ImagesMagUK_Digital-Edition_January2018

££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££ ££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££ ££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££ BUSINESS DEVELOPMENT www.images-magazine.com 106 images JANUARY 2018 the time investment of the proprietor and/or core staffers. For this reason, I’m an advocate of starting with what I call the ‘minimum to maintain’. This number includes not only the money spent, but also the cost of maintaining the critical labour that your business needs to run. This means that even if you are the sole proprietor and execute all the work yourself, your calculations should include a reasonable amount to pay for your labour – that is, an amount that enables you to continue putting in that crucial work, or would enable you to be replaced by staff. Start by accounting for fixed recurring costs that do not change, like the lease of your facilities, equipment and so forth. Add variable costs, such as supplies, utilities, temporary labour and the like. Add these costs to the cost of labour for your core staff, measured by the month. This results in the rough amount you must bill in a given month not only to cover spend, but to afford the staff and/ or the time needed to do your work. “H ow much should I charge?” Depending on who you ask, you’ll get answers ranging from supposedly universal flat rates by the thousand stitches, to advice to survey local competitors and undercut them, to comparisons with retail pricing. These answers don’t, however, stop to consider your business’s unique position and as such are of limited use. Read on for a better understanding of how to price your work for long-term success. Mind the minimum The first step is to make sure you’re bringing in what you need to stay in business. This begins with an evaluation of your operating costs so you have a foundation on which to build your strategy for growth and profit. Some embroiderers start by finding a ‘break even’ amount that they need to make in a year by simply balancing the literal cash spent on and in their business with the amount they are charging. While that’s a chief part of the calculation, it misses a critical resource: Erich Campbell provides an in-depth analysis of how much you should be charging for your work Dividing this ‘minimum to maintain’ by available production capability allows you to calculate what you must charge for a job to stay in operation. For hourly accounting, assume the number of working days per year is roughly 251 and that you can expect roughly six hours of each of these eight- hour days for dedicated production. This means there are 1,506 hours in which to cover your yearly minimum. Divide your ‘minimum to maintain’ year value by 1506; that’s what you must bill per hour of labour to carry on. To quote jobs based on this hourly pricing, you must estimate the time each job will take. Timing common tasks in production will help establish a reasonable idea of how long it takes to produce an average garment, provided you pay attention to complexity, stitch counts and special processes. If you prefer to price by stitch count, be careful not to calculate based on your machine’s top speed or the speed you run it at. Calculating by stitch count requires an average speed that includes non-stitching activities like hooping and Calculatingthe costs