you can spray the area with acetone. You will need a professional acetone spot cleaner or sprayer for this application.
Do not use the acetone on fleece garments or Wind jackets, garments that may bleed or near any type of trim that may bleed onto garment. You will need to experiment with different fabrics and keep notes on what worked out well using the acetone and which ones did not.
Damaged Garments: If any garment has been damaged during the embroidery or hooping process it must be removed. Do not try to pass a garment with any damage on it. The customer will be very angry. Bring it to the attention of the customer and let them decide what he or she wants to do. I will either credit the customer for the garment or replace it, but I leave that decision up to the customer.
Buttons Missing: Many times buttons can be replaced if they are missing. If it is a garment that buttons down the entire front, sometimes there is an extra button at the bottom. If it is a branded button that cannot be replaced, let the customer know about it and let him decide what to do. Most of the time if is not the fault of the embroiderer, but it still needs to be brought to the customer’s attention.
Zipper Not Working: This is an issue that should have been discovered when the garment was checked in. If not, again bring this to the attention of your customer. If you embroidered the garment and the zipper was broken, you are responsible for that. The manufacturer will usually not replace the garment once it is embroidered even though the zipper was not working when you received it.
Bobbin Pull Up: There will sometimes be bobbin thread noticeable throughout darker stitching in some logos. These stitches will need to be colored with a fine tipped permanent marker the exact shade of color as your thread. This is a very tricky process and again you need to experiment with this until you get the method perfect. It can be done. Do not touch any surrounding areas with this marker. Do not try to cover up a large area, that will not work! This is just for a small spot here and there on bobbin thread showing through on the top stitching.
Make sure all garments are buttoned and zipped before folding and packaging. Paying close attention to these important details in the embroidery finishing process will make a huge difference in your presentation and will show your customers that you are very interested in their business. This will definitely raise your level of customer service!
by The Embroidery Coach | | Embroidery Business Management
One of the main reasons embroidery businesses fail is the lack of cash to run their business! Managing cash flow in your embroidery business when you are first starting or trying to grow your apparel decorating business can be a challenge. Most new embroiderers are new to embroidery and do not have the business education that teaches you about cash low or even now to run a business.
When I first started by embroidery business I did not have any business training at all and I was extremely naive when it came to business. I trusted everyone and I knew without a shadow of a doubt that I would not have any trouble trying to collect my money.
When a customer placed an order with me, I did not even ask my customer for any money up front. I was so excited about getting the order and I knew that my customers were just as excited about placing an order and would be very anxious to come back to pick up their finished products with money in hand of course.
I used my money to purchase their items, embroidered them and then waited for them to come back to pick up their finished products. I was actually afraid to open my mouth and ask for any money when they placed their order. After being taken advantage of a few times, I discovered that this was a wrong approach and if I was going to survive, I would have to be a little braver and speak up!
Let me ask you some questions.
-
- Do you fail to ask for money up front?
- Do your customers always pay you on time?
- Do you have Accounts Receivables higher than you would like to see it?
- Do you ever have a time when money is tight in your business?
If someone asked me those questions when I was first starting to grow my business, I would have had to answer YES to every single one of them. My bank account was very rapidly dwindling instead of growing and I had to make some changes quickly or I would have to go out of business!
I learned very quickly that I needed to ask for a down payment or deposit on their order as soon as they placed it. The next question was, how much should I ask for? I started out by asking for 50% down and soon discovered that it was not always enough. You need enough to pay for the products when you place your order so that you are not using your own money to fund their order. Many times the total order for their garments is higher than the 50%, so I started asking for the full payment of the products that they were ordering. This gave me enough money to order their products, and it would help me to have some money to work with for their embroidery as well.
When you have an order that your added embroidery or other embellishment is more than the price of the garment, the 50% down would be adequate, but when you are ordering expensive items such as leather jackets, the 50% is not enough. Quickly figure out what it is going to cost you to order the customers products and ask for that amount of money. You cannot run a successful business using your money to purchase your customers products.
When it is time for the customer to pick up the order, call him or her and tell them their order is ready and they will need the remainder of money that is due when they come in to pick it up. If you are delivering the products, let them know that they must be paid in full before you can leave their order. If you are shipping out the order, then you must be paid the remainder before the order can be shipped.
I have had customers get upset with me when I told them this because they were planning on not paying in full upon receipt. When that happens, they are not a good customer and it is questionable whether or not you should continue to do business with them.
A small apparel decorating business cannot survive if they are working with accounts receivables and are always waiting for their money to come in or hoping that it will come in. It does not always happen or happen on time and you end up with a cash flow problem.
The number 1 way to manage cash flow in your embroidery business or apparel decorating business is to ask for at least 50% down for each sale and collect the remainder on delivery or pickup of the finished product!
Do not allow yourself to have to answer YES to any of those questions! There is no need to deal with issues of cash flow in your embroidery or apparel decorating business!
by The Embroidery Coach | | Embroidery Business Marketing
Do you ever wonder how you can create more profits and have more Embroidery Business Success? The better you serve your customer, the better your customer will serve you. This is a service business and I cannot emphasize enough the importance of excellent customer service and the effect that it has on your profits and your entire embroidery business success.
Your customers depend on you for guidance in their selection of your products and services that will help them promote their business. The more that you help them and show them that you truly do have their best interest at heart, the more business they will do with you and they will help you promote your business!
Here are 5 tips that will help you to serve your customer better!
- Educate them so they know exactly what to expect up front.
- Be willing to work with them and give them a reason to come back for more.
- Always return their phone calls and emails ASAP.
- Have samples tagged with product information to make it easier for the customer to make their selection.
- Deliver On Time!
Educate your customer so they know exactly what to expect up front!
Do not have any hidden costs with their order. Make sure that at the end of the order taking process you have given them every bit of information that is needed to complete that order. If there are any art charges, set up charges, color change charges, hard to hoop fees, leather fees, wool fees or whatever other fees that can be applied to their order, let the customer know this upfront. Never make the mistake of going ahead with the order without their permission.
Unless it is a request that is going to take a lot of research such as a certain product that you do not carry on a steady basis, you need to have price lists ready and be able to give them an instant price. This always makes the customer feel very confident in you and your services.
Be willing to work with them and give them a reason to come back for more.
Today, the customers are demanding more and more from their suppliers in the way of services. If you do not meet their demands or wishes, someone else will. If it is not possible for you to accomplish something that they are requesting, given your situation, you must let them know up front immediately. Do not mislead them in any way. If you do, you will not see this customer again!
Your customer will be very happy that you took the extra step and will gain more confidence in your company. You want to make sure that you give your customer a very pleasant buying experience and they will return for more!
Always return their phone calls and always respond to emails ASAP!
When a customer or potential customer calls and has to leave a message, make sure you get back to them right away. If you do not return their phone call, they will feel that you do not want their business. All present and future customers need to be made to feel important.
The same principal applies to emails. If a person takes his time to email you, you must be courteous enough to take your time to reply to that email. They do not care how busy you are; their time is as valuable to them as yours is to you! This type of customer service is expected!
Have samples tagged with product information to make it easier for the customer to make their selection.
Having good samples tagged with up to date information is an excellent way to make it easier for the customer to make a selection. This gives them the feeling of confidence that you know what you are doing! Have some sizing samples ready for them to use.
Many customers are not looking for a high quality shirt, especially businesses like restaurants or construction businesses. They go through a lot of shirts and are usually looking for a low priced shirt.
Embroider your logo on the samples that you are tagging. The customer will be able to see your high quality work and when you have discontinued samples, you can give them away and have free advertising.
Deliver on Time!
This is by far the most important tip that I can give you that will help you serve your customer better and create more success in your embroidery business When you take an order, the customer must be given a delivery date. That is expected right up front. The average turnaround time today is 2 to 3 weeks. If you can deliver quickly, you will be servicing them better than the average embroidery business.
You must deliver on time or ahead of schedule of the agreed date. This is an excellent way to set you and your business apart from the crowd!
Just remember, the better you serve your customer, the your customer will serve you and you will see more profits and greater embroidery business success!
