Attention screen printers: raise your prices!
No more looking at your competitor’s price matrix to undercut their print cost by ten cents.
Inflation, wages, garments, equipment, tariffs, debt. There is a perfect storm conspiring against you.
The only way to stay truly competitive as a screen printer is to add value and raise your prices! Here's how we've seen amazing screen print shops pull off this delicate balance.
Pricing your screen printing is difficult. It's no secret.
In most markets, you can't print $50 t-shirts and rake in the cash. Unless you print for the Rolling Stones, perhaps, but the rest of us have to nail pricing to be successful.
Here are the values about screen printing pricing that dozens of highly successful screen printing businesses have shared with us:
You really don't have to take our word for it on this. These aren't just our ideas!
They're the best practices that we've seen from partnering with thousands of screen printing shops through our simple shop management software over the past few years.
We've covered screen printing pricing in depth before, but there are some fairly easy ways to better understand your prices.
Why do these three things? They offer you predictive power (since you'll estimate your costs and understand the general flow of your business) and offer insight into the past (by giving you a big-picture overview of when the business is doing well and when it isn't).
The real point here is that pricing is as exact of a science as you choose to make it. Want to do meticulous time studies, carefully track each and every data point, and craft an elaborate customized pricing formula? That's certainly an option!
But if you understand your costs, meet your long-term targets, and can turn a profit – you're doing very well.
Screen printers tend to encounter three big pitfalls when they start growing their business. All of them relate back to pricing. They're downtime (or utilization), price breaks, and hiring.
Downtime is, basically, any time your shop is open but it isn't actually printing. This is also called your "utilization" – how well are you actually utilizing your operating hours?
Low utilization is not uncommon in the screen printing industry!
Here's how this can distort your pricing: let's say you're trying to calculate an hourly rate for your print shop so you can understand how to price things. If a job takes an hour, and your shop costs about $250 an hour to run, you've got to be able to print at least $250 worth of goods every hour...right?
So, the thinking goes, if you're open for 8 hours a day, it costs $2,000 a day to run your shop! Wow, it's so easy.
But what if your shop actually prints for about 3 hours a day? Suddenly your estimation – $250 an hour – is way too low.
Remember: if your press isn’t running, your prices need to go UP to compensate. Screen printing shops often have utilization rates between 17 and 33%! Some industry experts estimate that screen printing shops rarely exceed 30% utilization.
This means you're likely leaving money on the table by: a. undercharging for your print services and b. wildly overestimating how productive your shop really is!
For our example shop that only runs their press 3 hours a day, they'd likely need to charge 62% more than their hourly estimate. Instead of $250 an hour to cover their daily costs, they'd likely need more than $400 an hour!
One way to avoid the utilization trap (where your prices are too low to cover your real costs) is to set your baseline prices higher than you think you need to. This gives you some wiggle room and helps your sales and account managers meet their targets easier. It removes stress and pressure to know your prices are fair to your business.
Price breaks are a notorious part of the industry's obsession with quantity-based discounts. After all, your distributor gives you a price break when you order more – so why shouldn't you pass that along to your customer?
It's also true that it makes sense to screen print in higher volumes. Printing one shirt is ridiculously cost prohibitive. But printing 250+ shirts? That's where screen printing suddenly starts to shine.
However, having steep price breaks at set quantities is a recipe for disaster. Why? Because it's another way to leave money on the table. You may think it incentivizes customer to order more, but it often winds up creating a situation where you're undercharging.
To dive deeper into the topic of price breaks, we suggest watching this Mark Coudray interview. He explains how price breaks create a pricing trap for your business.
There's a very simple tip, though – it's a rule of thumb and not always applicable. But it's simple enough to understand that it can guide your decision making.
Hire only when you’re around $150K to $200K in revenue per employee.
That means: each additional employee you hire should be good for around $200,000 in revenue in your business. Hiring really affects your print costs, and labor costs are often the majority of a screen print shop's costs! So ultimately, hiring affects your pricing too.
Hire too soon and you may have to raise your prices to an unsustainable level. Hire too late and you may not be able to keep up with demand. Hire when it hurts.
Finally, one of the best ways to raise your screen printing pricing is to figure out what your most profitable jobs actually are.
What are your most profitable jobs that come into your shop? This is a question you should constantly revisit.
Run the numbers on this: take a few jobs and see how they average out. Does the total time spent dealing with the order (not just printing, but sales and all other aspects) work for your business?
Some of the jobs you print are not profitable. A lot of them may be losers! The customers may bog you down with art changes. They may get special pricing you've negotiated that doesn't make sense. They may just be too small, too detailed, or a poor fit for your shop's workflow.
If anything, you want fewer customers and more revenue. Don’t just run your press to run it!
Additionally, higher prices are actually a great way to weed out customers that will be a bad fit for your business. If a customer is extremely cost-conscious, they are willing to find another printer at any given moment. They just want to save a few bucks. Cost-sensitive customers have low lifetime value – they leave!
Find the people that want to create a real relationship. Coach them so they understand the value you’re adding by crafting custom merchandise for them.
To differentiate yourself, niche down and provide incredible value and service. Maybe you are the best water based screen printer in your area. Perhaps you're the shop known for sustainability. Maybe you're the coolest shop in town. Perhaps you just print cars, or just print for bands, or just print for construction companies.
Picking three or four distinct niches, mastering them, and conquering those markets is a fast track for success in the screen printing business. "The riches are in the niches."
Pricing is a topic we’re always talking about. We’re really excited about it. The custom apparel industry can benefit tremendously from an open discussion, more knowledge, and expert guidance.
But the bottom line is this. Unless screen printers raise their prices, we're in a race to the bottom. Price wars kill screen printing businesses.
So, screen printers, embroiderers, and all custom apparel businesses: raise your prices!
Thumbnail art courtesy of Madd Science Print Lab in Chicago, IL.
Printavo is simple shop management software. Whether your shop works with screen printing, embroidery, signage, digital printing, or awards & engraving–we make your complex workflow simpler to manage and understand. Printavo keeps your shop organized by handling scheduling, estimates, quote approvals, workflow, payments, accounting and more. With Printavo, you’ll work smarter–not harder.Try Printavo