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Adjusting Your Business Model for DTG

(April/May 2017) posted on Tue May 30, 2017

Overcoming the challenges of direct-to-garment printing.

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By Aaron Montgomery

The first is the cost-plus-markup method, where you take your cost to produce and then add a markup percentage that will satisfy your overhead and profit needs. For easy math, let’s use a profit factor of 0.5, or a 100-percent markup. You take the $5.00 you spend to print a light-colored shirt and divide by 0.5. That gives you $10.00. Now plug that markup into your spreadsheet and you have the selling price for all of your products. Easy.

The second approach takes more time and research, but it’s a more flexible way to determine your selling price. Start with a percentage value that is needed to cover your bills and add it to your cost to produce. Let’s say you need 25 percent to cover your bills, so you come up with $6.25 for light-colored shirts and $12.82 for dark. That’s the minimum you can charge for each shirt.

Then, do some research and determine what your target market will pay for a similar product. Maybe your target is bands and music enthusiasts. You’ll probably focus your efforts on dark garments. Let’s say you find that $15.00 seems to be the going price for these shirts. Or, assume your target audience is the high-end car market. Perhaps you find that those consumers are willing to pay $40.00 for a dark garment with an actual picture of their car on it. Why charge $12.82 when you can charge $40.00?

With this market pricing model, the key is to set your price and continue to track the trends. Are shirts selling faster than you can print them? Move the price up a bit. Are you struggling to get new customers? Maybe a sale for new customers is in order. This method is much more flexible and allows you to maximize your profits. With the markup method, you won’t always make as much as you could on some items, while you’ll be priced right out of the market on others.

I truly believe that DTG will revolutionize garment decorating, and if we approach it in the right way, we can maximize our profits while raising the perception of the common garment printer. Remember, it’s all about that word – perception – so before you turn on that new machine, be sure you’re ready to present what it has to offer in the smartest way.

Check out more from Aaron Montgomery or read the rest of Screen Printing's April/May 2017 issue.


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