What Should I Charge? Pricing DTG Printing Services

We often get asked “what should we charge for our printed shirts?”  This is a tough question to answer, due to the extraordinary number of variables involved.  Each business owner will be operating on different fixed monthly expenses (rent, electricity, phone, etc), and production capabilities will be vary depending on factors such as:

  • Number and type(s) of DTG printers you are using
  • Efficiency of the person operating the machine(s)
  • The specific RIP settings, print resolutions, etc used for production
  • Your business model / specific production process setup
Since everyone likes to do things slightly different, it is important to tailor your pricing to your business model rather than simply trying to copy someone else’s prices.  It never hurts to price check in your local market to find out where other printers stand for similar products, but remember that you are selling much more than just a simple printed t-shirt; you are offering your expertise, artistic skill and creativity, as well your customer service that cannot always be easily compared when simply “price shopping” around.  While some of your competition may be selling the “same product” for less, you may come to find out that they are using inferior print settings to save money on ink, or perhaps their level of quality control isn’t to the same standards that you adhere to.  The bottom line is that while it is important to know and understand what your competition is charging, it is more important to charge appropriately for the quality product and customer service that you deliver to your clients.
The first step in creating a viable price list for your DTG printing service is to make a list of all of your regular monthly expenses, or recurring bills.   For this list, you should not include things such as labor, ink cost, etc, as these items can vary each month based on other factors.  The things that belong on this list would include:
  • Shop Rent
  • Electricity
  • Phone and Internet
  • Equipment Finance Payment
  • Any other fixed monthly expense
Once you have determined your total “fixed expenses” for the month, you want to break that number down to figure out an approximate “hourly operating cost”, which represents the cost to simply keep the doors open at your shop – this does not include labor, nor does it include consumables expenses such as ink and pretreatment.  For example, let’s assume your total fixed expenses for the month are $3,000 – if your shop is open 8 hours per day, 5 days per week then your estimated hourly operating cost would be about $18.75.  The breakdown is simple:
  1. 8 hours per day x 5 days per week = 40 work hours per week
  2. 40 work hours per week x 4 weeks per month = 160 work hours per month
  3. $3,000 monthly operating cost / 160 work hours = $18.75 per hour
Understanding what it costs to simply own your business is a very important part of being a successful entrepreneur, yet you would be amazed to find out how many people are not watching their own bottom line; make sure you are well informed going into this venture so you can make smart choices moving forward.  If you are running your DTG printing operation from home, some of these expenses might not apply to you…  However, if you ever plan to expand outside of your home it might be helpful to structure your pricing in such a way as to allow for ample growth in your business; without accounting for these expenses before hand, you might risk become cash starved as your business rapidly grows.
If you are already running a successful business and DTG printing is just one more addition to the shop, then you are ahead of the game!  Many of the regular monthly expenses are already covered by other decoration techniques or products that you offer, and you will simply need to account for the added expenses that DTG entails.
Now that you know how much it costs you to keep the lights on and the doors open, you need to account for your additional operating expenses such as labor and ink.  Labor is easy, since you just have to figure out how much you want to pay your crew, as well as how many crew members you need to be working at any given time.  For this example, we will assume that you want two employees working and you are going to pay each of them $10 per hour (not bad for loading and unloading shirts) – this will put our hourly labor cost at $20, which we then add to the fixed hourly overhead cost ($18.75 + $20 = $38.75 per hour to keep the lights on, the doors open and two guys standing around waiting for instructions).
NOTE: Prior to continuing, keep in mind the prices indicated are from 2011, so please make sure you plug in overhead costs according to your particular business model and capacity.
 Ink and pretreatment can be slightly more tricky, since you have to figure out what your average ink cost per print is going to be (that is a whole other subject we will get into at a later time).  Since we use the Neoflex DTG printers in our sister shop (Fusion Logistics Group) we know that our average ink cost “per print” for a standard size print on a dark garment is $1-3; since we want to be sure we account for the “worst case scenario” print, let’s assume a $3 per print ink cost for our dark garment price list calculations – that way, even if the design has a lot of coverage we have already accounted it (since we are limiting the “standard print size” to 12″ x 12″, we are confident that most standard sized prints won’t exceed $3 in ink).  In addition to the ink cost, you must also remember to factor in the pretreatment that was used to prepare the garment for printing; we will plug in .50 for a standard size print, which we have found to be accurate.
Knowing what you pay “per print” in ink and pretreatment is vital, but how do we convert that into an hourly number that we can work with?  Easy!  By figuring out how many prints you can realistically do per hour on your machine (using your specific RIP settings, print resolutions, etc), you can multiply this by your “per print” cost and get an hourly estimate.  At this point, we are entering into the grey area when it comes to set pricing because every image is going to take a different length of time to print, and the ink cost will certainly fluctuate.  Since we are trying to figure out a set of pricing guidelines, an educated estimate is a good place to start.  We have found that (using our high resolution print settings) we can expect to produce about 9 dark garment prints per hour, at a standard size (which we have determined to be up to 12″ x 12″) – $3.50 x 9 = $31.50 per hour in ink and pretreatment.  Add this to the $38.50 you are already paying for your shop overhead and labor, and you’re in business!  Your hourly operating expense at this point is $70, which includes every needed to run your shop……..  Or at least to pay the bills.  Since the purpose of running our own business is not simply to pay the bills, we need to add one more thing to this equation – HOURLY PROFIT!  If we forget to factor in some pocket money on top of all the expenses, we are going to find ourselves in the unenviable position of working day in and day out and having nothing to show for it.  This can be easily rectified by simply determining how much NET PROFIT you want to make per hour on this segment of your business, and adding that number to the total.
As with everything else, each individual business owner will need to determine how much their time and effort is worth – we did not buy these machines to simply “get by” each month, so don’t be afraid to pay yourself well.  I once heard on a screen printing forum many years ago that “Profit is NOT a dirty word” – that phrase has stuck with me ever since (if I could remember who said it first I would give them credit right now).  Personally, I don’t roll out of bed in the morning for less than $60 per hour net profit, so let’s start with that – our final hourly total would look something like this:
  • $18.75 to keep the lights on and the doors open + $20 to pay two employees to stand around + $31.50 for ink and pretreatment + $60 PROFIT and a partridge in a pear treeeeeeee = $130.25
  • $130.25 divided by 9 prints per hour = $14.47 / per print ($6.67 of which is actually NET profit)
Of course, this figure does not include the blank garment – this is simply a determination of your actual print cost, including profit.  Using this number as a starting point, you can apply small price breaks at set quantities to attract larger orders – if someone is going to order 100 prints, most print shops don’t mind taking a slightly lower “profit per hour” just to keep the machines busy.  As long as the price you are charging is HIGHER than your root manufacturing cost, then you can at least be confident that you will stay in business.
Don’t let the figure above shell-shock you – for the purpose of this article I have intentionally chosen numbers on the high end to demonstrate just how expensive it can be to pursue this method of printing.  Realistically, a small shop with a single DTG printer will not require two paid operators to be standing around working the machine.  Also, the ink cost for most standard size prints on dark garments will be much less than the $3 we plugged in to our example.  For light garments, the numbers would be way different as a result of different production capabilities on lights, considerably lower ink costs, etc; depending on how it is done, DTG printing can be incredibly profitable for a keen business owner.  Some shops might have multiple printers, which will change their production capabilities as well as hourly profit expectations.
To make this process easier to understand, we have created a simple yet powerful spreadsheet that can quickly and automatically create a projected price list for your business model.  By plugging in some basic information about your business variables and production capabilities, our spreadsheet will tell you what your running manufacturing cost will be, how much you should sell your printing services for and how much profit you will make on each print.  Additionally, you can easily adjust the price breaks that are given at specific quantity levels, which allows you to create price list estimations across the entire quantity spectrum, automatically.  As you adjust variables throughout the document, the rest of the information dynamically updates to reflect your changes.  If you happen to apply a quantity discount that reduces the cost below your actual root manufacturing cost, the individual cells will turn red to show you where you need to increase your prices.
Don’t sell yourself short on your DTG printing business!  Make sure you are charging enough to stay in business, and print smarter not harder.
  

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