May '14

For the Business of Apparel Decorating

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20 1 4 M ay Printwear | 89 more prints actually costs less per garment (see detailed breakdown at right). Performance on the Garment Graphic durability is very important to the end user. The big retail brands have estab- lished graphic durability tests, crock tests, and RSL test requirements. If the ink fails here, it can be very costly as it could result in total rejection of an order, or worse, loss of a program. Consider how the ink per- forms in the screen as a matter of cost savings. Pro- duction slow- downs are a hidden cost of inferior inks. True Per-Piece Cost A Look At Cost sAvings W hen a bill goes out from a screen printer, the price is usually charged by the piece, so it is fair to say that the cost per piece has more impact on the bottom line than the price per bucket. The math on the cost per piece isn't as easy as most think. ask an average person to give you cost on a shirt, and they immediately surmise that the shirt and the ink make up most of that number, but that is not true. Here is a breakdown of cost components for an example job, as it affects per-piece cost: • Shirt Cost: $1.85 (cost is not affected by production speed) • Ink Cost: $0.12 (cost is not affected by production speed) • Screen Cost: $40 (cost is affected by amount of shirts on the job, not by production speed) • Overhead Labor, Supplies and Building (including utilities): This is affected by pro- duction speeds because the overhead numbers are fixed on the time, rather than on the piece. Once you establish an hourly overhead cost, you can set a production goal for a break-even dollar amount. Surpassing that number turns the math around and starts driving the average cost down, and positive cash up. Further, the more shirts that are produced per hour, the more that fixed number is di- vided, thus, lowering the overhead cost per shirt. achieving this is the golden goose of savings. In contrast, work-stoppage or slowdown is the added "hidden cost" of the ink. HOUrLY OVerHeaD COSt, FOUr-MaCHine SHOP exPenSe HourLy Cost HourLy Cost Per MACHine Labor $314 $78.50 Utilities $19.70 $4.93 Building & Supplies $120 $30 Sales Salary & Commission $70.67 $17.67 total Overhead $524.37 $131.09 This chart is an example of a simple snapshot of a small shop's overhead cost. Once the numbers are tallied, they are divided by work hours to get an overall hourly cost. That cost is divided by working machines (the above sample is for four machines). The final number is the hourly break-even number. The more shirts that are produced per hour, the more that fixed number is divided, thus, lowering the overhead cost per shirt. OVerHeaD COSt COMPariSOn Per PieCe nUMber OF PieCeS OVerHeaD COSt Per PieCe 300 $0.44 400 $0.33 500 $0.26 600 $0.22 PW_MAY14.indd 89 4/17/14 11:24 AM

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