8 Keys to Competitive Pricing for Apparel Decorators and Distributors

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ant to keep your print shop thriving? It all starts with getting your pricing right. “This should be your top priority,” says Shawn LaFave, president and chief branding consultant at NGA Promotions. “At the end of the day, staying in business depends on setting accurate prices.” According to LaFave, you’ll create a strong foundation for long-term success by pricing your products correctly.

From hidden labor costs to rising supply prices, top decorators and distributors explain how to keep your business in the black without cutting corners. Read on for expert insights on pricing that protects your bottom line.

8 Things to Consider When Pricing Your Products

Pricing your products involves more than just covering costs. These eight factors will help you make informed decisions and keep your business profitable.

1. Know your shop’s overall operating expenses.

LaFave emphasizes the importance of understanding your company’s operating expenses, including payroll. "It doesn't matter if you have a 50% margin if it’s not enough to cover your bills," he says. When pricing print orders or promo products, you’ll need to consider the total picture of your overhead.

"Factoring in overhead costs is the most important part of pricing our services. Labor alone makes up over 40% of our annual costs. Rising minimum wages and inflation impact our expenses to keep our doors open, which we pass on to our customers through higher prices."
- Colette Wilhelm, owner of Contract Impressions

Gabby Nguyen, owner of APDAT Print Co., agrees. “Overhead, especially labor, is really important,” she says. “Screen printing can be physically demanding, so we make sure our team is well-compensated for their hard work because we wouldn’t be where we are without them. You must also account for the wholesale garment cost, ink, film, electricity for running our dryers, and labor costs.”

2. Know your labor costs.

Knowing your labor costs is key to setting the right prices for your decoration services. If you don’t factor this in, you could end up undercharging and hurting your profits.

"You have to consider how labor-intensive each decoration method is. Some techniques can take up to 20 minutes per item. With rising labor costs, you must be compensated for every minute to cover staff wages. If you're embroidering one sweatshirt on a six-head machine that takes 45 minutes, you need to charge the same for that as you would for 54 items that only take five minutes each.”
- Colette Wilhelm, owner of Contract Impressions

Wilhelm adds that garment decoration is a skilled trade, usually learned through hands-on experience or apprenticeship programs, and as her team sharpens their skills, their pay increases, too. "Some designs can get pretty complex, and that takes a certain level of skill and equipment that not everyone has,” she says. “It’s important to recognize that expertise comes with time and should be reflected in pay.”

3. Know your supply costs.

As the garment decoration industry faces rising supply costs, decorators must consider these expenses when setting prices. "The cost of supplies continues to rise with inflation, where the cost of a decorated shirt has declined over the past decade,” Wilhelm says. “The garment decoration industry can’t allow this trend to continue. Paying more to create something you sell for less is a recipe for the entire industry to fail.”

To ensure his shop covers basic expenses, Eric Peterson, owner of Ashley’s Design, doubles the cost of goods at a minimum. “Ideally, we’re getting three or four times the cost,” he says.

4. Consider the time involved.

“As decorators, we should consider our time when pricing projects for customers,” says Lisa Kadz, apparel consultant for Big Frog Custom T-Shirts & More.

“We’re providing a service that requires skill and knowledge. The time it takes to do a professional job will vary from project to project, but ultimately, our time has value. Another consideration is the timeframe in which the customer wants it done.”
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Lisa Kadz, apparel consultant for Big Frog Custom T-Shirts & More

When pricing garment decorating jobs, it's important to factor in the time each task requires. “As a garment decorator, we’re production-based, so there are no production delays, barring unforeseen weather emergencies,” Wilhelm says.

However, timelines can be affected by when clients provide the garments. “We offer a competitive five-day turn time that begins when goods arrive,” Wilhelm says. If there are delays in receiving the goods, rush orders with additional fees may be needed to meet deadlines. Considering these time factors helps set appropriate prices while maintaining profitability.

5. Consider decoration and customization factors.

Peterson also considers quantity and the decoration method. “Of course, larger quantities reduce the price of screen printing due to economies of scale, but on embroidery, there isn’t much we can do to speed up the process or spread out the cost,” he says. “It’s a flat cost when figuring labor and run time of an embroidery design.”

An upholsterer came to Kadz with fabric to install custom headrests in a customer’s car. The end-customer wanted a business logo embroidered with a specialty thread and a specific size on the fabric to go on the headrest. In addition, they wanted them done in two days for an event.

“I charged them a rush fee, a specialty thread charge, and the embroidery cost based on stitch count and quantity. When someone wants a customized product, they must understand that it has a higher price tag. The type of fabric and the placement of the logo required extra consideration and skill level to complete.”
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Lisa Kadz, apparel consultant for Big Frog Custom T-Shirts & More

Ultimately, Kadz made the profit she wanted for her time and effort, and the end customer was thrilled with their custom headrests.  

6. Consider the customer’s budget without sacrificing quality or margins.

Understanding what customers can spend is key when pricing your services. “I follow the suggested retail pricing, but if I get special pricing from a supplier, I prioritize using them,” says Joellen Reichenbach, owner of Select Sales. “My main goal is meeting the client’s needs, so pricing isn’t the only factor driving my decisions.”

Reichenbach sticks to reliable decoration methods that deliver quality because costs for these processes are often similar between decorators. When it comes to price wars, Reichenbach avoids getting caught up.

“I stay within their budget, without sacrificing the quality of what I offer. Low-profit margins mean I have to sell even more just to break even. I focus on the value my service provides, and I won’t compromise that just to offer lower prices.”
- Joellen Reichenbach, owner of Select Sales

7. Consider how long you’ll give the client to accept your quote.

LaFave tells clients his quotes are valid for five business days, and Reichenbach gives her clients 30 days to say yes. “While we haven’t seen weekly changes in product pricing since the pandemic, it’s important to educate buyers on possible price fluctuations,” Reichenbach says. “On my end, I confirm with suppliers that I have a 30-day quote from them.”

APDAT uses a standard formula for pricing print jobs to streamline the quoting process.

“Our quoting and invoicing system plugs directly into our vendor product catalogs with the most recent pricing. If our production queue is backed up with longer than expected turnarounds, we communicate that with our clients so they know what to expect. Asking clients for in-hand dates is also extremely helpful.”
- Gabby Nguyen, owner of APDAT Print Co

8. Know the value of what you offer.

At NGA Promotions, the team views their offerings as more than the final product.

“Make the order transaction the easiest and most satisfying experience for your clients so they know the price of the products is with more than what they’re paying. Sometimes, we offer lower-margin products when it makes good business sense because it helps build better client partnerships."
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Shawn LaFave, president and chief branding consultant at NGA Promotions

Wilhelm focuses on profitability vs. competitiveness. “In our industry, there are people who don’t consider their labor or any overhead to be a cost of doing business,” she says. “They take part in the race to the bottom, lowering prices and negatively affecting shops. That’s why we must set ourselves apart in ways that go beyond price alone. We offer rapid turn times, no-cost PMS color matches, no setup fees, and proofs on every order to set us apart rather than relying on price as the deciding factor.”

The Role of Customer Expectations in Pricing

Customer expectations can impact pricing in various ways. From addressing special requests to factoring in additional time and effort, clear communication ensures both parties understand the value behind the price. Here's a closer look at how these factors influence pricing decisions.

The client says they can get it cheaper elsewhere.

In those cases, Reichenbach asks to review the other quote. “More than half the time, the client’s quote didn’t include all the costs, including setup charges and shipping,” she says. “I always have an open, clear, concise relationship with my client. If there’s no way I can meet their desired price, I tell them to go get the deal, but they often come back.”

Similarly, Nguyen doesn’t put a lot of stock in competitor pricing. “There will always be an online shop or local printer out of their garage with much lower pricing,” she says. “We own that we’re not the cheapest shop on the street but lean on our print quality. That’s why our clients don’t mind paying a little more for better products and more personalized experience getting their product from concept to reality.”

The client’s previous print shop wasn’t meeting their needs.

Nguyen starts by asking what issues they experienced to ensure a positive experience with her shop. “If our client requests something specific that costs more to produce, we’ll add that charge,” she says. “When it’s requests like a preferred image placement that just takes a quick extra communication to my production team, it’s free.”

Reichenbach makes it a point to only work with suppliers she knows to offer good quality products and top-notch service, especially during challenging times. “If the client selects a supplier I haven’t or wouldn’t use, I’m upfront about it,” she says. “Strong suppliers help me create happy, loyal clients for life.”

The client wants add-ons.

For example, Wilhelm has optional decoration or order options. “These are added services we can offer our clients at an additional cost,” she says. “Most decorators do this to some extent, and we’re no different. We consider the time and materials needed to meet those requests and price accordingly. For example, screen-printed foils are more labor intensive and use more equipment and materials than standard one-color screen printing.”

The client has a lot of red-flag expectations.

LaFave says you may consider increasing your margins to cover the additional time and effort required to process and complete that client’s orders. “You may not know this on their first few orders, but you’ll start to see patterns emerging, like needing it done faster than standard lead times or extremely tight tolerances above normal client expectations,” he says. “You need to be paid for your time and expertise.”

Peterson constantly reviews the customer. “Are they a regular, wholesale, or brand new to us?” he says. “We also consider them long-term and the influence they may have in our town or industry when deciding on the price.”

When to Reassess Your Pricing

At APDAT, Nguyen does a price evaluation and assessment at the beginning of each year. “Supply costs, like ink and tape, are the main trigger for these changes,” she says. “However, it’s a huge time saver that our invoicing system is plugged into our vendor’s catalog because our pricing is always up to date.”

Wilhelm adjusts her pricing every six months, usually at the beginning of the new year and mid-summer. “If we sold directly to consumers, this would most likely be ongoing with constant changes to keep up with market fluctuations in supply prices,” she says.

Since Wilhelm’s shop is contract-only, her distributor clients need current pricing to quote jobs accurately. “To ensure that we’re pricing to cover our costs, we compile data about what we spend on all overhead items for a year,” she says. “Then, we add a percentage to accommodate inflation and increased prices for the next six months based on the previous year’s cost-increase percentage.”

Similarly, LaFave relies on real-time data. "By recording all orders and tracking profitability on each one, as well as reviewing overall sales profitability each month,” he says, “we can quickly and effectively adjust margins to keep our business running smoothly and profitably."

Setting the correct prices for your products and services keeps your business profitable and competitive. By factoring in your costs, understanding your customers, and staying flexible with changing market conditions, you can build a pricing strategy that supports your bottom line and keeps clients coming back. Remember, pricing isn’t just about numbers  – it’s about recognizing the value you bring and reflecting that value in every order.

Posted 
Sun
Nov 10, 2024
S&S Activewear