How can a t shirt that costs £2.00 be sold at a retail price of £30?
The cost dynamics of a printed t-shirt.
Seems unlikely doesn’t it? This is a 1500% markup.
However, it is true when you look at the basic garment cost and then the retail cost and do the maths…but the real truth is a little bit more complicated and sadly this markup is not your profit figure because you need to factor in all the costs of production, advertising and fulfilment.
Never the less, if you can create some real brand equity in your product and some values that make your products desirable, you can make healthy profits and create a business that is fun to operate, creative and means you can work from home.
This short article explains the cost dynamics of a printed t-shirt.
When a £2 t shirt is about to be printed, it has before it a number of processes to undergo to become a finished article and be ready for retail.
Unless you have your own production facility then you need to pay someone else to do this work and this is what skews the truth.
If your t shirt is being screen printed (as opposed to digital printed) then your design first needs to be colour separated. A graphic designer type person works on your file in Photoshop or illustrator to prepare the artwork for separations and then outputs each colour to a posi film ready for the screen man to make the screens.
This labour has a cost and so do the materials.
The screen man then makes all your screens. This takes about 5 mins per screen and so there is a labour and materials component too.
The screens are passed to the printer who then sets up the job and this again takes about 7 minutes per screen, producing labour and material costs.
The time it takes to print a job varies. Some jobs are easy, some not so easy. It is not unusual to be able to screenprint t shirts at an average rate of about 400 per hour on an auto carousel so it is not difficult to see that the human cost per garment is negligible. However, the purchase cost of the machinery, the power required to drive and heat the t shirt to the required temp to cure it as well as the human cost to check and fold and pack the garment.
PACKING and DISPATCHING
This can be a very small cost or a relatively big cost depending on how the goods are being shipped. 100 t shirts in a big box, just folded neatly in bundles is going to cost you pennies per garment.
A single garment sent to you or directly to your customer has a high cost relative to the cost of the garment.
This is because it costs about £10 to ship a single box of £100 garments but it costs £5 to ship a single t shirt on a tracked delivery service.
WEBSITE and ADVERTISING?
You need to ask yourself why anyone will want to buy your t shirt.
There isn’t some unicorn magic that says just because you printed some t shirts that anybody is going to want to buy them.
You need to invest time and money in building your website and in advertising your products so your chosen audience can be made aware that they exist and can purchase them easily from you.
All of this web development time, unless you can do it yourself, has a cost element and you cannot advertise very successfully for free.
These costs all have to be factored in.
So…that £2 t-shirt which you can absolutely sell for £30 if you get your branding and advertising right will likely cost you nearer £10 or £15 to produce and sell if you are not printing it yourself and if you are advertising on Facebook or Instagram
That 1500% markup just dropped to 100%.
In this world, 100% margin is very typical of a retail markup.
The only way you can achieve a better margin is to sell for more or to cut your costs by doing your own production and marketing and/or by buying in bulk to leverage a better unit price.
In 2020, if you have the intellectual capability to learn Photoshop, if you have the capital to purchase and house the equipment required to produce printed garments and if you possess the skills and vision to build a narrative around your brand that creates a feeling in
the audience that compels them to purchase your products then there is no reason why you cannot achieve a vertically integrated clothing brand business that designs, produces, markets and sells its products all under one roof and under your control.
That is the brand owners dream and that is where you get closer to that 1500% markup.
If you need further business advice about your t shirt brand then Shirtworks provides this for free if you are a customer.
We are the only t shirt printing company that partners with you in this way.