Copyrights and Trademarks in the Custom T-Shirt Business

Copyrights and Trademarks in the Custom T-Shirt Business

Copyrights and Trademarks in the Custom T-Shirt Business

So when you go to your own attorney, you have heard some of the words before and you understand what you’re getting into. We’re also teaching a few common sense tips to help you understand when you need to check with an attorney.

Full disclosure, I am not a patent attorney. That is a whole separate wardrobe that I can’t pull off. I grew up in a local business. My parents had retail sporting goods stores in a couple of states. My grandparents were in the business before that.

I grew up with a front row seat to the task of a local merchant marketing their brand and identity. Because we were retailers we were also marketing the goods of some of our vendors – Nike, Oakley, Adidas, Spalding, etc.

I got to see and learn from those professionals.    You have a history with companies with no sense of humor about their brand and how they use it.

What are the differences between trademarks and copyrights? Why does that matter to people like our customers?

There are three standard, registrable forms of protecting intellectual property. One of the core things to understand about intellectual property is that it’s property.  Ownership fundamentally means the right to exclude. If you have ownership of anything, you’re able to exclude someone else in some way, shape, or form.

If you think about your house, you can prevent other people from walking into your house. Intellectual property allows you to exclude people from using that property. That’s important to understand before we talk about the differences between trademark and copyright.

Copyright is the ownership of an original work. If I draw a picture, write a song, take a photograph, or write some code, I own that original work. My rights attach as soon as I publish them. As soon as I make them available to the public. My ownership rights prevent someone else from copying them.

If you’ve ever watched a football game on TV you’ll hear, “This broadcast is the exclusive property of the National Football League….” What they’re saying is that you can’t record and broadcast it for profit.

Using a T-shirt as a metaphor: If I draw a picture then I own that drawing as soon as I publish it. If you love that image and want it for the logo of your company, then what you’re saying is that you want to use that image for the public to identify you.

If you think of copyright as the what, the trademark is the who. Who do you think of when you see that creative work?

You take my triangle with a squiggle in it and say that’s going to be your logo. What you’re saying is that when people see that logo, you want them to think of you. I might have thought of the image as a design for a t-shirt. However, you want to put it on a label, so that when people see it they’re going to know the t-shirt came from your company.

If Nike as a brand comes up with an idea for a t-shirt, they might copyright that design. No one else can reproduce that design. However, the swoosh, which they also have ownership over, is their trademark.

Expert Advice

"With patents, the government gives you a twenty-year monopoly on how you’re doing something. As long as you’re telling someone else about it."

The designs on their products are copyright. You can’t just copy that image. If you find artwork on the internet, download it, and upload it to your graphics program, you’re stealing that original work. In legal terms, it’s called infringing.

When we think about making something, it can seem tricky when it comes to graphics. Someone made something with dots and lines, they took the time. However, it’s much easier to take it than say something physical like a coffee table.

Either way their time, effort, creative work, is something that’s being stolen.

This is where this amazing system protects innovation. The whole idea behind the patent and trademark office is to protect innovation. People can’t just steal your stuff.

Before patent protection, if you invented a new way to make shoes the shoemakers’ guild would come and burn your house down. Or they would steal your idea. There was no upside for you.

That way we all get to benefit from the knowledge. However, you get to benefit from your work.

In copyright, if you create the special design you benefit from that work. You’re able to show it to the public where the public can potentially right click on it, but you have protection.

Do you have to do anything to copyright something? Or is it copyright protected once you put the design up on your store?

You own the rights to it when you publish it. However, it is not registered. When you register it you get some additional valuable tools.

You get the right to statutory damages. Otherwise, you’re only going to get actual damages.

If someone sold 2 or three t-shirts then your actual damages might be the profits from those shirts. That’s not enough for someone to take that on for litigation. There are no copyright police. You have to enforce this yourself and that costs money.

If you register your copyright you get statutory damages. Many of your customers have likely received letters from Getty Images. Where they’ve found an image, right clicked on it, and used it in a publication, or worse a product they’re selling.

The lawyers for Getty Images are paid on contract. They are paid to go and find those images and trace it back to the registered website.

When those copyrights are registered they get statutory damages – $750 per instance and it can go up from there. If it’s willful it can be $150,000 and you get attorney’s fees. If you create an original piece of work and you’re planning to use it commercially it’s worth it to register it. Copyright registration is relatively easy and/or inexpensive.

Trademark registration can be much more involved.

If we had a t-shirt store with 100 original design and decided to copyright all of them, how much effort and money might we expect to do that? What is going to be our return if I have to go after someone for infringement?

If we’re a small store, selling 500 shirts a year, is it going to be worth it? Versus if we intend to grow and sell 50,000 shirts a year.

If you hire a lawyer to do it, they’re going to charge you to set everything up. It’s going to cost more to do just one, rather than doing 10 at a time. Or to set them up on a retainer to do 5-10 each month.

The fee to the government is $35-55 per work. Think about what that’s worth to you.   Having that copyright to any one of them may not look like something valuable. If you sell your company they’re going to want to know if you have rights to all that artwork.

It’s the feeling you get when you see that brand. It can be a good feeling or it can be a bad feeling.  The car Edsel ended up becoming a brand for a failed product. Whereas Tesla has a very different brand.

Brand gives you pricing power. It gives you that additional feeling.

Imagine you have two identical beers. One in a blank can that says ‘Beer’ and the other in a can with a brand on it. The value of the brand is how much more you can sell the beer for.

Everyone knows that a few companies, like Disney, Universal, Warner Brothers, have swat teams of copyright attorneys. However, what will happen is our customers will say a couple of things.

  • “I’m just doing this for my family.”
  • “I just have these couple of shirts I want to print with Mickey Mouse in the corner, but the rest of it is my design.”

Can you talk about the scale of being in trouble?

It’s like going into a biker bar and hitting on one of the girlfriends or boyfriends of someone in there and saying, “I just thought they were cute.”

You’re asking for trouble that you cannot dig yourself out of. Taking a step back, first off why do you have the mouse in the design? If you have the mouse in the design because it kind of reminds you of Disney, you’re screwed. They are going to shut you down.

That’s not copyright, that’s trademark. That mark identifies their brand.  It doesn’t have to be an identical copy. It only has to create a likelihood of confusion in the mind of the purchasing public.

So if someone thinks it ‘might be’ a Disney shirt, then you’re in violation.

It reminds us of a customer who had an idea of making flags for college football teams. They put words that were not related to the teams, but were in the team colors, and the fonts kind of looked like their fonts (but weren’t exact).

However, when you looked at it you’d think, “That’s Penn State.” He got shut down.

Here’s what I like about trademark law. It’s very practical. The bummer about it is that there are no bright lines. In your example, he was creating a likelihood of confusion intentionally. He might not have been infringing on one of the copyrighted designs, but he was definitely infringing on purpose with their brand elements.

One of the cases we read about on this topic in law school was concerning two restaurants – Two Pesos vs. Taco Cabana. Basically, the plaintiff was complaining that the defendant’s restaurant looked a lot like their restaurant. It wasn’t any one specific thing, such as their signs were identical.

They said that the overall impression was close enough that people would get confused. That’s called ‘trade dress infringement.’

A trademark doesn’t have to be a word or an image. It can be a shape, a color, or a sound. Harley Davidson has trademarked the sound of their exhaust. They know that other companies are going to tune their engines to try and sound like a Harley.

That sound is part of the overall commercial impression of their brand.

Trademark is pretty broad. People think that they can get away with “it’s not the exact font, but it looks like it doesn’t it?” That last part is what will get you in trouble.

I live in a city and there was a little bakery in a strip mall that called itself Dough Boy. It just so happens there is General Mills plant in town. The owner of the bakery gets a cease and desist letter from General Mills saying, “You can’t use Dough Boy for a bakery. We own the trademark. And by the way, we’ve owned it for 50 years and it’s one of the most valuable assets we have.”

The owner thought that was crazy, he’s just a small bakery and his nickname in school was Dough Boy. “They can’t take that away from me.” Yes, they can. You cannot identify yourself as a bakery when another company has spent hundreds of millions of dollars over decades investing in that trade name so that when customers see the name they think of them.

What happened was someone walked into the General Mills plant and said, “Hey cool, you’re opening a retail store here in town.”Don’t think that you can say, “It’s small. It doesn’t matter.”

The big companies – it matters a lot. It’s their biggest asset. They know that. They’re responsible to the shareholders.

Even if they love the little bakery, they can’t say they’re going to cut them some slack. They have fiduciary duties to their investors. Is it trademark infringement to name your child after a brand? It may not be, because here’s another thing. If Dough Boy was a hardware store, General Mills would have had a tough time shutting them down.

A member of the purchasing public is unlikely to go, “They’re selling hammers and power tools now.”

If they were selling prepared meals as a restaurant, then I don’t know. Where’s the line?  Let’s run through some examples of typical questions we get.

“Can I use words or a slogan that’s been on another shirt?”

This is a good example of where copyrights and trademarks can get confusing pretty quickly.   Copyright protects the original works of authorship fixed in any tangible medium of expression. It prohibits the actual copying.

Typically short words, phrases, names, and titles are generally not protected. However, if those things become trademarks are totally protected.  If you’re copying something, I would say, don’t do it. If you really want to do it, try to get permission.

If you’re selling it, odds are at the very least you’re going to have to defend yourself, “This copyright doesn’t apply, because it’s a two-word phrase. It’s commonly used.”

For example, my niche is MMA. We’ve seen shirts all over the place that say, “My son/daughter kicks ass at MMA” or “MMA Mom”.

They’re out there and published. Is that the kind of thing we should worry about and consult an attorney on?

In general, that is the kind of short word or phrase that is so commonly used. That is probably less likely to be a problem.

However, let me give you an actual example, The Twelfth Man. I believe it was Texas Tech that was using the phrase to talk about their home field advantage.

They actually filed for and got trademark protection of The Twelfth Man.

A couple of other college football teams started using it. Texas Tech initially sent out letters telling the teams they couldn’t do that, “We own it.”

The other teams stopped and a couple of them signed license agreements. The one that didn’t comply was the Seahawks.

They wound up in litigation and ultimately settled. So now the Seahawks have the right to use “The Twelfth Man”. However, they’re paying the original trademark owner.

“Twelfth Man” is a two-word phrase. You can say it in number, letters, or pictograms. That’s still going to have a commercial impression that would make you think of that Twelfth Man.

If you try to use it you’re potentially infringing. Just like if you use the Seahawks colors you’re infringing. Because they have bought that right.

The answer to every legal question is, “It depends.” But you have to know what it depends on.

Is there a way to easily check if someone has the rights to something?

You can go to the USPTO website and there is a trademark search feature. Full disclosure on this, I as a trademark attorney do these searches. You yourself may not be able to interpret the results.

They do have a lot of self-help tools and resources. You can do a basic word search and punch in the exact phrase you’re looking for.

Going back to our biker bar analogy, if you go to a bar and there’s a guy sitting next to a woman with his arm around her, that’s probably his girlfriend. If you go and she’s sitting alone, that doesn’t mean she’s single.

If you go to this website and you don’t find the trademark information, it doesn’t mean that it doesn’t exist.

When it comes to trademarks there’s something called Constructive Notice. It means you didn’t have notice, but that doesn’t mean you couldn’t have looked it up. If you didn’t do it, tough luck, we’re going to treat you as if you had.

You can search the database. One word of caution is that people will say, “I searched the database. I didn’t find it. I’m good, right?” Wrong.

What’s the answer? It depends.

We also get the question about your own trademark and your own business name. How do you get and keep that trademark?

This is what I do every day. First of all, you want to start with a good mark. Most of my clients come to me when they’ve already been in business a couple of years.

The first thing to do is check what the name space looks like around your business name right now. A lot of people think they just have to register their LLC name.

All you’re doing is creating a unique name – and it can be unique by one letter.

If you don’t apply for trademark protection, a little like copyright protection, you still may have common law rights.

If you’re not in business yet I encourage you to work with a professional to help you find a name that is distinctive. I would start with that before your logo. Your logo is secondary. You’re going to change your logo.

If you can lock up the name first that is much more important. When people ask, “What kind of shoes are those?” I don’t draw them a picture. I say they’re Saucony’s. Internet searches are based on that.

The two reasons people’s trademarks don’t get registered or wind up in litigation:

  1. Confusingly similar to something else
  2. It is too descriptive

If your name describes what you do, the government is not going to give you a monopoly on those descriptive terms. Your company name is Miami T-Shirt Shop and you sell t-shirts in Miami. You’re not going to be the only one who can use those words in your name.

It doesn’t distinguish you.

If you’ve been in business for 5 years and you’ve managed to prevent anyone else from using that mark, and now the public only thinks of you when they hear that name, then there’s a Secondary Meaning way to protect that.

It’s a bad place to start. Most people want that so people will see and understand what you’re doing. A valuable trademark, however, is the opposite.

It’s the name that is distinctive, but people come to associate it with a particular business. Like Starbucks. ‘Starbuck’ comes from the book Moby Dick, it had nothing to do with coffee in 1972.

Today, when you say ‘Starbucks’ you don’t think of coffee, you think of THAT coffee. That is a strong mark.

There are a number of other reasons your trademark won’t be approved:

  • A surname
  • It’s offensive

When people give you a piece of artwork, whatever your intake form says, it should have them confirm they own or have rights to that artwork.

They will indemnify you in the event someone else thinks that it’s infringing. What that means if I bring you a piece of artwork, ask you to print it, and it turns out someone else says it’s infringing. They’re going to sue me, but they’re also going to sue you.

You want me to promise to defend you. To say that I’ll take care of it.

If we have what we think should be a trademark right now, is there something that we should do? What are our first steps?

The first thing that I would do is an audit. Understand what your rights are. What your challenges are.

I have clients that typically have a house brand. They have the name of the brewery. Then if they’re a production brewery they have 4 or 6 SKU’s they put in cans.

First audit each of those brands. Understand what the competition, what the name space is. I want to know if anyone else using that mark or confusingly similar.

Are there any allocations or registrations for that mark or those confusingly similar?

Could you send designs on a CD to the copyright office with the appropriate fees and paperwork?

I would probably not want to answer that question. She’s going to have to submit a sample of her design and show that she’s published it.

On a CD is probably a tangible medium, but this is not how they’re going to be used. If she published the designs on her website and said, “These are examples of my work.” That’s probably publication.

When I do trademarks it’s all electronic. There are some people who like to do it the old-fashioned way – the office charges you more for it and it takes longer.

If you just change the design by 10% you’re not going to be in copyright infringement.

If you are trying to make it technically different, but have a similar commercial impression that is a really bad idea.

If I’m the holder of that original work I’m going to claim that I’ve got common-law trademarks on that. What you’re using is confusingly similar. You’re not just having a copyright issue. The 10% rule is the kind of thing people get into trouble with all the time.

What does 10% even mean?

When I do this for clients I give them back a report. Here are the 5 names we looked at, here’s what I saw for each name.

These are the challenges. This is how serious the challenges are. This is who the challengers would be.

For example, if I had been representing that bakery, I would have said, “It’s General Mills. It’s a direct infringement. Change your name now.”

General Mills is not going to back down. And it’s completely useless for you to fight it, particularly if you’re a new brand. Your brand is meaningless to everyone but you.

Your brand becomes valuable as the public interacts with it.

Fighting a trademark dispute early in your company’s history is a waste of time. You’re better off finding a better brand name.

Some people might say that trademark fights are good because you get free publicity. However, it’s a very dangerous game to play.

The “Registered” symbol with the R in the circle. Nike does not have to put that or TM in the corner to make it trademarked. Are the TM and R just for showing off or does it actually have any purpose?

It’s your statement that you’re using it as a trademark. You’re providing some notice that you’re using the mark. You don’t have to use it every time. A lot of times you look at a press release and you might see the symbol in the first instance.

The circle R means that it is registered by the US Trademark office and it has a registration number that is currently active. Using the circle R if your name is not registered, is a big no-no.

You are saying something that is factually incorrect. You’re misrepresenting your mark as registered. That will get you into trouble.  The circle R is Actual Notice (going back to our notes on Constructive Notice). It’s helpful for you if you have to enforce the mark.

There are a couple clear instances where you should talk to an attorney. Not just about trademark and copyrights, but if you’re setting up your company and plan on developing a big brand.

It also applies to small businesses and working with contract artists.

If readers have questions they’re welcome to call us at 888-317-3556. My partner is a corporate attorney. We do federal work. You’re welcome to call us and we’ll either direct you to the appropriate resource or talk to you.

With contract artists the deal is they own any work, you want to make documentation changes that. If I contact someone to make me a logo, I want to own the logo.

It’s really important to check in with your intent. Are you attempting to cheat something else?

Just because you steal something, doesn’t mean anyone is going to find it. Just because someone steals something from you, doesn’t mean you’re going to find it.

If it is found, you can’t just call the police. You have to get an attorney and it could turn into a lot of back and forth. It might have to go to a judge. It could cost tons of money.

Should you do something about this? It depends.

It’s not always cut and dry. Act intelligently. Do your best to make good decisions.

Embroidery Machine Financing at 0%

Embroidery Machine Financing at 0%

When 0% Works and When it Doesn’t

Embroidery machine financing is just like financing any commercial equipment.

 

Your payment depends on 3 things:

The price of the equipment you finance

The term of the lease

 

 

And 0% doesn’t change any of that.

Your credit

It’s pretty simple math. If you finance an embroidery machine that costs $10,000, you’ll get one payment. If you finance one at $15,000, you’ll get a different number.

But it’s not exactly the price of the machine that makes the difference. It’s the amount you actually finance.

For example, if the embroidery machine you want to finance costs $15,000, but you put 10% down then your payment will be based on $13,500.

Purchase amount: $15,000Minus the down payment of $1,500 = Equals your finance amount of $13,500

Let’s just say that payment is advertised at $285/month for 60 months.

This down payment idea is particularly important because that’s one of the first things you’ll see the fine print of the ad.

Company A may list a payment of $315 on their embroidery machine.

Company B might list $285 on the same priced unit however when you read the fine print it says *with 10% down payment.

 

How Long Will Your Lease Last?

Embroidery machines are solid pieces of industrial equipment. They last a long, long, LONG time! 

Just like financing anything though, the number of months of your lease has a big impact on the payment. 

So, for now, let’s leave interest rates and down payments out of the equation. 

If you were to calculate payments for a $12,000 embroidery machine for 60 months you would do it like this:

 

$12,000/60 = $200/month

Now let’s say you wanted to pay it off sooner and only financed for 48 months. It would look like this:

$12,000/48 = $250/month

Your payment went up as the lease TERM went down.

Lastly, if you figure that same amount and extended it to 6 years or 72 months your payments would go down to $166.66/ month.

 

$12,000/72 = $166.66/month

Back to those low payment ads for leasing an embroidery machine now. 

You can see how the same machine at the same price can look VERY different when it comes to payments, right? 

Your Credit and the Lease Payment

 

No business ever advertises a lease payment based on bad credit.

Or so-so credit.

Or for a brand-new business.

Or for any other circumstance other than very good credit.

So, when you see that add for $283/month with 10% down that’s not a guarantee. It will depend on your credit too.

And that just makes sense, doesn’t it?

 

It’s a bigger risk for a bank to lend to a brand-new business or to someone with bad credit – so they want to make more money for taking the risk.

You can almost always get financed at some interest rate and payment, but the payment will be higher. That’s just the way it is.

If that’s your situation and you see a payment of $250 for a lease advertised, it’s probably going to be a little more for you if you’re a new business or have tough credit. If so, you might also have to add some down payment. Or cut the banks risk in some other way.

The GOOD news is that if you have to put extra money down– you’ll be in a great position when you want to lease your NEXT piece of equipment.

When 0% Financing Can be a Terrible Idea

 

It can be a terrible idea because there are some embroidery machine sellers online that are using the same financing approach as your local furniture store – and they shouldn’t be.

Basically, the 0% financing for an embroidery machine works, in that case, is really a “store credit card” that’s designed for face to face purchases.

Like when you go to a furniture store and they offer 0%, you’re often getting a new credit card with a preapproved balance on it.

It’s not really 0% at all.

 

You’re just being charged enough that the credit company gets all of its interest rate in the selling price of the equipment. 

So, it’s like saying “I’ll sell you this machine for $12,000 at $200/month financing. But they’re getting $12,500 and the bank is getting $2,500. 

In that case, it just doesn’t MATTER that you’re getting 0% interest. Everything is the same. It’s just where you’re looking. 

 

BUT HERE’S WHERE IT DOES MATTER

You can never miss a payment.
You can never be late on a payment. 

Because the whole deal goes sideways if you run into any problems.  

You’re interest rate goes to the maximum allowable by law. Maybe 24%. 

And these credit arrangements are on your PERSONAL credit. Not your business credit.  

So now the next time you need to lease commercial embroidery equipment things are not looking so good. 

When 0% Financing on Embroidery Machines is OKAY

 

Nothing is going to change the 3 things we talked about at the beginning. 

The 3 things that determine your lease or finance payment are:

  • The price of the equipment you finance
  • The term of your lease
  • Your Credit

Some people would rather put a lot of cash down because they’re focused on the monthly payment.

Some would rather shorten the finance term because they want to pay off their equipment faster.

Some have a great credit score and want to USE it by getting lower interest for the longest term possible.

In order to qualify for a 0% LEASE deal, you’re going to have to have GREAT credit. And you’re probably going to need 2 years in business.

And there’s still some tradeoff between down payment, credit, terms and the price of the machine of course.

 

But…

Some people are just really focused on the interest rate and would rather see the price of the machine go a little higher, or the term change, in order to see that.

Final Thoughts on 0% Financing for Embroidery Machines

 

Never do this through a store card or a credit card arrangement. The downside is just tooooooo great. 

It does not mean it’s a better deal. You might see Avancé embroidery machines advertise 0% financing. And that’s because there are people that WANT that. 

  • Just like a discounted price.
  • Just like included accessories or equipment.
  • Just like more warranty.

 

The thing that makes 0% a good deal? It’s what YOU care about.

Embroidery Prices & How to Price Embroidery or Monogramming – revised for 2019

Embroidery Prices & How to Price Embroidery or Monogramming – revised for 2019

image of lady learning how to price embroidery work for her monogram machine

Embroidery Prices & How to Price Embroidery or Monogramming Work

2019 Updated: We review methods of how to determine embroidery prices and embroidery cost… by the job, per Item, and per stitch

Not Knowing How to Price Embroidery or Monogramming Creates Fears.

Embroidery and Monogramming Machine shops all over the world are asking “How to price embroidery monogramming?” and “How do I determine my embroidery prices?”

They struggle with deciding on embroidery prices to their customers whenever a new job arrives.

Not to mention that when a business is new, it seems like so much is riding on correct and accurate pricing. It can be worrysome.

The result is business owners have dozens of fears regarding embroidery prices, embroidery costs, or monogramming costs. So, let’s take a look at some of those fears and how to get past them.

Fears: If My Price is Too High

  • I won’t get enough business to pay my bills each month
  • I only get one chance at embroidery prices or they will buy elsewhere
  • My competitors will take my jobs if I don’t learn how to price embroidery work
  • I will take advantage of people if my price is too high
  • People will think I am too proud
  • I will regret it if I charge too much

Fears: If My Price is Too Low

  • I won’t make enough to pay my bills each month
  • I only get one chance at pricing per stitch correctly
  • People will take advantage of me if my embroidery prices are too low
  • People will think I do cheap work if I don’t know how to price embroidery
  • I will regret I didn’t ask for more
Can you Notice all the pressure people put on themselves about pricing?

Notice how the fears and potential regrets are nearly the same in each list?

Unfortunately, deciding how to price embroidery monogramming work on a commercial machine can often become a huge procrastination point.

But it doesn’t need to be that way.

Understanding embroidery prices or monogramming with well-founded pricing models

Knowing your goals up front will help remove the fears and keep your business moving forward.

To start with, it’s important to keep pricing in perspective.  Learning how to price embroidery and monogramming jobs correctly is only one part of reaching your overall goals.

Pricing is not the thing that will make or break your business.

Pricing in the commercial embroidery and monogramming machine business is simply a tool.

It’s used to help you reach your business goals and more importantly your personal goals.

If it takes a while for you to learn how to price embroidery monogramming work, you’ll be fine.

Your potential in the embroidery business is only limited by your imagination, so let go of any fears you have about pricing and focus on your goals instead.

Start with your Goals in mind.

If you are at the start of a brand new embroidery business, then it can be tough to know what your goals should be.

That’s OK. Start by setting some smaller goals which focus on your actions rather than on your results.

Let the accomplishment of those smaller goals add up to your bigger goals.

For instance, let’s say your big goal is to hit your break-even point in your business (the point where sales cover all expenses) within the first year.

Rather than focusing on a large yearly sales goal, instead chose 4 or 5 actions you can do each day, week, or month.

Let’s say your goal was to learn how to price embroidery for the custom shoe making market?  Having that goal in mind would be critical.

image of the process showing how to price embroidery work for customers
Here’s an Example: Embrodiery Prices with Your Goals in Mind:
  • Make 10 outbound sales calls each day
  • Attend 2 business networking functions a month
  • Spend 1 hour a day for the first 2 months in training and learning
  • Take time for family each week, stop to ask how they are holding up
  • Explore 3 potential new vendors each week, etc
  • Spend an hour each month learning how to price embroidery or monogramming work.

If by chance you have an existing business and have never taken the time to write down your goals, now is a perfect time to get started.

Anyone who is searching for the best way to price embroidery or monogramming has a great opportunity to start making written goals.

These goals will inform your pricing decisions and help you decide which pricing models to use which support your overall goals.

Cost, Retail or Wholesale Strategies

Understanding pricing on a more general level is important before we can discuss pricing models.

There are three broad categories for pricing that need to be understood in order to speak the same pricing language that your customers, partners, vendors, and other colleagues will speak.

The Embroidery Cost Price

Cost pricing is often the starting point of any pricing model.  It’s unique for each business, and depends on many different factors that apply specifically to the individual business.

Costs are classified into two broad categories and it’s important to be able to have some understanding of the differences when learning how to price embroidery.

Fixed Costs – any costs that do not change with an increase or decrease in the amount of the goods or services provided.

These are expenses that the embroidery company has to pay regardless of if any business activity is conducted or any sale is made that month.

Typically this includes things such as rent, utilities, lease payments, monthly maintenance payments, owner’s salaries, and other fixed overhead costs.

These fixed costs get tracked to each job based on a number of jobs expected for each month.

For instance: if your fixed costs for a specific month are let’s say $1,450 (rent, lease payments, fixed supplies, etc.) and your Sales Volume is let’s say $5,000 then your fixed costs represent about 30% of your Sales Volume.

Imagine now if you are able to double your sales volume to  $10,000.  Now your fixed costs would now only add up to 15% of your Sales Volume.  This will leave a larger percentage (85% instead of 70%) for cost of goods and Profits!

When pricing monogramming machine jobs and items, keep in mind that any increase in sales volume effectively reduces the percentage you pay in fixed costs.  Higher sales volume leaves more $$$ for higher profits!

Variable Costs-  Variable costs fluctuate with production volume, they typically depend upon how much you sell or prepare to sell and how many orders you receive that month.

Learning to calculate and classify the variable costs of your monogramming machine business s one of the more tedious things to get a handle on when learning how to price embroidery or a monogramming job.

However, keep the task in perspective.  It is nothing more than a gathering of the costs that change with each job. For a quick rundown of the different monogramming machines out there compared to our Avancé brand, click here to learn more.

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Wholesale Embrodiery Prices

The Wholesale price is what commercial embroidery and monogramming machine businesses typically pay for blank garments, thread, backing, bobbins, etc.

Wholesaling is one of the steps in a typical supply chain, which includes manufacturers, distributors (blank garments) and retailers (most embroidery and monogramming machine services).

The apparel distributors typically have large warehouses locally where they store hundreds of thousands of garments which are blank and ready to be delivered to embroidery machine or monogramming machine shops in their local areas.

As a new startup or existing embroidery business owner, you can often show the wholesale company a copy of the embroidery machine invoice and be set up with a wholesale account.

Having purchased a commercial monogramming machine is a good indicator to Wholesalers that you mean business.  They will give you a better sense of how to price embroidery work if you know how to ask.

Embroidery Prices & Models for Machine Embroidery Jobs

There are literally dozens of ways to go about pricing machine embroidery jobs.  Pricing models help business owner’s price their embroidery work by the job, by the items, or per stitch.

However, there are a few particularly good pricing models that work best for an embroidery and monogramming business and we cover those here.

The Retail Price

Embroidery prices for retail is how most embroidery business typically gets done.  The overarching category of a typical embroidery or monogramming business is called “decorated apparel”.

Business owners in the decorated apparel industry end up purchasing a monogramming machine or commercial embroidery equipment which they use to embellish custom t-shirts or polos or dress shirts, or custom embroidered hats, etc.

Retailers and other users purchase goods from wholesalers and then sell the products at a higher price to cover costs and generate profits.

They do this by learning and using multiple pricing models.  These pricing models tell them how to price embroidery or monogramming work

Keystone Pricing embroidery jobs | Keystone Plus Pricing
This is a method of pricing embroidery jobs that is often used by embroidery & monogram shop owners.  It is supported across the board by many of the apparel distributors in the US.

Keystone pricing is a simple and easy to use retail pricing strategy where the end price is set at double the wholesale price.

Embroidery business owners and operators are typically entitled to wholesale pricing by the companies that they get their blank garments from.

Wholesale companies are not set up to deal with retail traffic and have a business model that focuses on Retail shops like those with a commercial embroidery or monogramming machine.

These wholesale companies often print their catalogs at keystone price (twice the price you pay) so that it provides a great starting point for the embroidery company when dealing with the end buyer.

The embroidery business owner can simply look at the price in the catalog and can show the pricing to the end customer.   They can know that there is already a fair profit built into the price to begin with. If new to the business, this method is a great starting point.

Many times shop owners will start with the keystone embroidery prices and add an extra fixed price to cover the cost of the specific embellishment. Other shops prefer to use a cost per thousand stitches approach.

Both are legitimate add-ons above the keystone price. Example:

  • Polo Shirt Catalog Price =$24.50 (customer sees this price as starting point)
  • Wholesale Price = $12.25 (½ catalog price – embroidery or monogramming business pays this, plus shipping)
  • Retail Pricing = $29.95 (full catalog price plus a set price for embellishment -$5.45 in this case)
  • Gross Profit = $29.95 – $12.25 or $17.70 per item.
  • Net Profit = $17.70 per item – fixed costs % and any remaining variable costs.

Another benefit to this model is that since the entire catalog has been printed with the keystone pricing it tends to eliminate further negotiation on the part of the customer.

It’s clear to them that a great effort has been made to put the catalog together, so they figure the pricing must be accurate and non-negotiable. This works to the benefit of the embroidery business owners because they have to do little to justify their price to the end user.  This all helps when trying to figure out how to price embroidery monogramming work.

However, keep in mind that this method is only a starting point.  As the wholesale cost of the item increases (say Brand Name Polos and expensive Dress Shirts) then keystone and keystone plus pricing can get quite high.

Competitors will often use other pricing models to justify bidding larger jobs at lower prices so when using this method, it’s important to keep the pricing conversation open with the customer and get feedback on how you’re pricing is holding up against the competition.

Lastly, Keep in mind, you are not actually calculating your costs with this method so be willing to negotiate if one of your other embroidery cost methods or your competition indicates the price using this method is too high.

Time and Materials Price Method |For the Embroidery and Monogramming Machine Business
Time and materials billing has long been used in the commercial construction industry.

By definition, it represents an agreement between the customer or end user and the company producing the product. In the apparel business, it’s typically used for larger custom jobs which are outside of the realm of what your business typically produces.

For instance, you might choose to use a Time and Materials approach to price out 100 high end leather jackets with multiple placements. However, Time and materials is perfectly appropriate for any job you choose.

If you don’t know your costs for a specific type of job, try a Time and Materials approach. As the shop owner, you negotiate with your customer for them to agree to pay for all the materials and cost of goods used in the making of the product.  In addition, they pay for the time it takes to produce the job.  This is all part of the “how to price embroidery monogramming work” process.

Sometimes there is an additional agreed upon mark-up for profit margin added in.  However more often than not all the fixed costs and the profit is included in the per hour price for the work.

For instance, if your fixed costs are say $1,450 per month and your shop is open for 40 hours a week.  Then that works out to about 173 hours a month which those embroidery expenses need to be divided by, or $8.38 per hour for fixed expenses.

Using this Time and Materials approach, you may decide that you intend to make $25 per hour for your work, and another $7 per hour in profit. So the fixed costs get added to your pay plus your profits to add up to in this case to $8.38+25+7 = $40.38 per hour. This figure then becomes the agreed to per hour price for your work.

It also represents the use of your equipment and resources. The customer also agrees to pay the price for materials on top of this figure. This method insures that you get the pay you deserve for the work you do.  In the case of a complex or a very large job, it makes sure you get paid enough.

It also makes sure you don’t pay too high a price for not estimating embroidery cost correctly. But it has drawbacks in that every hour the machines are not busy effectively reduces the amount of pay per hour.  So you must balance your need to get paid what your worth against keeping the machines busy.

If the machines aren’t busy, then you are paying for the fixed costs out of your pocket.  So it’s better to keep your machines moving.

It’s possible to win the battle by having the “highest price in town”, but lose the war when the bills come in at the end of the month. Making sure you have high profit work is the way to keep your hourly rate to a maximum.  But keeping your machines busy is the way to make sure you get to keep all those high profits you earn on the jobs you do.

Cost Plus Pricing for Mongramming Machine Embroidery Items
Cost plus pricing is a more complex strategy in which the selling price is determined by adding a specific profit margin or mark-up on top of the unit costs of the goods sold.

This is typically calculated for on a per job basis and it’s important to add in the fixed costs as well as the variable costs. Cost breakdowns must be deliberately kept and comparisons made at regular intervals.  This method is particularly hard for a start – up business to use because there is little data to base your embroidery prices  on.

Every business has a different set of costs and those costs get lower and lower as a business grows.  It is only after you have produced many jobs that you begin to get a good feel for what the final costs are for a specific niche of your business.  Over time, you learn how to price embroidery monogramming better as you go along.

This pricing model is excellent however for any business that has been in business for a year or more.  It’s important to go back and spot check the costs of former jobs.

Doing a post mortem analysis on larger jobs or specific jobs which you believe to be the most profitable is important. Spot checking your jobs allows you to compare the profits earned for each specific job type.  The goal is to keep doing more jobs which you enjoy and make the most profits on.

Compare this method to your other methods of embroidery prices and make sure your pricing is supporting your daily, weekly and monthly goals.  For instance, let’s say your machines are so busy each month that you don’t have time to make it to business meetings.

Or perhaps you are no longer able to pick up your kids from school because you are too busy. It may be time to raise your embroidery prices so that you can work less hours but still make the same amount each month. In general, you want to raise your prices every year or so anyway.

The more your customers learn to trust the quality of your work and service, then the more you can charge and still expect those customers to remain loyal. Customers will respect that  you know how to price embroidery work properly.

Price to Market Method | Embroidery Prices in Local Markets
It’s always recommended to know your costs and to make a serious effort to add up all the costs that go into the work you are getting paid to do.

However, in the beginning, as mentioned above, it can be a daunting task and this can often be a sticking point.  So another method which works very well is pricing to the market. There are all sorts of complicated ways to gather data and one can spend as much time as they want to examine every possible market influence on their local embroidery or monogramming business 

The people who will be paying for your work are often already educated about what they are willing to pay for embroidery prices.

Pricing to market is simply a process of asking around and shopping monogramming machine competitors in your local area and asking your potential customers what is the going rates for various jobs.

The thinking is that the other businesses in your area if successful are already charging a price that sustains their businesses. Using this method, it is assumed those embroidery prices will also sustain your business.

Keeping in mind, regarding how to price embroidery monogramming: it is sometimes an uphill battle to get an existing market to agree to pay a higher price for items or jobs they have bought for many years.   So when in doubt, there is nothing wrong with using the going rates for work in your area as a starting point. However, keep your eyes open for an opportunity to add value to your monogramming machine business as you go along.

It’s important that you only compare prices with other companies in your area that offer the same level of service and product as you do.

For instance, if you consistently provide a more expensive type of t-shirt than the normal for your area, then it will be important to make sure that you price according to the extra value that you bring to the local market.

Price per Thousand Stitches for Embroidery Work and Services
It has long been a standard in the embroidery industry to price jobs on a per thousand stitches basis.

There is an enormous amount of pressure and opinions that develop concerning the question of what the “right” price per thousand is. Industry software has even been designed to help out which will calculate literally every single meter of thread that goes into a specific job.

The theories and calculations and arguments can get quite intense.  How much fixed costs go into each stitch anyway? Are all stitches considered equal?  Does each machine produce the same results?

What about if I have a 4-head or a 6-head machine when another business only has a 1-head?  Should I then charge less?  On and on… To begin with, it is very hard if not impossible for even industry experts to be able to guess up front from a picture how many thousand stitches a particular design will end up with.

It’s not unusual to be off by 15 to 20% or more from the actual count when the job is finished.  Also some jobs cause more problems than others.

Sometimes a design that looks so simple to the customer, can represent a very large amount of time spent on an embroidery machine.   Sometimes a design can have a low stitch count, but be on a particular material so as to make it break thread 4 or 5 times more often.  All of which is hard to judge up front.

So it can leave your customer feeling like their price is always a moving target. The important point to realize is that the “per thousand stitches” method is essentially a “Time and Materials” method.

It is an attempt to break down the overall fixed costs and variable cost and reduce them all down to an amount you intend to get paid for every thousand stitches your machine produces. The bottom line is to keep this method in perspective of your other methods and use it to compare one model to another.

You may find that this method is most reliable for certain jobs (Typical polo left chest logos, etc.) but be very lacking in other jobs.  That’s why it’s important to keep your pricing flexible.

Be Flexible as you Price Embroidery Work and Services for Customers

No matter which methods are used to price your machine embroidery jobs, it’s important to be flexible. All markets change. What is popular this year, may change with next year’s styles. Customers may suddenly be interested in a rare and fascinating type of garment.

Be prepared to offer these unique items and make the extra profits that can be gained on these hot selling items.  How to price embroidery on lots of different items is key.

Keep following up with your customers and be prepared to ask them the tough questions about your embroidery prices so that you can match your business offerings to what your customers are buying.  Make sure to check out this commercial embroidery machine review.

The customers will tell you everything you need to be successful in your business if you keep listening and are willing to adapt to their needs on a year by year basis.

How to Price Embroidery Long Term Perspective

Lastly, keep pricing in perspective and make sure your embroidery costs & monogramming machine methods are working for you. Not the other way around.

Your job costing, pricing and business methods should be in alignment with your personal goals.  How you set your embroidery prices & costs work should reflect your personal goals.

Pricing embroidery work and monogramming machine services for customers gets easier with time so keep at it and make sure to call ColDesi, Inc. if there are specific questions you have about pricing. Our apparel industry experts will be happy to help.

35 Embroidery Business Ideas

35 Embroidery Business Ideas

Brainstorming ways to make money with your commercial embroidery machine.

ColDesi has sold thousands of embroidery machines to entrepreneurs launching new businesses or expanding existing ones. It seems that everyone interested in starting in the custom apparel world has at least one great idea, and sometimes more, but they also ALWAYS ask what else they can do.

You can approach your business either with an Item specialty, like embroidering on Caps or Hats, or a Vertical Market focus. A vertical market is a general industry, like athletic wear, baby clothes and accessories, etc. We gathered all of our answers together with our customers own ideas and came up with these 35 Embroidery Business Ideas to share with you. They’re broken up into Items for inspiration and Markets

20 Things To Embroider On To Make You Money.

  1. Aprons – both uniform aprons for food businesses and novelty aprons for consumers. Barbecue aprons, cook aprons, mom aprons, dad aprons
  2. Place Mats – once again, both commercial and personal. Place mats with restaurant names, kids names, baseball/football themes.
  3. Beach-wear –  Towels, wraps, umbrellas
  4. Golf related – golf towels for the golfers to carry, either personalized for them or for the Club. Golf bags, golf flags for events
  5. Baseball Caps – this one may seem obvious but it’s important not to overlook it. There are even kiosks and stores in shopping malls specializing in embroidered caps.
  6. Shirt sleeves – put employee names or company names on the sleeve instead of or in addition to left chest logos
  7. Dance wear – embroidery is great for dance performance wear because it’s soft, won’t scratch and metallic thread look great under the lights
  8. Pageant Sashes – Miss Tampa, Mrs. Universe, Mr. Tomato Festival or any sash for beauty contests is a great business
  9. Custom Bibs – name drops on bibs and other baby clothing
  10. Baby Blankets
  11. Karate Belts – martial arts clubs put names, ranks and styles on the belts and sashes they wear
  12. Name Tapes – military and other name tapes are removable name badges.
  13. Jacket Backs – Motorcycle clubs and other groups that wear jackets are a profitable market because the designs are always large
  14. Tack Twill – Letterman jackets and sweats are a easy and fast to add names and number onto
  15. Medical Scrubs – many Doctors and Nurses like to have their uniforms embroidered with their names on them.
  16. Lab Coats – just like scrubs, lab coats all look alike. Lab techs, scientists and other professionals want them personalized.
  17. Running Shorts – especially for competitive teams like in High School Athletics, College, etc, where running shorts are the only uniform
  18. Pillows – boutique hotels and resorts are great prospects for having customized embroidery on pillows and bedding as well as towels
  19. Patches – embroidered or iron on patches are simple to make and can be profitable if you offer low volume. Colman and Company has an embroidered patch kit that makes it easy.
  20. Gym Bags – anytime a company sells gym bags (tennis bags, etc) or a gives them away as a promotion, they may want the company logo or persons name added.

15 Vertical Market Ideas For Commercial Embroiderers.

  1. Medical – scrubs and lab coats
  2. Uniforms – direct embroidery and/or patches, janitorial, auto, etc.
  3. Golf Specialty Items – towels, bags, flags, club sleeves
  4. Schools – uniforms, sports uniforms, shorts, spirit wear, letterman jackets, cheer
  5. Pageant Market – sashes, event décor, booster wear
  6. Wedding – bridal party sashes, gift items, ring pillows, chair sashes, table décor
  7. Food Service – uniforms, aprons, caps, chef hats, iron on patches
  8. Resort – custom resort wear; robes, towels, polo shirts, beach towels, uniforms
  9. Tourism – tour guide uniforms, caps, location-based towels, blankets, shirts
  10. Infant wear – personalized blankets, bibs, socks, diaper bags, stroller flags
  11. Pet Items – pet blankets, beds, doggie shirts, breed tees for owners
  12. Athletics – local League caps, jerseys for baseball, hockey, kickball, adults and kids
  13. Corporate – company shirts, day planners, caps, bags, trade show give-a-ways
  14. Fashion Accessories – wrist bands, hair clips, bows, belts, handbags
  15. Equine – horse blankets, saddles, riding clothing and accessories

Embroidery is a versatile and potentially very profitable business to get into, and all you really need is the right idea, the right commercial embroidery machine and the right strategy to market your abilities. We hope this brainstorming session helps get you started in the right direction!

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