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Cost Analysis - Small Shop: Calculation of Yearly Business Expenses
Cost Analysis - Small Shop: Calculation of Yearly Business Expenses
It is impossible to set any kind of logical prices without understanding what something costs to produce. So
the first big question has to be: what does it cost to run you business and how does that translate into the
cost of generating products?
NOTES
The numbers thus far assume you are making all of your income strictly from sewing which is
not typically true for most shops as they sell garments and embroidery. Plus stitch count pricing
is not the best method in most cases because it tends to work against you as follows:
1. Stitch count pricing doesn't accurately reflect how much time (cost) goes into a job.
2. Stitch count pricing requires the embroiderer to quote a price based on an unknown.
3. Stitch count pricing makes comparative price shopping too easy for customers,
4. Stitch count pricing is complex and confusing to the customer.
The Cost Of Downtime And Lost Production
In production, time is money - literally. With stitch count pricing, you are equating stitch count to time,
though you many not realize it. More stitches take more time to sew, thus, your production costs increase.
But if you are only charging for stitch count, then you aren't taking into consideration all of the other factors
that affect how long it REALLY takes to produce a design. And if you aren't charging for it, you aren't getting
paid for it! Here are the most common lost production/downtime factors.
jlamb@sawgrassink.com
Retail Price Calculations
Quantity Price Breaks For Development Of Price Sheets
7500 (stitch count) 7500 (stitch count) 7500 (stitch count) 7500 (stitch count) 7500
5 (colors) 5 (colors) 5 (colors) 5 (colors) 5
5 (trims) 5 (trims) 5 (trims) 5 (trims) 5
$5.00 (item cost) $5.00 (item cost) $5.00 (item cost) $5.00 (item cost) $5.00
$1.00 (shipping) $1.00 (shipping) $1.00 (shipping) $1.00 (shipping) $1.00
$6.00 $6.00 $6.00 $6.00 $6.00
$13.03 $12.49 $12.23 $12.14 $12.06
(pieces) 500
(minutes) 15
(minutes) 30
10.6
(percentage) 5
(minutes) 11.1
(runs) 5.4
(pieces) 5.4
(minutes) 5551.1
(hours) 93.3
$32.28
$3,010.82
$6.02
(M/U %) 70
(CC %) 3.00
$21.05