Flat Rate Pricing Embroidery Project

If given a choice, many a shop owner would choose to stay up all night and “pick-out” stitches from an incorrectly sewn jacket-back design rather than make a sales call. Why is this? First of all, you are dealing with people (and as we all know, that is a challenge in itself) which means you have to deal with opinions, likes, dislikes, attitudes, etc. Unfortunately, you can’t control someone’s personality, so you have to adapt the best that you can. A second factor that can quickly sour a sales presentation is pricing. However, unlike the first issue, people, you can control this challenge.

Pricing is perhaps the greatest challenge for the commercial embroidery industry as a whole and the most maligned aspect of it. If you haven’t already done your homework and at least established a framework for a profitable pricing structure that applies specifically to your operation, then you are probably losing money as we speak. If that is the case, you should stop right now and save this article for later, as you can’t establish a flat rate system if you don’t already have a pricing system that works. Flat rate pricing isn’t a solution; rather, it’s a sales tool.

To better understand the significance of a solid pricing system, let’s take a look at a possible sales scenario.

You are in the middle of an awesome sales call, armed with design and product samples, innovative ideas and an exciting presentation. The customer likes what you have to offer and is engaged in a constructive dialogue with you over colors, sizes, and delivery dates. You whip out your order book and start jotting down details, pointing out certain garment options and features as you go. You are incredible, the customer is enthusiastic and the deal is hot!

Then the client throws out a routine, yet critical question: “What’s the price?”

You hesitate for just a moment, your smile weakens, and a furrow appears on your brow.

“The shirt starts at $15.00 and there are discounts based on quantity,” you reply.

The customer nods her head in acknowledgement. “Does that include my logo?”

A quick shake of the head, then you respond, “No, the embroidery is a separate charge.”

“Okay, so how much will that be?”

You feel a slight pang of tension traveling down your spine. “It will depend on the stitch count.”

The customer shoots you a questioning glance. “Stitch count?”

“Yes, that is the number of stitches that are in your design. Our basic rate is 90 cents per thousand, but it gets discounted based on quantity.”

Now the customer develops a look of bewilderment, the confusion obvious in her voice. “Ok, so what’s it going to cost to get my logo on this shirt?”

“Well first we have to figure out the stitch count, then…”

The customer cuts you off. “You mean you don’t know what that is? You have copy of my logo right there in your hands.”

You look down at the colorful, detailed logo that is staring up at you. “Well, ah, no…you see, we ah, we give the artwork to our digitizer who then estimates the stitch count for us.”

The customer’s expression changes from one of confusion, to one of concern. “So you have no clue what the embroidery is going to cost.” A statement, not a question.

The room grows silent and you feel the temperature drop 20 degrees at the revelation.

What was hot deal just moments before has turned into a dubious proposition. You struggle vainly to get the momentum going again.

“Well, it probably will be around $7.00, depending on the quantity!” You blurt out with a sheepish smile on your face.

Too little, too late. You may not have lost the deal, but you certainly caused a setback. By not being able to give a firm price, there is no way you can close the deal on the spot. You’re only recourse is to leave behind a rough estimate while you go about calculating a price and hope that the customer doesn’t lose interest or find another vendor in the interim.

Great way to do business, huh?

Put yourself in your customer’s shoes. That was confusing, frustrating and quite possibly a waste of her valuable time. All she wanted to know was how much it cost to put her logo on a shirt. How hard was that?

Okay, so we all know that the stitch count aspect is a variable in every job quote. Logos range from about 1000 stitches (Ralph Lauren Polo Pony is only 800) up to 100,000+ for large jacket-back designs, so you have to take great care in analyzing and estimating the stitch count. But to put things into perspective, the real concern is how long something takes to sew, not how many stitches are in the design.

Certainly, within reason, more stitches means more time, but not always. For example, a 10,000 stitch appliqué will take longer to sew than a 10,000 stitch (solid) design due to the machine downtime that occurs when applying the appliqué cut pieces. Long stitch lengths cause the machine to slow down during sewing, so conceivably a 5000 stitch design with intricate fills (created by using a variety of longer stitches) or wide satins will take longer to sew than a 5000 stitch design with normal stitch lengths. And, don’t forget that color changes and thread trims adds to the production time, as the machine must stop to perform each process.

My point is that stitch count is a good indicator of approximate sewing time, but not the only factor. If you really want to develop an accurate quote for sewing, you need to take into account several production factors, not just stitch count. With that said, let’s take a look at how to work up a different pricing approach— one that will help you to close deals on the spot.

Flat rate pricing is based on the assumption (dangerous word of course) that every design has approximately the same stitch count. Using this premise, we must implement some restrictions, such as left-chest and cap logos only. Obviously jacket-backs and full-fronts are in a totally different category. Most embroiderers who employ this method create multiple categories centered on their most common jobs. In fact, retail embroiderers have long realized that simplified pricing is a must, so they have applied this concept to everything they offer.

The first step is to develop a basic pricing structure that assigns stitch count pricing based on quantity of items sewn, something you should have done before you opened your doors for business.

Next, choose a type of placement and take a look at the jobs you have done recently. Determine the average stitch count. Most embroiderers assume that the average left chest and/or cap logo has 5000 stitches. Is this true for you? (Don’t assume, calculate – for our shop the average was closer to 7500 stitches.)

Once you determine a stitch count standard, then you can create a chart like the one to the right.

Armed with this information, when the customer asks “how much?” you respond with “how many pieces?” If they say 12, you quote them $7.50 for the embroidery. It’s as easy as that! Or maybe not.

The only thing the customer needs to know (see) is the quantity and price. They don’t have to see the stitch count pricing or know that it’s based on 5000 stitches. Though quick and simple, it does have some dangers as follows:

Remember, the standard stitch count is based on averages, since no two jobs are just alike, so you should have an acceptable range such as 5000 stitches plus or minus 2000. Thus, you still have to use some embroidery sense when pricing a job on the spot. Does the logo look like it will fall within that range? You can always back away from flat rate and go back to custom pricing.

One huge advantage of the flat rate system is that you can create all-inclusive price lists, which means the printed price includes garment and embroidery. For retail embroiderers, this is a necessity. When a customer looks at a price tag, they know it’s the final cost for the item with embroidery. No need for anyone to worry about how many stitches, how many letters, or how many words.

For those offering personalization, you can’t use a 5000 stitch standard, you have to calculate multiple standards depending on what the job is. Start by creating categories of placement that define the size of the embroidery. For example, single letter monograms on bath towels. A reasonable standard is a four inch tall letter. M and W are the largest letters of the alphabet, so choose one of them and set it up at four inches tall complete with the stitch settings (density, underlay, etc.) that you would normally use on a bath towel. Make a note of the resulting stitch count. Repeat this process for each of the most commonly used fonts. Average together all the numbers. You now have a standard stitch count for that type of job. Apply this same process to every type of monogram that you offer. For three letter monograms use MMM or WWW.

Flat rate pricing makes the process much simpler for everyone involved. It does have some challenges and some dangers, but for most situations it works very well. In fact, it has been shown in studies that people are more likely to challenge (haggle) a calculated price than a printed one. So get rid of the calculator and the puzzled looks and move into the realm of simplified pricing and improve your selling opportunities.