Set Up Charge?

[Di]

I've been told to charge a "Set Up Fee" vs. charging for digitizing that way I can keep the rights to the digitized file. I don't know how to digitize but I do know how to edit and combine designs and add text (I have DSP+).

When I'm doing a job that needs to have the design digitized, I of course have to send it out. Do most people that have to do this charge a set fee, say $60 for Set Up or do you have a slight mark up on the cost of digitizing? If you have a set fee, do you protect youself by saying that's up to a certain size of a design or a certain number of stitches so that you don't loose money on some huge design? (What is a "normal" Set Up Fee and what would be the average maximum size or stitch count for this fee?)

Then if you have someone who wants a stock design with text added, do you charge a Set Up Fee? Or do you just make your profit in you garment and stitch charge?

I hope my question doesn't sound like a monkey on pep pills? lol

Thank you!!!
Di

[GF]

I charge for digitizing/punching and prefer not to call it a setup fee. To me, a setup is setting the machines up for the job and I don't charge for that. Digitizing is skilled labor and I treat it as such. I charge $22/hr for any digitizing, or a flat fee of $100 for punching the design and that includes the test sewout sample and minor revisions.

[Shuffletown Embroidery]

I agree with GF. I have a separate line item for digitizing called "design fee".

I include the setup costs in the per item charges. It's so insignificant that it usually gets rounded out of a large order.

One thing I have never seen in these discussions about pricing is what everyone includes in pricing. So I'm going to start along this line. But before I start, I want to say that the customer sees only 3 things: design fee, per item charges, and sales tax.

The per item charge is derived from the total cost divided by the number of units.
The total cost includes:
1. set up fee - a one time charge for each order derived from the number of threads used and loading the design into the computer * hourly rate. Mine hourly rate is $50.
2. garments - my cost of each garment + a small markup (usually 30% but a minimum $3 apiece) + $1 each piece for shipping (even if my shipping is free)
3. Cost of materials - for each piece which includes thread, stabilizer, topping. Cost for this varies based on the size of the hoop needed.
4. Stitching costs - derived from a price scaled to the number of stitches in the design - more per 1000 for lower stitch counts.

If you're not accounting for all these costs in your charges, then you can't be making any money.

By the way, if I outsource digitizing, I mark it up a little because of the time I spend ordering it and testing it when I get it back.

OK, this is probably more than you wanted to know about me..... [img]smile.gif[/img]
Mary

[signman]

Here's how I do it, pretty much the same for screenprinting, decaling, and embroidery:
Cost of goods+ 10% + freight x 1.25 is the absolute lowest markup-for 144-288 piece order.The 10%? that is to cover a reasonable amount of rejects-1 out of 10 potential. (check out any ASI/UPIC catalog for imprinted goods-they all allow +- 3% to 5% of goods by count-most charge EXTRA if you specify an exact number of pieces!)
For orders under 12 pieces-I markup by 2.5-because if I screw up 1 $30 jacket on an order of 5- I've lost the profit on the whole order just replacing that jacket if I don't have a large enough markup to cover it. 1 to 3 dozen-the markup is 2, 3 doz to 6 dozen, 1.75, etc.
What you have to consider is YOUR setup time...changing hoop arm positions, adding hat attachment, testing the design on scrap-this is all time consuming-and it doesn't matter if you are doing ONE jacket or ONE HUNDRED jackets-you have to do the same amount. With screenprinting-whether it is 10 pieces or 1000 piece run-I still have to figure in 1 and 1/2 hours of time-intial 'screenburning' time, warming up and setting up the print octopus, then cleanup after the job, stripping the screen and recoating for next use. So my 'cost' of goods has that figured in as the 10% addition.
With embroidery-no screenburning or cleanup, but it takes me that much time on average to put together a stock design, add on lettering, clean up unneeded stitches, test sew, etc. and then some routine maintenance.
If I have to pay an artist or another shop to do designs for me-I mark that bill up 25%.
NO ONE ever passes on any costs without a markup-that's how YOU pay yourself for the time it took to contact a company, send them a rough sketch or idea, your credit card costs money to use for payment, your computer costs money to sit on your desk...think of it this way..Does your auto mechanic give you the oil and filter AT HIS COST when he does an oil change? Does the diner down the street make your morning breakfast at COST? No...they have to mark it all up.
$40 to $50 per hour is what you should have as a goal for 'billing'...and that doesn't include cost of goods.At an average of 1000 stitches per minute-you can only sew 60,000 per hour. At an average of $1 per thousand-that's $60.00 But if you only really sew for 2 hours a day...$120 doesn't pay the bills-so you make it up in markups on everything else.
In screen printing-normal charges are around $1.50 PER COLOR IMPRINT in low quantities...yet a gallon of ink ($65 or more) will last me over 2,000 imprints. So my cost is about 3¢ per imprint. If I only doubled that-to 6¢-I'd be lining up for food at the Soup Kitchen within a month.

[Shuffletown Embroidery]

You have a great point about higher markups on small orders. I don't think my pricing spreadsheet accounts for that.
Mary