Ryonet | #PoweringThePrint
Last week I wrote a post explaining how to Find your ‘Profitability Sweet-Spot, and gave readers a chance to understand the profitability calculator we suggest using to calculate profits for a job with our Profit Calculator post. Let’s go in-depth about how to make this equation work for your situation using five common scenarios based on our top-selling kits. Here’s how you can earn 45% profit in the most common situation: The DIYer!
First off, let’s just clarify that this kit was designed with personal use in mind, not commercial. Ambitious screen printers have come up with ways to make this kit work for them to turn a profit, but it isn’t an easy task and it requires some creative thinking. In order to paint a clear picture of what kind of numbers you would need to achieve to turn a 45% profit margin with this kit, let’s describe the scene (or skip to THE TAKEAWAY):
Most DIYers work part-time out of a spare room in their house, their kitchen, their garage, or other storage space. Normally we recommend including a portion of your rent or mortgage in your monthly overhead since it factors into your related expenses. However, in this particular scenario, we are going to eliminate that value from our calculations. Real commercial printing isn’t the goal of a DIY Print Shop Kit so we are assuming that the DIYer only prints shirts in their spare time and therefore does not rely on the income from this kit to pay for these expenses. We will assume the same with electric, and phone/internet bills. The only monthly inputs we will be using for this scenario will be equipment cost.
(Overhead) Equipment cost: The price for this kit is $249.99 and we assume the screen-printer wants to pay that off with the profits made from it. Let’s say that we aim to have this done paying for itself in four months, so the value we would put into this part of the equation would be $62.50 for each month.
Shirts Printed Per Month: Assuming that the DIYer in this scenario only prints in their spare time, we can estimate they are able to print between 25 – 300 shirts a month. For this particular scenario we will choose 175 to base our calculations off of.
To calculate the amount of money overhead contributes to each shirt cost we have to divide the overhead cost (equipment cost) by the number of shirts printed per month:
$ rent per month + $ electric per month + $ phone/internet per month + $ insurance per month + $ admin pay per month + $ other overhead costs per month + $62.50 (equipment cost per month) = $62.50 (overhead total cost per month)
$62.50 (overhead total cost per month) ÷ 175 (shirts printed per month) = $ 0.35 (overhead cost per shirt for that month)
The overhead cost per shirt for a DIYer printing 175 shirts a month using the DIY Print Shop Kit is only $0.35. Assuming the DIYer is just printing for their own small Etsy shop or family/friends we are going to use the full month’s printing amount as one job and calculate the price you should be charging for each shirt based on that total number. This isn’t the same way you would calculate a more varied situation involving printing multiple outside jobs, but in this scenario this is the most accurate way to calculate profits for this level of printing.
Number of Items Printed: For this calculation we are using the total monthly shirt output, 175.
Items Printed per hour: The output speed for the DIY Print Shop Kit with a heat gun is about 10-25 shirts an hour. We are assuming that the DIYer is putting out 14 shirts an hour in this scenario.
175 (number of shirts printed) ÷ 14 (shirts per hour) = 12.5 (hours spent printing)
Hours Spent Printing: This amount is based on the amount of items printed and the speed they are printed at. For our DIYer using the DIY Print Shop Kit. Assuming they print part-time we will estimate they spend about 14 hours a month on just print-time.
Pre-Press Hours: Since this kit can only print one-color designs, pre-press time will be much less than a job needing multiple colors registered. Exposure and screen-burning time will be high, however, since the DIYer will be using a UV bulb instead of a UV exposure unit. To account for these, as well as design time, let’s assume that pre-press time for this print is 2 hours.
Clean- Up Hours: Because the DIY Print Shop Kit comes with basic cleaning chemicals and relies on the DIYer’s own water-pressure and sink situation to be adequate for cleaning out screens, we can estimate clean up time will be a little longer than a printer with a dunk-tank or designated washout sink. The kit only comes with one screen, however, so we can estimate clean up time to be about 1.5 hours.
14 (hours spent printing) + 2 (pre-press hours) + 1.5 (clean-up hours) = 17.5 (hours needed for printing)
17.5 (hours needed for printing) ÷ 175 (of items per job) = 0.1 (hours)/6 (mins per item)
So far, the DIYer is printing 175 shirts a month, spending about 6 mins per shirt. The next step is to determine how much the DIYer wants to pay themselves for printing. This may seem strange to calculate out as a cost, but remember, profit is not the wage you pay yourself (although you can do that with it if you like). Whatever wage you hope to make doing the physical printing should be added in here to find the total cost of your labor. Time = Money
Hourly cost of Labor: Let’s assume the DIYer wants to get paid $20 an hour for their part-time labor.
0.1 (hours per item) × $20 (hourly cost of labor) = $2 (labor cost per item)
The next few numbers involve calculating the cost of materials that go into the print. Since we are basing this calculation off of only what comes in the DIY Print Shop Kit we can base our numbers off of the prices of items included in that kit. One 156 mesh 16×18 wood screen is $20.99. Shirt price will vary greatly depending on the brand, material, and pricing structure you find. For this calculation we will assume the DIYer is printing on a fashion T-shirt such as American Apparel but is not paying a full retail price, about $10.00 per shirt. Finally, the ink cost for a one-color print from a 16×18 screen is about $0.10 per print.
(1 screen × $20.99 cost of screens) + ($10.00 shirt cost × 175 shirts) + ($0.10 cost of ink per print × 175 shirts) ÷ 175 (shirts printed) = $10.22 (cost of materials per shirt)
Now we have the cost of materials per item. As you can see, the DIYer ‘s numbers are heavily based off of the materials that go into the finished garment. If they found a shirt supplier with a much less expensive price tag, say around $4 per shirt, they would be looking at a material cost of more like $4.22. That’s a big change in the final price to the person ultimately buying the shirt, and depending your their market, possibly a large difference in profit.
The last calculation regarding initial garment cost is to add up the total overhead cost per shirt, labor cost per shirt, and the material cost per shirt to get the total cost per shirt for the DIYer before any profit is made.
$0.35 (overhead cost per shirt) + $2 (labor cost per shirt) + $10.22 (cost of materials per shirt) = $12.57 (total cost per shirt)
Calculating Profit: Now that we know what it will cost the DIYer to make a one-color print on a fashionable t-shirt if they print 175 a month, let’s calculate how much they would have to charge for the final garment to get 45% profit.
$12.57 (total cost per shirt) × .45% (desired profit) = $5.65 (profit made per shirt)
$5.65 (profit made per shirt) + $12.57 (total cost per shirt) = $18.22 (price to charge buyer per shirt)
$5.65 (profit made per shirt) × 175 (shirts printed) = $988.75 (total profit made for the month’s worth of printing)
As you can see, the price per garment is higher when working at the DIY level than it would be for a printer making shirts on a job-by-job basis but there are many ways that the DIYer can use this to their benefit to find their niche. Etsy shops, Saturday markets and festivals are all excellent places to find an audience of buyers who will gladly purchase an awesome one-color design. Friends and colleges, school-mates and sport teams always need shirts for events and are often more than willing to support the work of someone they know before going somewhere else. Remember, the 45% profit margin is always flexible and this equation can work for any situation. The important thing is knowing your niche and making sure that you are printing with those buyers in mind. Once you have that information clearly defined, the possibilities for a DIYer can be endless!