Wednesday, May 13, 2015

Pricing: How Much Should I Charge?

A while ago, a young embroiderer called me, and very excitedly told me about a job she had just taken on. “It’s for 78 motorcycle jackets for a local club. With the design on the back, the rockers and a left chest, it’s over 135,000 stitches per jacket. And I’m supplying the jackets!”

“That’s great”, I said. “Are you going to make any money?”

The loud silence coming from the other end told me that she didn’t have a clue!

And I think a lot of small embroiderers have a real problem with pricing. Charge too little and you won’t be able to cover your expenses. Quote too much and you won’t get the job. Remember, the objective is to charge as much as you can and still get the work. But if you can’t make a profit, let the embroiderer down the street take the job and lose their money. Of course, if this is a hobby, none of this is important and you can stop reading and do something for fun. But if it’s your business, you need to know how to arrive at a “fair” price.

In order to do this, you will need to know two things. First, what is the average cost to operate your business on an hourly basis, your “fixed costs” (these are the costs you have whether there is any work to do or not). Second, what is your estimation of what it will take, in time and effort, plus the cost of any special materials, to complete the job?

Hourly Rate X Hours Required + Special Materials = Price $.

To make money you have to pass ALL your costs along to the customer, plus add a profit margin. To do this reasonably, you need to do a little book work.

This is what I advised that embroiderer:

Take out your checkbook register and go back six months. List every check amount for business-related costs. For instance:

· Machine payments (consult your accountant about depreciation, whatever that is)
· Rent (easy if you have a separate facility; if you operate out of your house use the 

  amount you are claiming on your tax return -- very carefully)· Utilities (see Rent, above)
· Labor cost (what you pay yourself + any employees)
· Health insurance (if you pay it on your business)
· Bank charges and business insurance
· Office supplies + equipment + business cards + flyers
· Embroidery supplies (top thread, bobbins, stabilizer, etc. all of which you 
  can get from Madeira USA)
· Phone + mobile phone
· Advertising (Yellow pages + print ads)
· Internet (Web site host + Web maintenance)
· Other overhead: waste removal, cleaning (even the occasional pizza)

So you add that all up and it comes to $40,000 (for 6 months of operation)

In six months of operation there are 26 weeks; each week X 40 hours = 1,040 hours which is reduced by 40 hours to account for holidays. Therefore, dividing the Operating Costs of $40,000 by the Hours of Operation, 1000 hours = $40 cost per operating hour.

So if you average $40 per hour for the 2000 hours per year that you operate your business, you will break even. Now if you want to take a vacation between Christmas and New Year’s, possibly to Aruba, now that you’re the President of a Company, you’ll have to add about $2 per hour under overhead (a little more if you’re taking me with you). And you should add some for savings to buy the next piece of equipment and the rainy day when you don’t have enough work for the full day.

And don't forget setup times, machine maintenance, giving out samples, tweaking the digitizing your customer brought you, running stitch-outs, etc.

Put together everything you spend to produce an item -- any item. Make sure that what you charge the customer covers everything, and then add your profit. If you don't do it in a way similar to this, then you don't have a business, you have a hobby.

You must learn to estimate run times closely. If you’re new to this, you will need to set up some basic guidelines. Try not to guess on something as important as price! If you need your machine to make $25 an hour to pay for itself and you pay yourself $15 and hour, and your other costs (electricity, rent, office supplies, coffee, accountant, etc., etc., etc.) amount to $5 an hour, then you have to charge $50 an hour for your work. If the embroidery job takes 30 minutes to run, then your estimate should be $25 plus your markup and any cost for goods. Don't forget the markup on goods! The standard markup is called "keystone," and is double the price of the goods.

As you will see, each job has its own particular set of problems to solve. That's what customers are hiring you for.

Usually industry trade publications, like Stitches, Impressions and Printwear, have articles on pricing, and so does the library. Check out some other methods which may be more scientific.

Friday, April 3, 2015

Where to Look for Business: Leave No Stone Left Unturned!

Where to Look for Business: Leave No Stone Left Unturned!

Being an embroiderer and having your own business is a fulfilling and demanding enterprise. There are a number of activities which will fill your every waking moment (and possibly your dreams and nightmares) which have little to do with the creative act of embroidering:  

      1. Marketing – what market should I serve; pricing, competition, etc.
      2. Finance and Accounting – collecting money, paying bills, insurance, etc.
      3. Maintenance – keeping your facility operating and machines running.
      4. Advertising – letting prospects know you exist and where to find you.
      5. $ales – getting new business.

Clearly, none of these responsibilities are the reasons you got into the embroidery business, but they all have to be accomplished in order to stay in business. In my view, the most important is Sales; if you don’t bring in any business, the others are irrelevant. 


So, here are a few suggestions for where to look for business: 
• Start by always wearing a denim shirt or polo shirt with your logo and your company name  
  EMBROIDERED on it. Then, when people ask what you do, you can point at it. Be a walking, 
  talking billboard! And have at least 50 business cards in your pocket at all times. You can never tell!

• Check out Community Sports teams: soccer, for names on warm up suits; softball leagues, 
  for uniforms and caps; wrestling singlets; T-Ball, etc.

• Visit bowling alleys and ask the owner/manager if you can post a small flyer on his bulletin board. 
  Lots of teams need their shirts embroidered.

• Try local Car Dealerships. You'll need to digitize their logos and be certain you get an 
  authorization in writing before you reproduce the car brand.

• Make a trip to Doctor's Offices to offer embroidery on employee shirts and scrubs. 
  And don't forget Dentists, Medical Labs, Veterinarians, and Chiropractors.

• Barber shops, Beauty shops, Bath shops, Christmas shops, Spas, etc. all require embroidery.

• Any place where there is a Bridal Registry - Monogramming special items for the 
  Bride & Groom or the bride’s hankie and the Ring Bearer's Pillow, etc.

• Funeral homes and mortuaries –lots of embroidery opportunities here.

• Real Estate Offices. Florists. Furriers. Gift shops.

• Alteration shops and Dry Cleaners – show samples of your work and leave cards.

• Social organizations – community centers, scouts, motorcycle clubs (they love their embroidery 
  on leathers and denim), civic organizations (bear in mind that all manner of social organizations
  may expect a donation, but you will emphasize your ability to help them in fund-raising), 
  political clubs, etc.

• Sewing Machine Dealer's and Fabric shops. Uniform stores – they may not have their 
  own embroidery machine for personalization.

• Churches and synagogues. The choir, sisterhood, annual picnics and fund raisers are all possibilities.

• When you get gas, sell the manager/owner; and get gas at a different station each time; 
  and fixit shops.

• If you have repair men or contractors come in to your shop or home to work, 
  check out their uniforms or shirts and tell them about your business.

• Most Supermarkets have a bulletin/corkboard in the entranceway; put your flyer (5” x 7” is a 
  good size; colorful and eye-catching) up (bring thumb tacks) and make the circuit every
 week because, hopefully, a potential customer will have taken it down to call you.

• You will probably not be able to get any school accounts, at least not right off the bat, 
  but there are things going on in the school with which the school’s embroiderer may not bother. 
  For instance, a towel set a teacher may want or some shirts that need to be monogrammed. 
 Additionally, many teachers have side businesses (hard to live on teacher’s wages, in most places) 
 like trades (plumbing, carpentry, painting) or summer camps. See if they’ll let you leave samples 
 of your work and business cards in the Teacher’s Lounge. If you can find a couple of hours a week 
 to volunteer at a school, hospital or senior citizen’s home, you’ll find it a great way to get your 
 foot in the door (I know. Where do you find a couple of hours a week to volunteer? Stop whining! 
 Figure it out!).

• Avoid the temptation to go after your competitor’s customers; you don’t need enemies. 
  But you can use allies, to wit, a larger embroiderer to whom you can subcontract large jobs 
  that would tie up your machine for days and in return they will give you the small jobs 
  they don’t want to run.
Think of everybody as a prospect – 
either they need something embroidered or they know someone who does.

Thursday, February 19, 2015

Madeira Introduces Cotton/Acrylic Blend BurmilanaCo Embroidery Thread to the Market





Madeira Introduces Cotton/Acrylic Blend BurmilanaCo Embroidery Thread to the Market




So what’s new? A new thread product added by Madeira, to the most diverse product line in the Decorated Apparel industry (in the interest of full disclosure, I work for Madeira USA on the days I’m not watching my wife shovel the snow off of our sidewalk).

AND NOW…introducing… BurmilanaCo! Ta Dah!

Many of you will remember when Madeira introduced Burmilana, the thick, 12 weight wool blend thread with a terrific mix of fall and winter colors resulting in a distinct embroidery look. (As a matter of fact, a popular mall store wrote their name on sweatshirts with the wooly Burmilana and sold a bazillion shirts). The thickness of Burmilana allows for the creation of crazy beautiful designs with around half as many stitches as with regular 40 weight thread, resulting in an appealing three dimensional look.

BurmilanaCo is also a 12 weight blend, but in a cotton-acrylic version. The BurmilanaCo colors are fresh, bright and cheerful, making it a terrific complement for the Spring/Summer fashions. A much different look, a hand-embroidered effect, more designs with fewer stitches, a voluminous thread like BurmilanaCo can be beautifully combined with other thread types; imagine shiny threads like Classic Rayon, Polyneon, or Metallics combined with the matte aspect of the BurmilanaCo.
And BurmilanaCo is certified Oekotex Standard – Class 1 (baby standard) and is therefore a safe choice for children’s wear.

So, when you place your next order, whether by phone (800-225-3001) or on our website, at www.madeiramart.com, please request a free sample and try it out for yourself.

Tuesday, January 6, 2015

Are you going to ISS Long Beach? Here’s Why You Should!


Three questions I’m often asked are:
1. Which machine should I buy?
2. Which thread should I use?
3. You look great! How much weight have you lost?

The good news I have for you today is that 2/3 of those questions are easily answered at the ISS Long Beach Show this month (and the third is confidential). For those of you who live on the west coast, it’s easy to get to Long Beach; for those of you who live in the Midwest and Northeast – it’s gonna be cold, oh so cold, at home but the temperatures in Long Beach on the weekend of the how are forecast to be in the low 70s.

So you arrive at the show on Friday and visit all the machine people: Brother and Melco, ZSK and Barudan, Texmac (Happy) and Hirsch (Tajima). Just come to the show with some idea of what you need and want, visit all the booths, ask your questions, watch demonstrations and request references (for happy, satisfied machine owners in your neighborhood), make comparisons and possibly a buying decision.

In the afternoon, you can investigate threads: Gunold and Amann, A&E and Wire & Rapos (Elize USA) and Madeira. Visit all the booths; ask for new thread cards and samples and when you visit Madeira (Booth #100 - in the interest of full disclosure, I work for Madeira USA on the days I’m not fishing) ask about the new Classic Rayon colors (42 solid) and the new Polyneon colors (74 solid), as well as some new products to help you be even more successful. Additionally, ask about the show special. Yikes! What deals! Be sure we have your current email address so we can keep you apprised of periodic sales and specials through 2015 and beyond.

On Saturday, check out the other stuff in which you’ll have some interest: bags, apparel, stock designs, sportswear, fleece, caps, T-shirts, towels, workwear, backing and stabilizers (Madeira again).

Then, on Saturday evening, have a good dinner and a walk along the waterfront. On Sunday, have a hearty breakfast or brunch and find a raucous sports bar to watch the two NFL Conference games. My predictions: Panthers vs. Packers at 3:05 PM and then the Patriots vs. Broncos at 6:40 PM.
Then take the early flight home on Monday and embroider!

Tuesday, August 19, 2014

New Polyneon Colors at MadeiraUSA

There are certain maxims that I hold dear:
“You can never have enough good health”

“You can never have enough good friends”

“You can never have enough sunny vacation days”

“You can never have enough chocolate”

“You can never have enough pictures of your grandchildren” 

And finally, “You can never have enough different thread colors in your place of business.”

Yeah, I know you think you have it covered, but how many times have you pointed out your thread display to a customer and showed them a thread card only to have them ask, plaintively, “Is that all? Do you have any other reds or blues?”

At Madeira USA, we’re helping (in the interest of full disclosure, I work for Madeira USA on the days I’m not at the beach) by supplementing our already bountiful Polyester thread offering with 72 new colors (57 fashion shades, 5 fluorescent colors and 10 multi-colors).  

If you haven’t already received the new Polyneon card #100-82, you can order one when you place your next Purchase Order or at either ISS Orlando or ISS Ft. Worth.

If you don’t use Madeira Polyneon, you should call your thread supplier periodically and inquire if they’ve added (or deleted) any colors and request a new thread card. Thread cards should be changed every few years as a matter of course because after years of exposure to sunlight, incandescent and fluorescent light and those new weird-looking corkscrew-shaped bulbs, the thread on the card can fade and may no longer match the thread you receive from your supplier.


So, in summary, if you want some EXCITING NEW COLORS, call Madeira (you know, the guys I work for) or check with your supplier and ask, “What’s new… for Back-to-School, Halloween, Thanksgiving, etc.?”