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!
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What It Takes To Price Embroidery Correctly So You Are Making A Good Profit!