How Do I Price My Hard Goods?
If you’re considering adding branded hard goods to your promo offerings, here are some tips for effective decoration pricing.
Apparel is the crossover point between what’s generally considered a “print” product and what’s a “promo” one.
For apparel decorators looking to further dive into the promo market, oftentimes the same machinery that prints your clients’ T-shirt order can also be used in the hard goods segment. However, there are often more variables in hard goods decoration — making setting prices a challenge. Use this guide to help build a hard goods pricing structure that works for your business.
What Should I Consider When Setting Prices for Hard Goods?
First, it’s important to recognize that no two pricing structures look the same. Even if your business operates similarly to your fellow decorator up the road, you can’t just apply their exact model to your business and expect it to work out, says Howard Potter, CEO of A&P Master Images.
“If they don’t adjust their numbers accordingly to match what their actual cost of doing business is, they’ll fail every time,” he says. “You’re either going to be overcharging or undercharging for your product.”
With that, there are a number of factors to keep in mind:
- Cycle time. A 360-degree engraving on a tumbler is going to take far more time on a machine than a 2x2” imprint. “If you had that run charge the same, that wouldn’t make any sense,” says Adam Stone, vice president of sales at drinkware supplier ETS Express.
- Number of colors. For a digital print, this isn’t a factor, but if you’re screen printing, a design with several colors is going to take more setup time and materials.
- Labor costs. Keep in mind the number of employees you have working on a project and their hourly wage. Don’t forget about the preorder touches, too — it takes work and time to get a project ready for printing.
- Material costs. Factor in the price of the goods you’re decorating, but also the cost of running your machines, any facility overhead, and the price of ink, screens, or other supplies.
- Machinery costs. If you’re purchasing new machines to enter the hard goods market, you may want to factor that into your pricing.
- Shipping. Hard goods can be heavy, and depending on the supplier, inbound shipping costs — to get the products to your decoration facility — can be steep.
So How Should I Build My Pricing Structure?
Stone says it’s a necessity to calculate the exact price per hour to run your machines, all-inclusive, because the biggest determiner of decoration price is often time.
In some respects, it’s a similar system to what you already have in place for apparel decoration, says Potter. How long does your embroidery machine take to embroider a logo with 1,000 stiches, and what do you charge for that amount of time?
It’s the same principal with hard goods.
Potter suggests first calculating how many units you can decorate per hour with a given imprint size, for each decoration method. Then, factor in your decoration costs and your hourly staff rate to determine the “hourly rate” for running the machine, tack that onto existing material and shipping costs, and mark up as needed. Based on that rate, you should be able to determine an appropriate run charge for a given imprint size.
What Might I Overlook in That Calculation?
When you’re calculating time, it’s important also to consider what happens before and after the item’s time on the machine.
One of drinkware and cooler supplier Diamondback Branding’s biggest “aha!” moments during its recent pricing model revamp was the realization of how much time was spent unpacking or repacking products, especially if items come individually packaged.
“It might take five seconds to engrave something on a machine,” says Martha Hightower, Diamondback’s product manager. “But it may take another 30 seconds to a minute to pack it, repack it — all of those things. So, you can’t just go by the five seconds.”
The same goes for machine setup. Digital printing is heavily automated and requires less manual setup time, says Stone, but screen printing is still fairly labor intensive, especially if it’s a multicolor imprint. That should be factored into your run charge.
In essence, take into consideration the full time and materials it takes to decorate each item.
Even if those timeframes seem trivial, they can add up and dig into your profit margin. As with everything, there’s no one-size-fits-all approach, but according to recent research from ASI, the average profit margin for hard goods decoration is about 36%.
How Should I Break Things Down for the Customer?
It’s become more common in apparel decoration to provide an all-inclusive decoration, says Bryan Goltzman, owner of Liquid Screen Design; the price you see is the price you get.
In contrast, it’s typical to see setup or run fees separated out as individual line items on a hard goods order, Goltzman adds. Setup fees for screen printing, the engraving run fee, or an extra fee for a larger imprint size would likely be listed separately instead of rolled into one final price per unit.
However, some hard goods suppliers are shifting to a more all-inclusive pricing model despite the complications of varying decoration pricing. Supplier Goldstar, for example, has moved to a pricing model that includes the full cost of shipping and decoration in the list price of each item. Diamondback Branding also incorporates setup fees and run fees for set imprint sizes into its pricing model.
“Consumers don’t always shop for price,” says Kenny Ved, Goldstar’s director of global sales. “They shop for convenience.”
In other words, it’s more common to list out extra fees, but you don’t have to. If you want to rely on an all-inclusive model, just make sure you still factor in the relevant decoration and shipping considerations in your pricing.
Anything Else to Note?
Here are two more tips from suppliers and distributors already in the hard goods space:
- Keep things simple to start.
There’s quite a bit of variety in the hard goods market, both in terms of product categories and the substrates you’re decorating, Potter says.
When you’re just starting out, keep it simple until you get the hang of things, suggests Goltzman. For example, stick to a small imprint on a tumbler instead of trying to do a wraparound engraving on your first project.
But starting slow doesn’t mean you can’t branch out into a wide array of products if you have the right decoration equipment. “Between UV printing, direct-to-film, and laser engraving, you could pretty much almost customize just about anything,” Goltzman says.
- Be mindful of shipping costs.
Diamondback Branding has a different inbound shipping rate for every brand it works with, says Jolene Slama-Saenz, the supplier’s director of marketing and customer experience. But for some of those brands, it doesn’t pay inbound shipping it all. “It’s kind of relationship based,” she says.
To account for those differences, the company calculated a weighted average based on the percentage of business each brand accounts for, and that’s what factors into its pricing model. Depending on the product you’re printing, hard goods can be far heavier than apparel products, so shipping costs could dig into your bottom line if you don’t account for higher shipping in your pricing model — or build relationships with trusted suppliers to reduce those costs.