When you are creating your basic pricing structure, there are many factors that need to be added in over and above the actual cost that you are currently incurring as you start your new embroidery business. This also applies to businesses that are expanding by adding new machine or services, such as screen printing, vinyl, rhinestones…pertinent to any apparel decoration within your business.

You should always include the cost of doing business as a store based business from the very beginning. Most new embroidery business owners that are home-based do not include many basic expenses that will prevent them from making a living with their business or plan at all for future growth.

  • Rent
  • Insurance
  • Utilities
  • And More

Figure Floor Space Required To Determine Cost

These are just a few of the basic expenses that must be covered. Do you know exactly how much floor space you need for your business? You are going to need at least 1 small room or a corner in your basement to hold your embroidery machine and other equipment, a work table, some shelving. My home workshop that I started with was 12 feet by 14 feet. It was very compact but workable. I had 2 single head embroidery machines in that room, but I did not have my desk in this space. However, I would have had room for it, if I did not have 2 machines.

Call a real estate agent in your area to find out what an average charge per square foot would be for a rental of commercial space. You can then ask someone that has rental space, about what the utilities would cost. Call your insurance agent and find out approximately what the insurance would be. As long as you have an idea as to how many square feet you would start out at, these would not be hard figures to come up with.

If you have a machine that is paid for and you have no machine or loan payment, you still need to include the cost of new equipment. If you paid cash for your machine or took the money from your savings then you need to set up a repayment plan to pay yourself back.

Without including these types of cost when you are creating your basic pricing structure, you will have no way of creating a price list that will give you the means for planning for your future growth.

When I started my business I was in my home, did not take a salary, I had no idea that I needed to add for my utilities, rent or other items. I charged very low prices so that I could get the work and made many mistakes as a new business owner.

I just kept thinking that if I increased the numbers that went through my business, then I would eventually start making money, but I found out that it does not work that way. I did what most embroiderers do; by trying to undercut the competition and found out in the end that I was only undercutting myself! That practice set me up for failure right from the start.

You may have heard my story of how I almost lost my business because of the way that I was pricing. When I had to move out of my home into a retail location, I was not at all prepared for it. I was not aware of the many additional costs that were associated with operating my business away from my home. As a result, I had to work extra hours to bring in more money to pay for all of the extra expenses.

When I went to the bank to borrow money because I needed another machine, I was told no because I did not have a plan for future growth or even a plan B.

This is NOT the way to start your business! It is very important to include all of the basic expenses when you are creating your pricing structure right from the beginning of your embroidery business! Without it, it is impossible to grow. DO NOT MAKE THIS MISTAKE!

Click Here to start creating your pricing structure that will help you plan for future growth!

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