Traditionally, quotes for machine embroidery jobs are based on stitch count plus digitising charges, which are quoted separately based either on area, stitch count, or complexity. Over the years, there have been many discussions surrounding pricing methods, ranging from questions on how best to estimate stitch counts without incurring the cost of digitising a design, to arguments for digitising being either a flat-rate or hidden cost.
Lately, I’m finding that more of the embroiderers I am talking to are moving towards a model that not only removes the difficulties of predicting stitch counts on the digitising side, but also removes stitch count as a measure for pricing the embroidery itself. These new methods seek to entirely revise the pricing model in order to give customers instant simple-to-understand pricing on their embroidery orders.
I’d like to examine the pros and cons of a pricing model that ignores the age-old ‘per 1,000 stitches’ set-up to show how such models might work, illustrate any pitfalls in this approach, and give shops that are contemplating pricing simplification some information to help them choose a pricing model that best suits their business.
The pros and cons of abandoning stitch counts
Quoting embroidery in the traditional way takes time and skill; quoting a non-count, flat-rate pricing model doesn’t necessarily take much of either. In the traditional method, once a customer provides art and chooses garments, it’s up to the person quoting the job to guess at the final stitch count, based on the coverage and complexity of the design at the stated finished size. This guess is more art than science. It requires considerable embroidery experience, or a measuring strategy that involves estimating the overall length of satin stitches and runs as well as the coverage area of fill stitches to arrive at an accurate price.
If the guesswork isn’t done in house by a salesperson or an in-house digitiser, you may have to consult a contract digitiser to make the same ‘educated guess’, albeit a guess that’s likely to be backed by greater technical experience. While the contract digitiser will likely have a more accurate idea of stitch count compared with a salesperson, (particularly if your sales staffers are not yet versed in embroidery), it invites delay, as you’ll be reaching out and waiting for a response from the digitiser before you can process the quote and send it to the customer. No matter how you achieve it, quoting based on stitch count for any job with new art assets takes time and relies on guesswork that may not accurately reflect the finished decoration.
The pros of removing stitch count from the quoting process are obvious; flat-rate methods are quicker, less hassle, and leave less room for misunderstanding on both sides – shops can either provide the rates directly, or very quickly rattle off prices to a customer based on a much simpler set of questions. The problem, however, comes from dealing with price comparisons and any necessary deviations from the quote that (inevitably) crop up during decoration.
The cons to removing stitch counts are glaring: if you don’t use stitch count to quote, how can you ensure that you are being paid enough for those massive or overly-detailed jobs that take more production time than simple decorations? In deciding to eschew the difficulties of stitch count-based quoting, you leave yourself open to a string of complicated, time-consuming jobs damaging your margins until simpler, less time-consuming jobs once again appear. One solution would be to set your fixed prices to cover these more demanding jobs, and maintain a higher margin on less detailed or lower-coverage decorations. The problem then becomes one of comparison and competition.
Depending on the market you are targeting, you may have a difficult time preaching higher prices as a method to simplify the lives of your customers. When charging this premium, success relies on your ability to pitch customers a unique proposition of value that serves to justify the change. Either that, or you have to change your target market; bargain shoppers who value price over convenience or quality and who have simple decoration needs are not likely to be your best customers – they could effectively end up being asked to pay more to balance out your more demanding customers’ jobs. Instead, you may need to look to convenience-minded customers, or those for whom your quality, level of service, or other potentially valuable adds like online company/team stores, unique decoration methods, high levels of single-piece personalisation, multimedia or specialty finishing differentiates you from your conventional competition.
These two designs are the same size, feature the same detail, and take very little extra digitising to create the multi-colour version and/or isolate the single-colour version, yet if these pieces were both priced as a ‘jacket back’, the multi-colour version requires a great deal more time on the machines.
Pricing and forecasting have to take the potential larger coverage into account
Finding your stitch-count-free pricing style
There are several types of flat-rate pricing, each of which works in a slightly different way to the rest. The following descriptions of various different potential pricing models are only a starting point.
Inclusive flat rates Including the garment and any desired decoration in one stated rate is rarely seen due to the obvious potential for abuse. Though this is what the words ‘flat rate’ call to mind, this pricing only makes sense when the garment or decoration has a high enough margin to cover costs on any potential decoration you can imagine your market requesting.
Combined flat rate In this model the decoration and garment are usually included in one price. Decorators using this rate may specify permissible decoration and garment parameters to ensure profitability. This is often seen in ‘package’ sales, wherein a specific garment and level of decoration will qualify for the special pricing. Pros of this rate include the removal of any and all mention of fees, and the lack of separation between garment and decoration when it comes to building in profit. It is also simply explained and easy to advertise.
Per-location flat rate These rates start with the garment cost to the customer and then add a flat fee for every decorated location. Mark-up may be applied to garment prices in this scheme, though many decorators, particularly those that allow customer-supplied garments, will ignore such mark-up and include profit in the decoration rates so as to avoid the need for multiple pricing schemes to achieve profitability. Pros are that it allows for decoration flexibility and is still fairly simple to explain without requiring the decorator to set up strict rules to restrict excess decoration. When used with a few decoration-size and placement categories, this method provides a middle ground between stitch count quoting and full flat rates.
Reflecting on the returns
How can you tell if these flat rate pricing methods make sense for your shop? Truthfully, it is likely to be a tough call. If you find that your clientele (or intended clientele) is quick to move on, more concerned with convenience or other aspects of service rather than price, and doesn’t make overly-detailed or difficult decoration requests, you may find these pricing methods to be a better fit than traditional quoting. If a customer can receive a firm price quote quickly and without question, and your shop maintains a reliably high standard of quality, these higher, more simply explained prices could well fit the bill. Remember, this is all predicated on the customer believing in the value you provide; if you want to embark on this disruptive dive into a new method of pricing, be prepared to defend your work and position yourself above the commodity decorators.
Be a problem-solving, stitch-knowledgeable consultant, not a box that eats money and spits back shirts. Sell the fact that your no-nonsense, quick quoting takes no input, hides no fees, and makes immediate sense to the purchaser and potentially to those to whom they have to justify these purchases. No fuss, no problems, no friction to get from art to finished product; it’s hard to call such an offer anything but valuable. If, however, your clientele has nothing but time and fights for every penny, you may want to stick to the traditional method, or better yet, seek out a less cost-oriented client-base.
Erich Campbell is an award-winning digitiser, embroidery columnist and educator, with more than 20 years’ experience both in production and the management of ecommerce properties. He is the programme manager for the commercial division of BriTon Leap.