When Supply Costs Don’t Really Matter in the Custom T Shirt Business
Tripping Over Pennies
When Costs Don’t Really Matter in the Custom T Shirt and Embroidery Business
In today’s post we want to talk about people who are focusing on costs for embroidery, rhinestones, etc. over growing their business.
People want to make more money and that’s understandable. Perhaps your business is new or your business has hit a plateau, and you’re finding it difficult to increase sales or get more customers.
When this happens people often look for something that they can control – like lowering their supply costs. But problems come up when lowering costs becomes more important that increasing sales. Yes, it’s easier to focus on because you’re seeing the numbers upfront, but what you’re actually doing is avoiding getting more sales.
So let’s get into some numbers
Commercial Embroidery Business Example
A cone of colored thread is 5 thousand meters and costs about $6.78. And you can get millions of stitches from each cone. Which makes each stitch $0.0000017.
If a logo is 10,000 stitches that’s $0.017 per logo, so 100 shirts cost $1.70 in thread. If you were able to get a 20% discount you’d save $0.34 on the 100 shirts.
Rhinestone T Shirt or Transfer Business Example
If you use rhinestones, each rhinestone costs $0.0033 (if you were to buy in bulk). And if you used 400 rhinestones per design, each design would cost $1.32. If you sell your shirts for $20 and the shirt itself costs $4 and rhinestones cost $1.32, you’d make $14.68. Which is a really good return. Now if you were able to save 20% on those rhinestones, you’d only make and extra $0.26 per shirt. So even at 100 shirts, you’ve only saved $2.60.
You can see that these numbers are really small. What you need to do is really consider what is the long-term benefit to your business? Are those small discounts really worth it? Because there are so many risks with switching suppliers.
Ink is a great example, because you need to make sure you get the right ink for your machine. Discount ink can ruin your machine, and the cost to replace your print head can be up to $1000. So you’ve already lost money fixing the machine, and while it’s being fixed you aren’t making any shirts to sell.
You also have to consider the washability of the ink. If you know right now the ink you’re using will get 50 washes before the design fades, if you switch to cheaper ink, perhaps your customer will only get 20 washes.
Is the colour the exact same. What if a client buys multiple batches of shirts, and the t-shirt batches don’t look the same? If the client takes a company photo for example, and 20 people are wearing the shirts with one ink, and 20 with the other, and the colors don’t match, it’s going to be really noticeable.
Same thing with the gemstones (Hotfix rhinestones). Will all the gemstones look the same? What’s the quality of the glue?
Regular customers will notice these things, and you can lose repeat customers if they feel the quality of product has gone down. Customers want to know that they can call you up and make an order and get the same quality every time. And you want to know that you’re going to get the quality you want from the supplier each time.
Profit potential isn’t worth it, because you’re not selling a hundred thousand of this one item. You’re selling to small niche customers who are ordering 10, 20, 50 shirts. It can take a while to gain those customers and you know they’re going to be repeat customers if you treat them well and provide a quality product. But if you lose them it takes more work to gain new customers.
It’s better to spend time on things that will increase repeat and new customers.
What can you do instead of scouring for savings?
- Call a customer. Make an appointment with a new or existing customer. Ask your customers how their supply is.
- Learn new things. Listen to podcasts. Learn how to make videos to advertise. Start a blog.
- Get some local Facebook advertising.
- Go to events. Go to networking or meet-up groups, trade shows, or join your chamber of commerce.
- Find a new niche. Ex: Clothing for dogs.
It doesn’t make economic sense to be worrying about supply costs instead of contacting customers. As a small business you need to prioritize things. Supply costs matter, but if you’re making a profit, and you’re not already maxing out your marketing, do your marketing first, then look at supply costs.
What it all boils down to is this: Instead of trying to save a few hundred dollars, try to make a few dollars.
Looking to learn more?