So you’ve received a large order (maybe the largest you’ve ever received) and you’re not sure where to begin pricing it. For handling an order like this, everyone has a separate approach or system in place. So, it appears that you have received your first bulk order. These pointers will assist you in properly pricing the next bulk order of your digitizing business by taking into account labour, quantity, and supply expenses.
Here are a few basic ideas for quoting your next bulk order and without underpricing your work:
Take into consideration the costs of overhead.
Setting up a set-up fee can help you make money.
Set up a tiered pricing structure.
Make use of a multi-tiered pricing system
Most businesses that sell clothing for a low price can do so because they have multi-head machines and several workers working on the production line. This is another efficient bulk-order pricing approach. A tiered pricing system demonstrates how much you should charge based on the order volume. If you price the same quantity of things for the same price as these companies, you will lose money.
Depending on your original price point and how many goods you can efficiently complete in one order, a tiered pricing system usually has roughly five tiers. As the order grows larger, your initial pricing should be high enough that you don’t wind up with a really cheap price per shirt.
While this is a reasonable scale to work with, the savings you arrive at will be unique to your circumstances. The cost of setup and individual shirts is determined by your time, labour, and the number of heads you have.
If someone is ordering a large quantity, don’t set your first pricing at $10 and then have to decrease it by half. That would only be $5 per shirt, thus there would be no profit (assuming a $5 wholesale shirt). Furthermore, comparing your prices to those of other businesses may not be the most effective method of bulk pricing.
Granted, the setup charge will not be included in this calculation, so you’ll have to add that to the bulk price. If you have a multi-head machine, you might be able to offer a lower setup price than if you simply have a single head. If the order is for 1-10 polo shirts, for example, you can sell it for the price of your first tier, which is your original pricing before discounts ($50 in this case).
Setup fees should be one-time-only
The cost of creating artwork, hooping the clothing, threading the machine with the correct colours, and any other chores that require setup time are all included in the setup charge. Charging a one-time setup charge is a great approach to assure that you’re earning a profit on the work you’re doing. People are often fine with this since, because they are buying more products, the price of each individual item decreases. Larger orders normally come with setup fees of $50 or more.
A setup charge can be used in one of two ways:
The setup charge can be included as a separate expense. This will take into account the entire process as well as the supplies.
You can include it in the pricing of each item separately.
A nice approach to learning how to use a setup fee is to break down an example:
- Charge a $50 setup fee (normal starting point for large orders).
- Customer orders 50 shirts for $16.00 each, totaling $800.
- $850 = $800 (50 shirts) + $50 (setup cost).
Each order’s price (depending on order size) will be variable as well:
- Starting at $18.00 per shirt in bulk (11+). (10-15 per cent discount).
- Regular pricing per shirt (1-10 items): $20.00.
Now we need to figure out how much you paid for the materials, which will tell us how much profit you made on this order altogether.
Consider your overhead expenses
Before we attempt to price each individual item in your bulk order, we must first consider your overhead costs. This includes the following:
- Fees for shipping.
- Maintenance of the machine.
- Salary of an employee.
Increase the price of each individual item so you may profit from your order and recoup your investment. These costs must be factored into all of your orders since, at the end of the day, your orders must be able to support your business expenses. These expenses are often any monthly cost that does not fluctuate significantly from month to month.
You must ensure that the price you charge for your orders not only covers your overhead costs but also reflects the time and effort you put into the task. This is why it’s crucial to keep track of your monthly expenses. Make sure to include an extra 5% each item when pricing your work to ensure a bigger profit.
Always price a little more than your costs in order to maximise your return on investment. If you charge the item’s retail price plus a little fee for embroidery digitizing, you might only break even or fall short of the threshold entirely.