The first element of a profitable price strategy is the most important: cost. Understanding what things cost is one thing, figuring out how to calculate your operational costs and then create a price structure that makes sense is another thing. In reality, material costs may be irrelevant when you look at the big picture. The material cost (not the cost of the blank) is just a percentage of all of your operational costs, which have to be accounted for in your production numbers. There are lots of angles you can take here, but my point is that the cost to produce something is based on how many units you can produce in a given time period against the operational costs assigned to that same period of time. And because of the smaller image size, your ink costs may well drop below 15 cents per piece. It should also be noted for sublimation, that with smaller pieces, such as coasters, name badges, dog tags, etc., you can print and press multiple pieces at the same time, which further increases your efficiency. The end result is more pieces per hour and a lower cost per piece. On the other hand, if you could improve your efficiency in terms of setup and post-production time by 50% (based on the scenario above) it would save $5.00 in production costs. If you were able to cut your ink costs by 50% it would save 30 cents in production costs - hardly a make-or-break scenario. If it took you 20 minutes on average to process something, the cost is going to be $10.00.Īs an example, let’s say that you were using a printer that has an average media cost of 60 cents for an 8” x 10” area - potentially a full front design on a T-shirt. But just like the embroidery example, you are going to have downtime associated with setup and post-production tasks, so in the case of single-piece orders you might be spending more time engaging in those tasks than in the true production process. ![]() If it took 2 minutes on average to print and press something, you could theoretically produce 30 items per hour, which works out to $1.00 each. Let’s look at an example.Īssume you are a full-time digital printing shop (we will use sublimation for our discussions, but the same concepts apply to direct-to-garment and digital transfers) and you have calculated your hourly cost of operation to be $30.00 (your operational costs should be based on all expenses incurred over the course of one year including your desired paycheck). ![]() Thus, ink costs should be considered a regular part of your business operating expenses that will vary based on production demand. ![]() If you tried to assign the cost of ink used on a specific job to that job, you would never recapture your total ink costs. The material cost is immaterial.įor one thing, with digital printing you consume a certain percentage of ink for non-revenue tasks, such as samples, testing, mistakes, head cleaning, etc. From an engineering standpoint, that sounds logical, but in reality it’s like trying to figure out how much thread and backing go into an embroidery job. I frequently get into discussions with business owners who are focused on determining a cost per milliliter of ink and then translating that to area coverage for different print items. It’s hard not to direct your attention to ink prices - especially when you’re forking out several hundred dollars at a time on replacement inks. In the world of digital printing (direct-to-garment, transfers, sublimation) there is a lot of emphasis placed on ink costs, yet they account for a very small percentage of production costs.
0 Comments
Leave a Reply. |