Never Count the Pennies - Learning Center

Never Count the Pennies

Spending time focusing on saving money on your supplies is time wasted, and could be used to increase business instead.

Never Count the Pennies - Colman & Company

Minimizing costs and maximizing profits is the focus for any business. This is especially important for new businesses, because they may not have regular or large profits each month. However, what many custom apparel businesses get hung up on is the cost of their supplies. The reality is that they don’t matter that much, they’re pennies. When you focus on saving pennies, you lose focus on the dollars you could be bringing in.

To help bring this into perspective, we’ll give you a few examples.

Embroidery

Each cone of thread is $7-11 for 5,000 meters. A single cone can get you about 4 million stitches. Even going with the higher priced thread that’s $0.00000275 per stitch.

The average size logo on a jacket or polo is about 10,000 stitches. Each logo costs $0.0275 in thread. Making an order of 100 shirts only cost you $2.75 in thread.

If you spent the time shopping around to find a 20% discount on your thread, you’d only save $0.55 for all 100 shirts.

Rhinestones

If you were to buy in bulk you’re looking at each rhinestone costing you about $0.0033. Let’s say you create a shirt with 400 rhinestones. Meaning each shirt costs $1.32 in rhinestones.

Spending the time to get a 20% discount on the rhinestones, you’d only save $0.26 per shirt and only $2.60 if you sold 100 of them.

Profits

Perhaps you sell your embroidered and/or rhinestone t-shirts at $20/each. The shirts themselves cost you about $5. Each embroidered shirt costs $5.0275 and rhinestone shirt costs $6.32, meaning you’re making $14.9725 and $13.68 per shirt, and $1,497.25 and $1,368 to create 100 of them. Even if you calculate your wage and all other costs into the equation, saving $0.55 and $2.60 is trivial.

Your Time

How long did it take you to find that 20% savings? 30 minutes? 60 minutes? If you took an hour out of your day, you just spent $20 (your wage) to save yourself pennies. The cost of you spending time to find the savings doesn’t outweighs the tiny saving.

Sacrificing Quality

It’s important to also point out the risks involved with switching suppliers and/or supplies. Unfortunately not everything is made equally and it’s dangerous to assume just because you’ve used one thread for a supplier that if you switch to another supplier and a different type of thread that it will work the same. Oftentimes things are cheaper for a reason – they’re lower quality.

If you switch to a different supplies, best case scenario is that you notice it doesn’t meet your standards and you have to remake the product. Worst case scenario is that it affects your machine and that can cost you quite a bit of time to fix, not to mention the loss you’ll take while waiting for the machine to be fixed. In the case of a DTG machine, if you have to replace your print head it can cost up to $1,000.

Another big side effect is that you deliver the product to the customer, and after a few washes the embroidery starts to come apart, rhinestones start falling off, the DTG design starts to fade, or the heat transfer peels away. In those instances you could lose your customers. Your repeat customers which are the foundation of your business are going to notice these changes right away. If you’ve calculated the lifetime value of your customers you know how much of a loss losing them would be.

In the custom apparel business quality is of the utmost importance. You’re not mass producing product that sells at a Walmart or Target for $10. You’re producing small batches – 50 corporate polos, 25 jackets for a sports team, 1-off bling t-shirts for cheer moms. They’re spending $20 on the t-shirt, $80 on the jacket and so they expect them to be of high quality and to last.

Because the custom apparel business is a lot about word of mouth it can take you a lot of time and effort to gain those customers, but also know that if you meet their expectations they will become repeat customers. It costs more to gain new customers than it does to keep existing ones.

Time Better Spent

There are a handful of more productive things you can do with your hour than trying to save a few pennies on supplies.

  1. Talk to existing or potential customers. We’ve already talked about Word of Mouth, using the phone, and email marketing, how to use it to gain new business. Spend an hour and talk to people, you’ll likely get a new customer from it.
  2. Learn something new. Use your machine to learn a new technique or practice on a different blank. Learn about marketing, or how to create videos.
  3. Create some Facebook or Google Ads. Spend a few dollars and see if you can generate new interest.
  4. Go to an event. It can be as small as a local networking event – chamber of commerce event. Or a trade show – even if you don’t have a table, talk to people and hand out your business cards.
  5. Get into a niche. If you already have a niche, think of where you’d like to corner the market next. If you don’t have one, think of where you’d like to be involved – create some product, talk to some people.

Summary

Supply costs, to some extent matter (for example you don’t want to be buying from a local hobby shop that will charge you 10x as much, when you can be getting them from a direct distributor). There are things you can buy in bulk, like your main colors of thread or rhinestones, that can stay on your shelf (keeping in mind that overstocking is dangerous – if you don’t sell it, it’s wasted).

However, prioritization is key to success. When you focus on the pennies you’re not focusing on the customers who are actually going to make you more profitable and build you a long-term business.