So you want to know how to make money in the custom apparel business, but before we get ahead of ourselves, lets take a step back.
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After all, if you dont know how the business works, how do you expect to get started?
In this article, Im going to share the 5 industry fundamentals we make sure our clients understand before they get started in the custom apparel business. (And yes, this all ties into how to make money, in case you were wondering.)
Before you start a custom apparel business, you should know which apparel decoration methods are the most profitable. The chart below lists the top 3 apparel decoration methods that generated the most revenue in the U.S. in , according to Statista.com.
The most popular method, embroidery, topped the charts by almost twice the amount of screen printing and six times the amount of heat transfer. According to a March Fox 34 article, embroidery continues to hold the highest percentage share in the total decorated apparel market. Check out the stats below.
Now, were not just saying this because we sell embroidery machines. (We also sell heat presses so wed pretty much be self-sabotaging if that were the case.) Theres actually a bunch of reasons why embroidery remains at the top of the charts, and is actually expected to increase 11% from now until .
Now that you are aware of the most profitable method, its time to start thinking about the cost of the materials youll need to start making money. Were going to use a small order of 50 embroidered polos as our example. Imagine you are selling polos to a local business of 25 (2 shirts per member.) Now, lets break down the costs of this example using real numbers.
Optimal profit margin = 50% to 65%
At a cost of about $5 per item and a profit margin of 60 percent, the price per item will be = $12.50 per item. Therefore, the profit per item will be $7.50.
$7.50 x 50 = $375 (profit)
But thats just the profit after deducting the price of materials. Now, well have to work in labor fees, which when built-in, will increase the price per item.
To work labor cost into price, consider how much you want to pay yourself or your operator for labor.
Lets say: $10 an hour. If each garment takes about 8 minutes to complete, you can make about 7 garments in an hour. Therefore, you can produce 50 garments in a little over 7 hours. (Lets round to 8 to account for any downtime or preparing of garments.)
$705 (revenue) $246.38 (cost) = $458.62 (new profit)
After working in the cost of materials and labor, embroiderers usually charge an additional setup fee.
Lets take a look at an example of charging a one-time setup fee, which is usually $50 to $60 for medium to large orders.
Our final price was $705 with labor. A setup fee will add another $50 to the customers order, boosting the total price of the order to $755.
Note: A setup fee usually accounts for the digitizing, the time it takes to set up each garment for embroidery and other factors that affect the cost of doing business. However, proceed with caution. Setup fees of $50 are usually added to orders with minimum quantities of about 12. These fees are generally accepted when ordering a large amount of shirts for a small price each (such as $12).
If youre embroidering a small order or custom order, you should consider:
There are two opposing viewpoints in the decorated apparel industry about setup fees or hidden fees:
The reality is, if you work in all the costs correctly in both scenarios, the result will be the same. Its more of a matter of how you choose to approach your pricing structure.
At Ricoma, we always like to present an all-inclusive price. That way, there are no surprises when the customer thinks theyre getting an embroidery machine that embroiders flats and caps for one price, and then ends up having to pay an extra $ for a cap embroidery attachment.
However you choose to work in the labor and setup costs, you should keep in mind the size of the order, the amount of time it will take you to complete, the complexity of the design and other factors that will make the process more timely or costly. Our particular example is a low price.
In fact, some embroiderers charge close to $20 for polos depending on the quantity ordered, the quality of the fabric and other factors that affect the cost of doing business. Therefore, theres room for extra profit but I like to keep my examples low.
With a similar order as the example above, you can easily make an average of about $450 in pure profit in less than one workday. But the best part is: That was an example of a routine, small order. We have new customers who take orders in the 200s and 300s. These large orders produce far more income and can be achieved with the implementation of a few techniques that you can use to attract customers and keep them buying.
You can learn all this in our free webinar, 3 proven techniques to make over $2,000/week in the embroidery business even if youre just getting started! Sign up here to learn the 3 proven techniques to make over $2,000/week in the embroidery business.
If youve heard about the top markets in the decorated apparel industry, local businesses and school organizations may ring a bell. However, within those two markets, there are a number of markets you can sell your products to. Check out some of the popular businesses or organizations you can consider targeting in your area.
Note: Half of custom apparel orders come from local businesses, so youll surely find success locally which is where most people get their first customers when theyre starting up.
FINOHOPE Product Page
Top marketsSubmarketsItems you can sellLocal businesses Restaurants Coffee shops Plumbing Landscaping Mechanic shops Bakeries Polos, caps, button-ups, aprons, glovesSchool organizations Sororities Fraternities Dance teams Color guard teams Football teams Cheer squads Baseball teams Softball teams PTA Chorus club Band Shirts, caps, warmups, jackets, duffle bagsWhile those are very lucrative markets where you can surely find success, you dont have to limit yourself to just that. Consider this list of markets that youve probably never thought of.
At first, many embroiderers take any job that presents itself. But after a while, they determine what market their product best fits in and develop a niche.
The reason its important to have a niche is because it creates the highest value for your target market. Creating a product that speaks to a certain market will yield more results than a product that speaks to just anyone. Another advantage of having a niche in the decorated apparel business is that you could reach maximum efficiency in terms of production (because youll master how to embroider the specific items you offer and how to complete those projects the fastest.)
More importantly, the people in your market are getting a product thats tailored specifically for them. Eventually, youll start learning what that group of people wants and needs and youll seamlessly retain and attract clients in that market by simply meeting those needs.
How should you do this?
Choose a profitable niche and run a subset of advertisements that directly reflect their needs. When your service speaks directly to your target niche, youll be recognized as a specialist or expert for that service. That niche will feel more confident in your capabilities to produce quality products for them.
Thats not to say you have to turn away other clients or that you cant be clear that youll also offer additional services. Again, with embroidery this comes later on in the game, but its always important to know this at first so you can be aware of which markets youre attracting and where to shift your focus to produce the best results.
Marketing, even in its simplest form, is essential for attracting new clients and retaining existing clients. One of the simplest, most effective ways embroiderers get clients is through sampling. If this concept is unfamiliar to you, its actually very easy to understand. You just go to a local school or business (or whoever you wish to sell your products to), and give them a sample of your work. Its that simple.
For instance, you can embroider a left-chest logo for a local business and present it to the owner. If he or she likes it, theyll think of you when they need company shirts or (even better) theyll decide to get new company shirts because they liked it so much.
When sampling, be sure to do the following:
Take sampling a step further by keeping up with events to see when a customer is hosting a business event. When you know theyll be hosting an event, make an event tee or cap as a gift and offer a promo based on their event. Offer it as a way for the company to have uniform staff shirts for the event and/or to have giveaways for their attendees. For example, if this company is attending a trade show or hosting an in-house event, theyll probably want merchandise to give to their customers.
Theyll be happy you took the extra time to learn about their business, and if they like your work and are looking for someone to create gear for their next event, youll be a clear choice.
Click here to watch an Apparel Academy episode where Henry breaks down why sampling is the #1 time proven method to get more customers!
Other simple must-haves:
So there you have it. Those are the 5 industry fundamentals you must know before launching a custom apparel business but youre not done yet.
I know what youre thinking.
You mean to tell me 3,000 words later, Im still only scratching the surface?! Yes and no.
Yes, because theres more awesome content (that will help give you an edge over your competition) coming your way
And no, because youre already one step closer to your goal of making money with embroidery.
Next, well introduce three types of offers you can implement in your business that will turn prospects into customers and turn regular orders into highly profitable orders. Well teach you how to find clients, how to make them an offer they cant refuse, and how to get your clients to buy from you over and over again.
3 Proven Techniques to make over $2,000 a week in your embroidery business
Are you an entrepreneur, fashion lover, or embroidery enthusiast interested in starting or growing a profitable embroidery business? Do you want to be successful?
To guarantee maximum profit in your embroidery business, weve put together a webinar discussing the top three methods that business owners are using to convert prospects into repeat customers!
Click here to sign up for this FREE course.
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Grow your collection of personalized kitchen goods by transposing your mitt design to any of our other kitchen products! If you venture over to our Kitchen section, within our Home and Garden department, you'll find a variety of products to enhance your kitchen. Some of those products include pot holders, trivets, waffle weave kitchen towels, and more!
We also have coordinating pot holders and kitchen essentials so check those out too!!