What to charge your customers for embroidery digitizing?

 

Below are the four methods of retail embroidery digitizing pricing.  We’ll review the pros and cons to each pricing method.

1. FREE

2. Subsidized

3. Cost

4. Full price (marked up)

Below are some things to consider when trying to determine what to charge for embroidery digitizing!

FREE:   Should you offer Free digitizing and if so, when?

Embroidery digitizing really is a work of art.  If you give it away, as with anything you can devalue the service and product.  Doing so can commoditize the service – and for most customers, (not educated in the art of embroidery) it’s already a commodity.  Educating your customer will help.  (We’ll discuss this further in the coming paragraphs).

One key factor to include when offering “free” is the hassle of free.  What do I mean?  People that ask for free or tend to seek “free” are generally the most demanding and time consuming!  Isn’t that true in your own experience?  Plus, customers generally refer people just like themselves.  By offering “free” without structuring it right or educating the customer, you may find yourself with a whole lot of business from customers you don’t actually want.

Embroidery companies with In-house digitizers tend to give away digitizing more than those that outsource.  One reason may be because they haven’t tied a specific cost to each logo.  When outsourcing your digitizing, you know your actual cost.  With an in-house embroidery digitizer, you can easily take them for granted and the actual costs because they aren’t measured like they should be.  If you have an in-house digitizer, I’d definitely recommend re-considering your pricing structure.  You could be giving away the actual business so to speak.

Okay, back to where we started…  Free CAN be good!  Free is best when it’s a true incentive.  In other words, make sure that the free offer is a trigger that incentivizes customers to choose you now!  Consider who and where your offer appears.  Would you get the business if you didn’t offer free?  Free digitizing on orders over X size can incentivize people to increase their orders.  Let’s assume your average order is $300.  Would it make financial sense to offer free digitizing on an order of $500 or more?  That might be all that is needed to give your customer reason to add a few more items to the order.

“Free” can also be used effectively when trying to get new customers, more specifically target the kind of customers you actually want.  The more you make the “free” design about high quality craftsmanship, the more “free” builds value and gets you the kind of clients you’re looking for.

Below are a few “Free” Incentive examples

• Free digitizing with orders over $X
• Free digitizing with first sample product. (This gives your customer a chance to make sure they like your work before placing a larger order.  This is a great tactic for larger prospects.)
• Free digitizing with a social media shout out and tag
• Free digitizing with a cross product order (embroidery & printing or promotional product)
• Free digitizing for new accounts (be prepared to also offer a special deal for existing customers, especially those that paid for their digitizing)
• Free digitizing & sample sew out for prospects.
• Free digitizing – for a special promotion on a specific product or product type. Product prices could be inflated slightly to compensate for the digitizing fee.

Subsidized/Discounted:  To subsidize means to pay part of the cost of producing (something) to reduce prices for the buyer.

By letting customers know the actual or regular price, keeps the perceived value high and makes you look generous when offering a discount. The discount can be applied on any order, on an order over a specific size, in combination with other offerings, for special occasions and the discount can be for any amount including less than full price or less than cost.

Cost:   Obviously, this is a form of subsidized or discounted pricing but ensures that your actual costs are covered.

This can be difficult to determine unless outsourcing your digitizing and have an actual invoice for the costs OR you track your time digitizing.  If digitizing in-house, be sure to include the time to sew out the design on a similar fabric and product to ensure you won’t need additional edits when going to production.  In either case, in-house or outsourcing, sewing the file and including buffer time for edits and possible additional sew outs is wise.  Even the most proficient and experienced digitizer doesn’t always get it right the first time, taking into effect the various styles and fabrics of products especially caps.

Full Price:   Of course, full price sounds straight forward, but how do you determine your mark up?

However you determine your pricing, it’s best to create a formula or range of pricing for your mark up.  Some companies base their pricing on $X per 1,000 stitches.  Others set their pricing on a range of pricing. For example: A flat fee of $X if the stitch count range is from 1-10,000 stitches and $Y if 10,0001-20,000 stitches and so on.  Yet, others have flat fees based on dimensions of design or embroidery placement.  For example, $X for a Cap design or left chest size design (no matter the stitch count) and $Y for a full jacket back, etc.

Once you determine your pricing, make sure and put it in writing so you don’t veer from it.  Having it in writing will help you and your co-workers to stick to the pricing and will give you the confidence to declare your pricing boldly.  There is no reason, embroidery digitizing should not be a money maker!

It’s not just about price!

If everyone only cared about price, we’d all be driving Kia’s.  Don’t fall prey to the idea that price is the number one factor behind most people’s decisions. One thing I’ve learned over the years, is that an ideal customer, the kind you want, generally doesn’t make all decisions on price alone.  Price is relative to what they receive and what they perceive they are receiving, or in other words how you present it.  High quality customers value quality or service over price and most of them have experienced the disappointment of lowest price over all else.  And in case they forgot, it’s your duty to remind them of that experience.  A good salesperson will always have a story ready for the last time they went “cheap”, not as a way of manipulating the customer, but as a way to help them avoid the disappointment and head ache associated with the lowest price.

Customers generally only focus on lowest price IF they don’t know what else to ask.  In other words, what else does the customer need to know or learn in order to tell the difference?  What are the consequences of going with lowest price?  For some reason, our lack of confidence in ourselves OR our lack of our customers level of embroidery understanding can cause us to automatically start with price especially if they bring it up first.

Reminder, most of the time you need to overcome your own perceptions and lack of confidence.

• Embroidery companies deduct the price out of fear of losing a job.
• Educate your customer. Can take time but you can also prepare.
• Differentiate yourself/company from the competitors.  Don’t allow your competition to dictate your pricing.
• Customers only buy on price when they don’t know what else is important to ask about.
• Use examples, samples. Tell Stories.  Articulate why your price is worth it.  Create fear.  Make aware of risk.  Referrals, references, Testimonials.
• Guarantees – Lower the risk! Offer guarantees to push them over the edge and give them confidence that they’re not making mistake.  Make them feel safe by giving them an out if the feel the boat sinking.  (it may happen on a rare occasion but you’ll benefit from it far more)

Now, go sell some embroidery!