Guaranteed Profits for Screen Printing - Part 4

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Gathering Timeframes for Screen Printing

Large corporations usually establish separate budgets for each department. They do this because each department performs a different task, has different needs, and provides different products or services to the company. In a way, each department is like a separate company producing a different product. Your screen shop has at least three distinct departments, probably more. Every shop has a minimum need of an art department, a printing department, and a screen maintenance department. Even if the same person performs all these functions, we need to consider these departments as separate because of the radically different functions each department performs.

Pricing art is the simplest, but least accurate. Simply put, when you charge for art, you just try to think about how long it will take to create what the customer wants, and provide a price based upon anticipated time and materials that might be used. Most printers will provide a small amount of art department time gratis with each order, usually incorporating the costs into a screen charge. When you think about it, a screen charge isn't really a charge for preparing a screen. Today's printer plans to reclaim the physical screen after the job, and make a new one if the customer re-orders. But the screen charge has continued to exist since the days when printers kept a warehouse of customer designs on screens. Today it's really a charge for converting the art to a medium that you can use to create a screen. If the customer's art is more involved than is provided free of charge, then an art charge is usually added to the order.

Screen maintenance is the next department. It's task is to manufacture or "cycle' screens for the jobs your shop prints. The cycle each screen goes through during a job looks pretty much like this: The screen is coated with emulsion, exposed, patched, mounted in the press, removed from the press, and reclaimed. This happens with every screen for every job. We can create a single "selling price" for each screen this department produces, and we will call it a "Screen Maintenance" charge. (not to be confused with the "Screen Charge" above!) Our task is to figure out how much labor-based time is expended each time a screen goes through it's "cycle."
 

The best part about collecting the timeframes for screen maintenance is that you probably won't have to collect this information more than once, unless something about your shop changes. By saving this information, you can quickly turn it into a new screen maintenance charge anytime your dollar-per-hour rate changes.

Collecting timeframes for the press department is easy. All your figures can be gathered right from your press logs. You've probably already figured out that you'll need separate timeframes for printing on different types of garments. For example, light-colored garments print much faster than dark colored garments, and jackets seem to take forever to print. If you print caps, you know that printing them is not the same as printing a garment that you can lay on a platen. While you could create numerous timeframe categories, such as timeframes for light-colored sweatshirts as well  light-colored tees, I've found that the difference in printing speed between one light-colored substrate and another is minimal enough that I average them into a single category of "light colored" goods. Realistically, if you don't print caps or jackets, you probably only need to create two timeframe categories - light-colored goods and dark-colored goods. If you print jackets, you'll need a "jackets" category, and if you print caps, you'll want light-cap and dark-cap categories.

Each timeframe consists of just two numbers - the time per shirt it takes to print a single color on a specific type of goods, and the additional time required to add a color. We don't need timeframes for 3-colors, 4-colors, etc. The logic is simple - When you print a single color on a shirt, you place the shirt on the platen, smooth it out, lower the screen, flood, print, raise the screen, and remove the shirt to place it on the dryer belt. What happens when you print a second or third color? - You still place the shirt on the platen, smooth it out, lower the screen, flood, print, and raise the screen. But to add a color you now move another screen into position, lower it, flood, print and raise the screen. You repeat those exact same additional actions for each additional color, then remove the shirt and place it on the dryer belt. Logically the amount of additional time added per color should be alike. It's also important to mention that it does take an automatic press more time to print a two color job than a one-color job. Even though all heads print at once, adding a second screen adds more stoppages during printing. You need to re-ink an additional screen, more thoroughly inspect prints, pick lint spots, etc. Despite the sales pitch, an automatic press cannot print eight colors as fast as one.

Collecting timeframe information for your separate categories only takes a few minutes if you have a press log with a number of jobs recorded.

1. Choose a category, such as light colored shirts, and locate a few jobs in the press log where you printed a single color on the garment.
    
2. The press log helps you figure the total production time. (exclusive of setup and teardown) If you divide the time it took to perform the printing by the number of shirts printed, you get a number which represents the number of minutes per shirt. For example, if you had an order for 100 light color shirts with a single color print that took 60 minutes to print, you discover that it took .6 of a minute to print each shirt. You'll want to do this for several single-color jobs on light garments, and average the time per shirt.

Determining your time per additional color is nearly as easy.

1. Find a number of two-color jobs printed on the same type of garments in your log, and repeat the process above to determine the time per shirt. Average several jobs.
    
2. Subtract the single color time from the two-color time to arrive at a time per additional color.

Once you do this for each category you want to use in pricing goods, you'll have all the information you need to create prices for the garments you sell.

Like the figures you generated for the screen maintenance department, these figures only need to be generated once, and you can use them for quite some time. You should review them occasionally, and change them whenever things change in your shop, but so far, everything we have done laid our groundwork for pricing and does not need to be performed each time we quote an order. Now that we have all this information, quoting individual jobs can be easy and accurate.

It might seem like a simple matter to divide the Total Printing Charge by the number of shirts in the order, but if you did that, you would probably fall short of your profit goal for the year. Why? Because there are two concepts that don't occur in the theoretical world that are bound to show up in the real world:

• Spoilage - or the rejection of defective pieces - is a natural and expected part of any manufacturing process. People are human, errors happen, and masterpieces become shop rags. If you don't account for spoilage in your pricing, then the cost of each rejected garment comes out of your pocket. You will want to keep track of the number of garments rejected in your shop to figure out what percentage of garments don't survive the printing process. If you discover that you reject two garments out of every one-hundred printed, then you need your pricing system to charge your customer for one-hundred-two garments for every one-hundred ordered.
• Salesperson's commissions - If your computations tell you that you need to charge a certain price for a garment, and a salesperson sells the garment, demanding a twenty-percent commission, that commission figure can only come out of your profits. You may need to account for this in your pricing - even if you don't have salespeople! (more on that in a moment) If a salesperson demands a twenty-percent commission, you can't just add twenty-percent of the selling price to the order. Once you deduct that percentage from the final total, you'll discover that you'll have something less than your original price left over for yourself. To arrive at a selling price where a salesperson can take his commission and leave you with your original price, you need to divide by the reciprocal of the commission rate. A reciprocal is the commission figure subtracted from the number one-hundred, so if the salesperson wants twenty-percent of the final selling price, you need to divide your price figure by eighty-percent.

A Few Final Thoughts

• Charges such as art charges or screen charges (for new designs) were not included above, they are added in when the order is compiled as "extra" charges.
• Because the costs of setting up the press are incorporated into this system, and this only happens once per job, you will discover that the cost per garment decreases naturally as quantities increase. This fulfills the Logical Quantity Discounts objective mentioned at the beginning of the article because the selling prices decrease due to genuine efficiencies gained. Because prices are based upon real-world costs and realistic profit goals, the Equity objective is satisfied too.
• Many printers want to offer both a "Wholesale" and a "Retail" price list. Adding a salesperson's commission to your selling prices allows you to offer your commissioned price to anybody you meet, while offering a "wholesale" price (without commission added) to certain individuals. In this manner, "wholesale" orders will generate prices that will cover your costs and profit goal as needed, while "retail" orders will give you a little "extra" leftover profit. Most managers find that there are many occurrences throughout a year that will require use of that extra windfall.
• Most printers hate to see customers supply their own garments. Emotionally, this thought is tough to overcome, but if you are using this system and a customer supplies goods comparable to the ones you would supply, they are now doing you a favor by paying you the same amount of money to print, and saving you the work of procurement.
• Most people who adopt a corrected pricing method discover that their old system was overcharging on orders of more expensive garments, while charging prices for less expensive garments that did not nearly cover the cost of producing them. If the need to increase prices on low-cost goods bothers you, consider:
  • When differentiating yourself from competition, price should be your last resort. Good printers differentiate themselves using methods other than price.
  • If your competitor secures a job by offering a price that is too low for you to make money, is that such a bad thing? Assuming his costs are similar to yours, how long can he keep doing that?
• This pricing system shows the lowest price you can charge for an order and maintain a specific profit goal. On some occasions, the market dictates that you charge more.