Style & Design Tips
The Hidden Cost of DTG Printing in the Custom T-Shirt Business
If you are looking to produce custom tees and a custom t-shirt business, DTG printing is a great printing method you can start with. DTG printing is a newer printing method that uses a digital printhead to print designs directly onto different surfaces. Currently, DTG printing is in the stage of rapid development and is becoming more and more popular with sellers. So what are the costs of it? And behind that what hidden costs will be applied?
Usually, when people think about t-shirt production, whether they use the embroidery method, screen printing, heat transfer printing, or DTG printing, they will estimate revenue this way:
$25.00 = selling price of a t-shirt - Cost of a blank shirt = $4.50 - Cost of printing ink on garment = $1.50 ⇒ $19 in revenue
While this may be a starting point to find out if your business really has potential, the actual costs you'll need to cover for finished products and deliveries are much more. Simple ROI calculations based on specific equipment and the costs of creating specific designs are given by multiple equipment vendors. However, only YOU can accurately determine your actual cost.
In the article below, we will use DTG printing as a concrete example of the cost you need for a custom t-shirt business. You can apply the same ideas to whatever printing method you want to start with.
If you are a screen printer, DTG printing has several technological advantages that we will point out below to help you know how to calculate them differently:
- No setup costs: Like other inkjet printers, the DTG printer is a computer peripheral device. That means when you receive artwork from a client, you just need to open your RIP software and print it on a t-shirt. For screen printing, it will have an additional step of producing the screens themselves, which is a significant cost. Likewise, other methods like embroidery or heat Transfer will also have some costs associated with converting the image to the proper file or setup cost.
- There are no minimum orders: The price difference between producing 1 t-shirt and 50 t-shirts for DTG printing is not. There may be minimum orders in your business plan, but they are optional
- Color doesn't matter: Once again, compared to screen printing, the number of colors you create for a T-shirt affects the number of screens you need to make. And the price will be more expensive because of that. The amount of ink used in DTG printing also has a cost difference, but it's negligible and it doesn’t affect your costs too much.
After you know the above, we will move on to the "hidden" costs that are usually not available in the calculation of custom t-shirt entrepreneurs.
LABOR – Mostly Yours
To get an accurate picture of how much profit you will generate from DTG printing, you have to calculate labor costs even if you work for yourself.
For example, in 5 minutes you could print a specific custom t-shirt for your customer. With all the time you go through processes like back and forth to the DTG printing, etc, you can produce 10 t-shirts per hour. So also assuming that the initial $5 you spend on each t-shirt and ink is correct, you could make a profit of $20 for each of your finished shirts. So for every hour/10 t-shirts for $20 each => $200,000 - $50.00 in ink and blank shirts is $150/hour
Wow, making $150 an hour is a bargain!
If you work 8 hours a day and multiply it by $150, does it mean your profit per day would be $1200?
Not really! First of all, that labor is valuable and you need to pay the DTG printing operator something, even if it's you. When you have hourly labor costs, you can include yourself in these calculations and also apply them to hidden costs.
Especially if you are a one-person business, it can take you 2 hours practically to manage DTG printing and production. There are a few things that will take extra time and labor for a typical job:
- Sales time: How long will it take you to talk on the phone with this customer? Have they ever visited your store or have you met them at a networking event? To find this customer you may have to spend 3 hours calling them back and forth. All of these are counted as labor costs.
- Accounting time: What percentage of time do you need to spend a day creating quotes/proposals, invoicing, and calling blank garment suppliers about your orders? How about ordering ink and other supplies to complete your DTG printing product.
- Shipping & Handling: Are you using branded boxes? Mailing labels? Can you deliver your product yourself? All about packaging and shipping is only part of the handling cost.
When processing a particular order, there are hundreds of little things you need to do. So orders like the above example will still generate profits for you? Definitely yes, as long as you have a realistic assessment of the labor costs for DTG printing involved.
In general, when estimating whether a job is profitable or not, people often forget about this cost. Each city and county will have a different tax code. Therefore, you should consult the legal party to always ensure you’re staying on the right side of the “Revenuers” and local governments.
Based on your income and depending on how your company was founded, you may also be directly taxed on that basis. Always remember, you need to obey the law. And make sure all the time and effort you spend, or a bookkeeper or accountant rental investment, are included in your profit calculation.
The item that is often missing from common business calculations is the Error and Mistakes. Here are a few things that will mess up and affect the cost of your DTG printing process:
- Ordering supplies and blanks for DTG printing: You must delay work for not ordering an adequate quantity of blanks or the wrong ones. How much will it cost to ship the next day? How about doubling the cost of thread or backing with freight because you ran out? Neither of those is even close to what happens if you have to have a liter of ink or pretreatment overnighted!
- The mistake on a shirt, pants, or a cap: No one is perfect. And whether you use DTG printing or any printing technology, the printing process takes skill and practice. So it is possible to complete the order of 50 shirts but not get the first one, or sometimes up to the 5th. You may accidentally fold the shirt while the ink is still wet, forgot to set it to print white, or messed up the hooping position, ... Whatever the mistake is, this will have to cost 2 things:
- Time - Need to rework and re-order the blank
- Money - for blank garments and supplies that you have wasted
Making Money in Custom T-Shirts and DTG Printing
Like many other types of printing techniques for the custom T-shirt business, DTG printing has turned many sellers into very successful businesses. In fact, once you have researched here and you have avoided letting Labor Costs, Taxes and Mistakes stop the path of your business, your chances of success are just increased!