Embroidery Pricing: Where the Money Actually Goes
Most embroidery shops undercharge because they get the digitizing fee, the labour rate, or the cap surcharge wrong. Here's how to price the work properly, with real numbers from real shops.
James Bateman
· 8 min read
A customer brings you 24 polos. Left-chest logo, 8,000 stitches, mid-range blank. You quote $18.50 a piece. The job goes through the shop fine. You invoice, you get paid, you move on.
Six months later you sit down with a bookkeeper and find out you made $1.12 a polo.
Most embroidery shops have a version of this story. The numbers move around but the shape is the same: pricing that felt fine on the spec sheet, that the customer was happy to pay, that absolutely did not cover what it actually cost to make the order.
This is a post about the gap. Where it comes from, what it usually looks like in dollars, and the three pricing decisions that close it.
#You're not pricing one thing, you're pricing four
The temptation, when a customer asks "how much for 24 polos with my logo," is to give a per-piece number. It's clean. They get it. You get it. Everyone moves on.
The trouble with a per-piece number is it has to absorb four very different cost categories, and they don't scale the same way. Some are fixed per order. Some are fixed per piece. One is fixed per logo, forever. If you build them all into the per-piece number without thinking about which is which, you'll undercharge on small orders and overcharge on big ones.
Here's the breakdown for that 24-polo job:
Materials per piece
| Item | Cost |
|---|---|
| Polo blank (mid-range) | $9.50 |
| Thread (needle + bobbin, 8,000 stitches) | $0.12 |
| Tear-away backing (hooped area) | $0.15 |
| Topping (water-soluble, for textured fabrics) | $0.04 |
| Material total | $9.81 |
The blank is 97% of your material cost. Thread is genuinely cheap, a 5,000m cone of Madeira or Isacord runs $8-9 and covers around 125 left-chest designs. Backing adds up faster than people think because you cut a hooped area, not a design footprint, but it's still under twenty cents a piece.
The interesting thing about this category is that it's the only one that scales linearly. Two polos cost twice as much in materials as one. Twenty-four cost twenty-four times as much. So this is the easy bit. You add it up and you charge for it.
The fixed cost per order
This is where shops bleed.
| Item | Cost |
|---|---|
| Hooping and setup time (15 min × $30/hr) | $7.50 |
| Design review and file prep (10 min) | $5.00 |
| Fixed total | $12.50 |
These costs don't change whether the order is twelve polos or two hundred. Spread across twenty-four pieces, that's about $0.52 a polo. Spread across six pieces, it's $2.08. If you're not pricing in tiers, you're either subsidising small orders out of large ones or pricing yourself out of large ones because you set your rate to cover small ones.
The fixed cost per logo
The biggest and most-missed line item.
If the customer is bringing you a logo for the first time, it has to be digitized, converted from artwork into a stitch file your machine can read. There's no shortcut. Auto-digitizing exists but the output is reliably bad on anything more complex than a typed word.
A standard left-chest logo digitized properly runs $25-40 outsourced (US-based digitizers; overseas can be cheaper but quality varies, and you're often the one paying to fix bad files). Complex designs with fine detail or gradient work hit $50-65. If you digitize in-house, the time still has a cost.
Erich Campbell, who runs digitizing classes for the industry, makes a point in his article on digitizing pricing that's worth taking seriously: there's no fair way to charge digitizing as part of a per-piece price. Either you bake enough margin in to cover it on small orders (and you're overcharging on large ones), or you bake in less and you lose money on the small jobs that absorb most of the time.
The cleaner answer is to charge digitizing separately. Every time. As a line item on the quote.
If you want to soften it for repeat customers, the file already exists on the second job. Tell them: "$35 digitizing on this order, and never again on any reorder of this design." Most customers respect that. Some of the bigger embroidery wholesalers (Corporate Casuals, others) make this their headline pricing principle, "set-up is one fee, one time, per logo."
What it costs you to absorb digitizing on the 24-polo example:
The per-piece digitizing cost on a six-polo order is more than 50% of the labour cost. If your per-piece price doesn't move when the quantity drops, you're losing money on small orders the moment the customer's logo isn't already in your file system.
The labour per piece
This is where the real money goes, and where most shops have the worst data.
A single-head embroidery machine running at production speed (600-800 stitches per minute) takes 10-13 minutes of pure machine time to run an 8,000-stitch left-chest design. Add hooping and handling, traditional screw hoops add 3-5 minutes per piece, magnetic hoops cut that to about a minute and a half if your operator's quick, and your effective throughput is 4-5 polos an hour on a single head.
At a loaded labour rate of $25-30/hour (which includes payroll taxes, the operator's share of utilities, and the slice of overhead that needs to come back as billable time), you're looking at:
Labour alone, on a 24-polo single-head order, is $5-10 per piece. That's more than your materials cost, blank excluded. Most shops underestimate this number by half because they price off their wage rate, not their loaded rate.
Multi-head changes the economics entirely. A four-head machine embroiders four polos simultaneously, same stitch time, four times the throughput. Per-piece labour drops to $1.50-2.50. This is why shops that outgrow a single head see margins jump on identical pricing, and why one of the better arguments for the equipment upgrade is just "do the math on labour cost per piece."
Caps are a separate problem. They run at roughly half speed because of the curved hoop and the smaller embroidery field, an 8,000-stitch cap takes 20-26 minutes of machine time, essentially double a flat polo. If you're charging the same per-piece price for caps and flats, you're making half the hourly rate on caps. Either price them on a separate sheet or add a flat surcharge ($2-4 per piece is typical).
#The full picture on the 24-polo order
| Category | Per piece |
|---|---|
| Materials | $9.81 |
| Fixed costs (÷ 24) | $0.52 |
| Digitizing (÷ 24) | $1.67 |
| Labour (single-head) | $5.00-10.00 |
| Total cost | $17.00-22.00 |
At $18.50 a piece, you're either making $1.50 or losing $3.50, depending on which end of the labour range your shop actually runs at. That's not a margin problem. It's a "you don't yet know what your shop costs" problem.
The good news is the fix is straightforward. You time three jobs. You write down what each one actually used in materials, in setup, in labour minutes. You divide. You compare to what you charged. Within a week of doing this seriously you'll know, to within fifty cents a piece, what every job in your shop actually costs.
#Three pricing mistakes that compound
1. Absorbing the digitizing fee
Forum threads on Signs101 and T-Shirt Forums are full of variations of "we include free digitizing on orders over X." It always sounds like good marketing in the room. In practice, you're giving away $25-65 on every new-logo order and hoping the per-piece margin makes up for it on enough of the orders that it doesn't matter.
It doesn't make up for it on small orders. It barely makes up for it on medium ones. Charge digitizing separately. Every time. The customer is paying for the artwork setup, just like they would at a screen printer or a sign shop. They'll understand it.
2. Flat per-piece pricing across all quantities
If you're charging $7.50 per piece whether the order is 12 or 200, you're subsidising the small ones with the big ones. The fixed costs don't change but the per-piece share of them does, dramatically.
Use quantity breaks. The structure is the same as screen printing:
| Quantity | Per-piece markup |
|---|---|
| 1-11 | Base + 25% |
| 12-24 | Base price |
| 25-49 | Base − 8% |
| 50-99 | Base − 15% |
| 100+ | Base − 20% |
These break-points aren't sacred. Set yours based on what your shop actually does. The principle is what matters: small orders cost more per piece because the fixed costs spread thin.
3. Pricing caps the same as flats
Caps run at half speed. If you charge the same per-piece price for both, you're making half the hourly rate on caps. Price them separately, or charge a $2-4 cap surcharge. Don't bury this in your standard rate.
#What this looks like in practice
If you have a hundred jobs in your shop's history and an afternoon, you can build the version of this for your specific operation in about three hours. It's not a sophisticated exercise. It's just an honest one.
What you're looking for, when you do it, is the gap between what you assumed each cost category was and what the data says it actually was. The labour gap will be the biggest. It's almost always the biggest.
Shops that move from flat-rate pricing to genuine cost-based pricing typically find an extra $1.50-3.00 per piece in margin they were leaving on the table. On 500 pieces a month, that's $750-1,500 a month back into the business. Not from selling more. From pricing the work the customer was already paying you to do.
Originally written August 2019. Prices reflect that period; principles are unchanged.