Issue link: https://docs.hic.us/i/403552
45 minutes since they are more production oriented.) Assuming a single head machine is running 800 stitches per minute (average, not max), for 35 minutes, yields 28,000 stitches produced in one hour. (As an alternative, you can track stitches sewn by checking your machines stitch counter every hour.) If we now divide the hourly overhead figure of $30.00 by 28,000 stitches, the result is $0.00107 per stitch. Wow, what a great number to work with! To make things easier to understand, we multiply this number by 1000, which yields $1.07 per 1000 stitches. Now you have a basic cost, not price, for producing stitches. Using this number as a breakeven point, you can begin to build a price sheet. By the way, you can lower this number by increasing your hourly production. For example, if you were sewing 50 minutes per hour, your stitch output would increase to 40,000 stitches per hour, with no increase in overhead. The final result would be a stitching cost of $0.75 per 1000 stitches. This is an important concept to understand. Increasing your production rate can decrease the cost of producing each piece. Thus, you really can offer discounts to larger volume orders. However, at some point, you will reach a maximum output for your machine, at which point, no additional pieces per order will make the job any more efficient. If you understand the calculations presented and do some work on your own, you will see where the saturation point is for your machine. The examples above are focused totally on stitch count pricing, and don't take into account any profits generated on the sale of merchandise. Garment markup is a discussion in itself. But on a general note, garment markups should not always be based upon a flat percentage system. Instead, it should be done based on the perception of merchandise value by the customer. For example, in a retail shop, forget the 100% markup rule. Figure out what people are willing to pay. Just because you buy it cheap doesn't mean you have to sell it cheap. (An important rule of retail.) And with retail markups, don't feel guilty because you know what the item really costs. You're in business to make money! Are you going to retail a $2.00 cap for $4.00? I think not. Most retail shops sell blank caps for $12.00 to $18.00 each. However, when you go to the bulk orders, these numbers come down quickly. Typical wholesale orders see about a 30% markup across the board. So lets go back to the master pricing scheme. In the real world, when you are looking for a competitive pricing edge, you can shave off some of the merchandise cost and some of the stitching cost, in such a way that you can still make money. Remember that hourly cost figure of $30.00 that we came up with? Time to put it to use. Let's say you have an order for 12 baseball caps, and you estimate that your machine can output four of those per hour. Divide the hourly cost by four and you will see that you need to charge $7.50 for each baseball cap, above the cost of the cap, to break even. But since the goal is always to do better than break even, you should add a little more in to the price. Don't sell yourself short! Here www.hsi.us care@hsi.us 142