The definition of opportunity cost, per Investopedia, is: “The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.”
That’s a lot of jargon, but it really just means that when faced with two options, by choosing one option you are giving up the potential good outcomes of the option you did not choose.
From automation vs manual printing, DTG vs screen printing, or water based ink vs plastisol ink, screen printing shops have to be ready to make these decisions on a daily basis. Each one of these choices in technology provides different opportunities for a business to grow. With that, however, comes the opportunity cost of NOT choosing one of them.
The popularization of automated screen printing technology has enabled printers to go from a production capability of 200 shirts a day on a manual press, to upwards of 1000 or more shirts a day on their ROQ. At the other end of the spectrum, Direct to Garment printing with the Epson F2000 has enabled printers to offer small batch, highly customizable garment prints while still remaining profitable. Giving them the ability to scale up quickly and with agility.
One of the opportunity costs of choosing more traditional screen printing over a DTG printer is having to sacrifice small batch, high profit & time sensitive jobs.
A Direct to Garment printer is the master at this particular niche in screen printing. With a DTG printer, you are able to take in highly detailed prints at low numbers and output them quickly, with very low labor. Because the function of DTG printing is so different than traditional screen printing, your pricing strategy should also be different. Direct to garment printing has operating costs that include the ink, the garment, maintenance, and labor. A typical 1-off print on the Epson F2000 will cost $3 in ink, a nice 100% cotton double ring-spun garment is about $3, pretreat will cost around $.50 and production time is about 6 minutes or $1.50 in labor if you were paying $15 an hour. An average print off the Epson F2000 will cost $7.50 in materials and labor.
Typically these 1-off prints are being offered at $29 or higher depending on the amount of setup required to run the job. (Please also keep in mind that your fixed operating costs will need to be accounted for to determine profit margin.)
So, if I was to price a 6-color job of 10 shirts via the Epson F2000, my costs would be $75 with a 1 hour production time. Costs on my Riley Win 6-color 4-station could range from $55 to nearly $200 with a 3-hour production time depending on the materials required and what is on hand.
Choosing a DTG printer means choosing a specific business model, designed and optimized for customers who can benefit the most from DTG printing. As such, screen print shops have to decide which action/technology is best suited to handle each customer’s requirements. Production schedule, job requirements, supplies on hand, and time constraints all play a big factor in the opportunity costs of choosing one technology over another.
You can have great success when choosing a DTG printer vs screen printing when you target small run, high detail jobs. A natural place to learn more about these kinds of customers is right in your backyard with your local art or photographic community. Try connecting with the customer in your niche at local galleries, farmers markets, and festivals.
Want to find out more about how DTG printing works? Check out this blog post that shows you the process of creating a DTG print, from start to finish.
Check out this video, where we explain the opportunity cost of DTG vs screen printing: