Should I consider getting into the contract printing market?
There are a few things that would be wise to consider before getting into the contract segment of our industry. First, realize that margins may suffer due to the wholesale pricing structure that you will have to adjust to. For example, let's say that on a direct-sale, 500-piece order with a two-color front design, the profit will be about $1.65 per garment. That same order on a contract basis will bill at $0.60 per garment, give or take a nickel or so. If you ran that job on an automatic press and it took one hour, that press would bill $820 per hour on a direct sale and only $300 per hour on a contract basis. That said, it can be very profitable so long as you adjust how you manage your operation from the front office all the way to packing and shipping.
Another point to consider is your equipment and staff. Those running a manual versus an automatic operation will see more of a challenge in terms of profitability in a contract pricing structure. That same 500-piece two-color order will now take roughly six to 10 hours to produce. Let's split the difference and say that it would take an average printer eight hours to print. That press just billed out $37.50 per hour. After paying the printer’s wage and all of the other overhead, you would be lucky to break even if not lose money on the order. That, my friend, is not why we went into business.
Those currently running an automatic press with the capability to run 400 to 500 garments per hour will eventually want to consider upgrading to a press that can produce 700 to 900 per hour. This increase in production also has the potential to increase profitability drastically.
In the 13 years that I have catered to promotional-product distributors I have noticed that deadlines have gotten tighter and tighter. It used to be that a two-week lead time was normal and acceptable. Somehow that same two weeks turned into two to five days. And, believe me, if you can't produce that order in that time-frame, they will find somebody who can. This creates a tremendous challenge, but for those able to adjust operations to turn orders quickly, everybody will be more profitable. Eventually, when all the kinks in your operation are worked out, and the shop is running as efficiently as possible, you can start to see the light at the end of the tunnel. These are just a few tidbits to consider. If you have the right attitude, staff, equipment and work ethic, contract screen printing can be a very profitable avenue to venture into.