Every printer wants to make money. You don’t want to lose profit on a job, but don’t want to turn potential customers away. So what do you do? Set a minimum order quantity. A minimum order quantity will ensure that you are putting in the effort that isn’t going to waste. It also can help weed out customers who aren’t committed to quality like you are. Get your calculators out; this is going to take a bit of math. Don’t worry though. Here’s everything you need to find your minimum order quantity for every job.
WHAT IS THE MINIMUM ORDER QUANTITY?
The minimum quantity order (MOQ) is the smallest amount of garments that you’re willing to print for one job. You’ll need to turn a profit for your shop, and printing orders of single-digit garments means you might not break even. By creating a minimum order quantity, you’ll be able to at least break even — and hopefully make a profit — on every job. Your hard work won’t be going unpaid.
The cons of a minimum quantity order? You might turn customers away. If a customer wants 3 shirts printed, but your minimum order quantity is 12, they might be uninterested. As a screen printer starting out, this can be discouraging.
However, that customer might have a different job down the line. Remembering your conversation, they’ll come to you with a need for 15 shirts, meeting your requirements. Remember: good customers are willing to pay for quality.
MINIMUM ORDER QUANTITY VS. MINIMUM ORDER VALUE
The minimum order value and minimum order quantity seem pretty similar, right? The minimum order value is the lowest amount you can sell an item to still make a profit. The process of figuring this out is pretty similar to a minimum order quantity equation.
Check out this example from Chron: “Look at the cost of the items you sell to determine your minimum order amount. For instance, if you know that you want to make at least $15 per order and you sell items that cost you $1 each for a price of $2.50 each, you need to sell at least 10 items. That means your minimum order value for this example is $25.”
Calculate the cost of the items you’ll sell to determine the minimum amount. Combined with the overhead costs of your shop, you’ll know how much you need to break even versus make a profit on the job. These two terms are combined when you’re printing custom orders. The customer is paying for all the setup, art creation, and printing costs.
The minimum order quantity (MOQ) includes art fees, screen fees (films and darkroom time), set-up fees (which can be different from screen fees), garment cost and margin on the garment, and print fees (per print cost). Essentially, this all includes the price that will make it worth it to get out of bed in the morning to work.
WHICH ONE IS BEST FOR PRINTERS?
Most printers use minimum order quantities to determine their profits for a job. Minimum order values can apply to screen printers who are printing their own brand or have shirts ready to ship out. Most screen printers are printing custom jobs, which needs a bit more involvement.
When a customer comes with a job, you’ll have to calculate the costs for that job, including garment cost, overhead, and more. Using minimum order quantity to do this means you’ll be able to tell the customer how many shirts you can print to turn a profit, and can print more shirts to bring more money in.
Say a customer wants to buy one shirt for $300. You could use your resources to print just one shirt for that amount, but is it worth your time? By using a minimum order quantity instead, you can use your time more effectively and print more shirts.
HOW TO FIND YOUR MINIMUM ORDER QUANTITY
Now it’s time to determine what your shop’s minimum order quantity should be.
STEP 1: CALCULATE THE PRICE PER GARMENT
First, you’ll need to calculate the overhead costs of your shop. Find out how much money per month you spend on simply having a business. That includes rent, electricity, internet/phone bills, insurance, equipment cost, and the amount of money you want to pay yourself as a business owner.
Next, find out what the total monthly cost of these expenses is. Divide that by the average number of items you print each month, and you have the amount you have to charge per item to cover overhead for that month. This will help you figure out what you need to remain sustainable. Here's a formula to help you out:
|$ Rent per month|
|+ $ Equipment cost per month|
|+ $ Phone-internet per month|
|+ $ Insurance per month|
|+ $ Admin pay per month|
|+ $ Other overhead costs per month|
|= $ Total overhead costs per month|
You’ve calculated the total overhead cost per month. Now it’s time to narrow the number down to overhead cost per shirt in a job. Here’s another formula:
|$ Overhead total cost per month|
÷ Average number of shirts per month
|= $ Overhead cost per shirt per month|
Next, calculate the cost of the materials that go into the printing itself. Make sure you’re taking garment costs into account. Here’s how to find it:
|(Number of screens x $ cost of screens|
|+ ($ Item cost x number of items in the job)|
|+ ($ Total cost of ink for that job)|
|÷ Number of items in the job|
|= $ Cost of materials per item|
For the last step, add those total cost numbers together:
|$ Overhead cost|
|+ $ Cost of materials per item|
|= $ Total cost per item for that job|
STEP 2: CALCULATE PROFITS
Depending on the situation, most businesses want to aim for 20% to 45% profit. In some shops, the set-up simply won’t allow for a 45% margin due to high production time, material costs, or overly competitive local pricing.
Check with local shops in your area to see what they’re doing. If you simply can’t keep up with your competition's pricing, consider specializing in something they don’t offer. Here’s a formula to calculate the profit you’ll make:
|$ Total cost per item per job|
|x % of desired profit as a decimal (example: 0.20 or 0.45)|
|= $ Profit made per item for that job|
Next, you need to add that amount to the base cost of each item for that job and multiply it by the number of items in the job. That looks like this:
|$ Profit made per item for that job|
|+ $ Total cost per item for the job|
|= $ Price to charge customer per item|
Now, multiply the profit per item by the number of items in a job:
|$ Price to charge per customer|
|x Number of items in a job|
|= $ Total price to charge for the job|
You’ve just determined the price you should charge for a job. Now it’s time to determine how many garments per job is too few.
RELATED: A GUIDE TO PRICING SCREEN PRINTED GARMENTS AND TURNING A PROFIT
STEP 3: DETERMINE THE MINIMUM ORDER QUANTITY
If you’re printing 3 or 4 shirts for someone, chances are the overhead, materials, and time costs will make those 4 shirts really expensive in order for you to make a profit. Ask yourself this: what’s your overhead cost to operate for 1 hour? You’ve calculated that number in the first formula of this blog. Say that 3-shirt order is the only job you’re bringing in that day. You need to recoup your costs and not operate at a loss.
Let’s assume that printing 12 shirts take an hour. That doesn’t include setups like art creation, burning screens, and takedown. Take a look at the formulas you just finished adding up. Does the final price per shirt make sense to charge a customer?
The standard minimum order quantity is 12 shirts, but that can depend on your shop. If you run a large shop, you might not want to set up a job that’s only 12 shirts. Say you’re printing a 1-color design on a Riley Hopkins 300. That means only one print head is being used when you could be utilizing at least 6.
Depending on your equipment costs and overhead, the minimum order quantity could increase. You might go to 50 shirts, or even 72 (a standard box of shirts). Shops running an auto might make the minimum order quantity even greater because of the costs to run the equipment and potentially pay employees.
RELATED: WHICH SCREEN PRINTING KIT IS RIGHT FOR YOUR SHOP?
Many customers are willing to pay extra for a softer or better quality garment. If you don’t have a standard or favorite garment to print on, talk to the customer about garment options. The most economical garments are carded-open end 100% cotton shirts, but they’re not the softest garments. Screen printers and customers generally prefer ringspun cotton or poly-blended garments.
It’s important to find blanks that you enjoy printing on and that the customer is happy with. There are plenty of companies and sites to find garments, like SanMar. Search for garment type, blend, and price to find what works for you and provides a comfortable yet affordable garment for customers.
RELATED: THE 4 MOST COMMON TYPES OF T-SHIRTS FOR SCREEN PRINTING
WHAT ABOUT TRANSFERS OR DTG?
With transfers, your minimum order quantity can be lower, since transfers can be made in bulk and the time associated with making one shirt is typically lower. Customers that order transfers usually order low-volume over a long period of time, like a construction company needing a few new work shirts for their new hire. While you can charge less and still make a profit, there are still going to be some overhead and material costs.
When doing Direct-to-Garment printing, or DTG, the minimum quantity can be 1, since the setup is significantly less than with traditional screen printing. However, you’ll still need to account for the cost of the DTG printer and the other materials you’ve used.
There are lots to consider in minimum order quantity. Do your math and research, and look around at shops in your area to determine what’s standing there. If you’re not making a profit, make a change. Good customers are willing to pay for quality products.