by The Embroidery Coach | | Embroidery Pricing
How can I price my embroidery to make a profit? This is a question that I am asked on a regular basis. How can I price my embroidery to make a profit especially when other embroiderers are practically giving their work away? Some embroiderers say to charge $1 per 1,000 stitches; others recommend flat-rate pricing. I'm not sure which way to go. Some of the embroiderers in my area are undercutting me. Which kind of pricing will help me stay competitive and make a profit?”
One dollar per thousand may not be enough and yet maybe it will work for you, but this does not always work. Staying competitive is not the answer. You must find a way to make yourself stand out from the other embroiderers, not just be competitive. What is it that you can do better or more efficiently than the other embroiderers in your area? What do you do that is a little different? Do you offer a service that the other embroiderers are not offering?
You must create your own pricing structure. You cannot price according to the competition or what anyone else tells you to charge. You have to charge according to what your expenses are and then add on for a profit. Stop and think about this for a minute.
- Why did you get into business, to begin with?
- Didn't you think you could make some money offering your embroidery?
- Didn't it cost you quite a bit of money to start this business?
- Where did that money come from? Did you borrow it from the bank? Did you take it from your savings or your retirement plan?
- Now how are you going to get that money back unless you make a profit?
This is a process that takes time but you need to know exactly what ALL of your expenses are to begin this process. If you are a home embroiderer, you must also plug in a salary and home office expenses into this equation. If your machine is paid for, add a machine payment into those figures for future planning. After that figure is established, figure out how many hours a day you run your machine. You can only count the number of hours your machine is actually running if you are pricing by the stitch count! Your machine only makes money when it is actually running!
There are many factors that go into pricing besides just how long your machine is running. You also have to figure in how long it takes to prepare your garments for production, how long for finishing up the order etc? What about preparing the design? Are you setting it up for sending it out to be digitized? You need to charge for that time and the cost of having the design digitized. Did you have to create the artwork before you sent it out? These are all costs that you are incurring during the production process that need to be charged to the customer, not absorbed by you. Many embroiderers include this in their pricing. I have a pricing program available that will guide you through how to figure out your pricing.
Do not listen to what anyone else is telling you to charge. If you are not making a profit with your pricing, do not do the job. The embroiderers that are practically giving away their work will be out of business long before the embroiderer that is pricing to make a profit! This embroiderer will also be more respected!
Joyce Jagger
The Embroidery Coach
by The Embroidery Coach | | Embroidery Pricing
Are you charging enough for embroidery to pay all of the bills, make a profit and have some extra set aside for growth? This is an struggle that most embroiderers deal with every day and cannot seem to get on top of it. They do not know how to charge or where to begin.
You may have heard my story of how I almost lost my business because of underpricing. I did what most embroiderers do; I gathered everyone else' s price lists and averaged them out to create my own price list! Sometimes I would give the customer the lowest price around just to get the business and this was a huge mistake! So many embroiderers start out doing exactly the same thing that I did and that is a practice that must stop! There are many embroiderers that are in the same position that I was in and it is very sad. It does not have to be this way.
It Is Time To Stop Undercharging For Your Embroidery!
I would love to start a movement for embroiderers to stop working for nothing and start pricing their work for a price that is worthy of them. We are highly skilled professionals, not unskilled laborers, but so many embroiderers charge like they are unskilled laborers! This is not fair to the embroiderers that are trying to make a living and it is really causing many of them to second guess what they are doing! This is very disheartening!
There are many embroiderers that are working from home and they are just getting started. They think that their time is worth nothing and to get the work they must practically give it away. When you are first learning your craft, I can understand this way of thinking but it really must stop. Most embroiderers do not offer their products until they feel confident that they are ready and that their quality is good. You did not get into this business to kill time, you go into this business because you wanted to earn an income doing something that you love to do!
It is time to stand up and start charging what you should charge like the professional that you are so that you can actually make a living from your business or at least give you a good supplemental income.
There Is More To Pricing Embroidery Than Stitch Count!
When you are trying to come up with a good price list you must consider several factors and it is not all by stitch count. There is so much more that goes into figuring your pricing other than stitch count and that is what the majority of embroiderers are charging for. When your embroidery machine is not running, you are not making any money, how can stitch count be your only factor? It isn’t. You have color changes, stops and starts, the time it takes to put the garment into the machine and take it out along with other factors.
Who is paying to hoop it, who is paying to trim it, who pays for the packaging of the finished product? Most of the time it is the embroiderer and not the customer that pays all of those charges. This is not the way that it is supposed to be! You are performing a service and each piece of that service needs to be figured into your pricing structure.
You need to know exactly how much each one of these pieces are costing you and the only way that you can accurately know that is to start timing each one of your steps. Each function that you perform in your business has a time and cost attached to it; start timing each one of these functions and figure out how much it is costing you. I have always been an advocate for timing everything that I do. Time is money and you cannot get it back when you give it away. Your time is precious. Use it wisely and start charging for your time.
by The Embroidery Coach | | Embroidery Business Marketing, Embroidery Pricing
Do you know what it takes to price embroidery correctly so YOU can make a good profit?
Pricing is one of the main concerns that most embroiderers have when they are first starting out in business and even after they have been in business for a while; they are still trying to figure out how to price their embroidery. I have found that most embroiderers start out by obtaining the price list from anther shop and this is what they use to start charging their customers. They really do not understand what it takes to price embroidery.
They soon wonder why they are not making any money or have any money left over at the end of the month when the other shop is still operating at what appears to be very smoothly and maybe even profitably!
You may have heard my story of how I almost lost my embroidery business because I was pricing totally wrong. When you are first starting your embroidery business, you really do not know where to begin when it comes to the pricing area of your business. You start by getting the price list of your competition and many times try to stay one step ahead of them by lowering your prices just a bit or else charging exactly what they are charging; thinking that this is the way to go.
That is exactly what I did when I first started and kept this up for several years! I felt so pressured because many times the competition was charging less than I was and I thought that I had to keep my prices low so that I could get the work!
After 15 years of struggling I finally sat down with my accountant told him that I was sick and tired of struggling and he told me that I needed to raise my prices or else get out of business! I did not want to get out of business because I loved embroidery but I was scared to death to raise my prices. I just knew that I would lose all of my customers!
But really, what was the difference? Either I had to try this to see if it would work or I would just quit because I did not want to continue to work night and day any more for no profits! Actually, I was in the hole! There was no take home pay for me, it was just work, work, work day after day! I had the mindset that it was all in volume and that eventually when the numbers were large enough it would all even out and I would finally be making some money.
That was the wrong mindset and I finally discovered that the volume theory with the amount of machine that I had was not working. I know that many other embroiderers find themselves in the same trap and they really have no idea how to get out of that hole!
Most embroiderers start their embroidery businesses, because they love what they do and they decide that they can earn some money with it and they soon learn that there is a lot more to it than just getting jobs and getting those orders out the door!
There is so much more that goes into figuring your pricing than just stitch count and that is what the majority of embroiderers are charging for. When your machine is not running, you are not making any money, how can stitch count be your only factor? It isn’t. You have color changes, stops and starts, the time it takes to put the garment into the machine and take it out along with other factors.
Who is paying to hoop it, who is paying to trim it, who pays for the packaging of the finished product? Most of the time it is the embroiderer and not the customer that chokes on all of those charges. This is not the way that it is supposed to be!
However, what do they do? Where do you start? In this training I am going to give you the steps that it takes to price out your embroidery correctly and what you need to do to run a profitable embroidery business.
No. 1 Know Your Break Even Point!
You must know what your break even point is. Do you know what a break even point is? That is the sum total of all of your expenses that you have that costs to run your business each & every month. What is that figure and how do you find out? What is included in this figure?
No. 2 Know All Of Your Processes!
You must know what all of the processes are that are performed with each and every order. Each step in your business has a process and that process has a price attached to it. The bottom line is, it costs money to run your business! It costs money to wait on a customer! It costs money to plan out their order! It costs money to create their product! It costs money to stand there and chat with your customer when they pick up their order. You need to know what each one of those steps and processes is costing you.
No. 3 Time All Of You Processes!
Time out all of your processes. Start timing each process as you are performing it when starting and completing a job.How much time are you spending:
- Taking an order
- Ordering your products
- Getting your job ready for production
- Creating the Invoice
- Talking to the customer when they pick up their order.
Each and every one of these tasks plus many more need to be timed out and has a cost price attached to them. When you have that done, you will be able to see exactly what the job is costing you. Too many people make the mistake of pricing by stitch count alone not really realizing that they need to be adding all of these other steps onto the price as well.
This is what it takes to price embroidery correctly! Being aware of all of your costs and watching your numbers are extremely important and the bottom line of what it takes!
I would love to start a movement for embroiderers to stop working for nothing and start pricing their work for a price that is worthy of them. We are highly skilled professionals, not unskilled labor, but that is how most embroiderers charge. This is very disheartening!
It is time to stand up and start charging what you should charge like the professional that you are!
For more information about What It Takes To Price Embroidery Correctly For A Profit click on the link below!
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 Pricing
How To Price Embroidery Workshop Starting January 8th!
I have some questions that I would like to ask you.
- Do you have a concrete pricing structure in place that makes you a good profit?
- Can you give your customers an instant price?
- Do you price by stitch count alone?
These are very important questions for you to think about.
In today‚’s economy and the way that business is changing it is extremely important for you to be able to work with your customers more efficiently and be able to give them an instant price! In order to do this you must have a concrete pricing structure in place!
When a customer or prospect wants a price, you cannot tell them that you will get back to them later! This does not work anymore! They want an instant price! You have to be prepared ahead of time and be able to work with them quickly. You do not have the time to spend on trying to get things figured out. You need to be running your business more efficiently if you are going to stay in business. I do not mean to scare you but the way that we have to do business today is far different than the way that we did business a short time ago.
The economy is changing and we have to be prepared to change with it. The competition is getting fiercer and in order to stay on top, you have to be more organized, give better and quicker service and show your customers that you really want their business.
As you make your plans for 2013 keep in mind that I am going to be holding a series of workshops that will help you become more organized and make it easier for you to run your embroidery business.
- How To Price Your Embroidery–Starting January 8th – 4 weeks
- Embroidery Business Plan-How To Plan For Your Business –Starting February 19th Рthis will include Organization, your Marketing Plan and your Business Plan with projections– 4 Weeks
- Embroidery Shopping Cart-March 26th – Includes more organization and getting samples together- 4 weeks
- Embroidery Business Marketing System – may 14th – Blog-Automatic Emailing System – 4 weeks
Plan to be part of this first Workshop starting on January 8th. You will be creating a tool that will allow you to see instantly if you are going to make a profit on a job or if you should even take a job. This tool is extremely important in your business. You will also be creating pricing worksheets that will allow you to be able to price for Retail, Schools, Organizations and even Wholesale. Having these tools in front of you at all times makes it easy to work with your customers and be able to give them that instant price!
Go to http://www.TheEmbroideryCoach.com and get signed up for the How To Price Your Embroidery Workshop staring January 8th!
