# Factoring in your advertising budget



## campfire (Oct 8, 2007)

Hey, everyone. I was just wondering what the typical mark-up is for retail sales of shirts? That is, does it ever make sense to NOT shoot for a 50% mark-up?

If it costs you $14.00 to print a shirt (geez, Organic Cotton and earth-friendly inks really are through the freakin' roof!), would you even consider selling a shirt for less than $28.00?

More importantly, do you factor in your advertising budget (10% - 15%) into the retail price and try to recoup that from the retail price .... or do you take the advertising budget out of your profits?

Thanks!


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## Peace2TheRest (Feb 6, 2008)

That is a good question.....I have been meaning to ask that as well

Some of my shirts are enviro shirts so they cost more to make....is it ok to charge more for them then any of the other shirts on my site?

I definitely thnik you should take total time, effort, money spent, and double it when setting your price

Also, when you are doing organic cotton printing and bamboo, and your production is like 10-18 how do you go about selling wholesale???

Will the average environmentalist understand about all of this, and accept the high price??


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## campfire (Oct 8, 2007)

Yeah, we're in the same boat.

Companies like Threadless appela to the lowest common denominator. Their shirts probably cost them $1.50 each and they even make jokes on their site about using"good ol' plastisol ink!" 

Meanwhile, morons like us are spending ungodly amounts of money on organic cotton, hemp and bamboo shirts and unfortunately we have no choice but to sell them for more. 

Perosnally, I don't like the idea of charging more for soemthing just becuas eit may appela to a higher end crowd. But I can not in a million years EVER sell a shirt for $5. or $10 or even $15. It can't be done. 

However, I might be able to lower my price a few bucks if I decide to absorb the cost of paying my designers and for marketing so the customer isn't paying for it --- I am. 

That being siad, is there really anyone in the world who would NOT buy a t-shirt because of $1. or $2.??? Probably not. $10? Yes $20 yes. But not $1 or $2.

What I am trying to do with my company is offer designs that appeal to everyone, and the fact that it is on Organic Cotton, etc. is just a bonus. I certainly don't want to charge more because of it.

Anyway, I'm off in another direction. The main question is, what side of the fense does marketing expenses land? Let the customer absorb it or shall we absorb it? There probably is no correct answer, but I was just wondering how everyone makes that decision.

As far as I am concerned, I WILL spend at least 10% of retail on marketing. Usually a lot more. My background is marketing. As far as I am concerned, that is money that MUST be spent. I don't miss it. It is not mind. it belongs to the Marketing Monster.


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## Peace2TheRest (Feb 6, 2008)

I woud set a reasonable yearly budget and then divide it up between all of your shirts. Then add that number on to the cost of the shirt. 
That way you are covered for it, but it isnt astronomically high or will affect the buyer from purchasing.


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## uberchupacabre (Jun 5, 2007)

$14.00 is a lot to print a shirt. American Apparel is almost $4 each and that's usually on the higher end for shirts. Screen printers usually charge about $3 a shirt if you do 100 shirts so I can't see how your paying $14 each.


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## Peace2TheRest (Feb 6, 2008)

Yeah, but they are using organic cotton tees which cost more, not a lot more if you went with like an anvil...think its like $4.39 or something like that......
Don't know bout the inks, but it seems like you are getting hosed on your end for $14


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## campfire (Oct 8, 2007)

OK, let me see if I can clarify. 

I can get really nice and durable organic cotton shirts for $4.75 each. But colored with natural dyes is an additional $2.00. So I pay $6.75 per colored shirt.

Set up fee is only $15.00, so if I print 100 shirts (for example) the set up fee is .16 per shirt. 

First color = $1.20
Second color = .75
Third color = .75
Fourth color = .75

That's $3.61 + $6.75 = $10.36

Average credit card fee = $1.17
Misc. (overhead, artist, etc) $1.00
Misc. (marketing & Adv) $3.00

That's $5.17

Yes, I can have fun and fool myself into thinking the above expenses do not exist and say, "Oh, I'll take the about out of my profit" but that's how people go out of business.

And to be perfectly honest, $1.00 for overhead, etc. isn't enough. What about the future? Employees? Sales rep? My health insurance? What about s&h if the printer isn't local? What about buying new equipment? It should be $2.00 or $3.00. 

So, that's how a t-shirt can cost $17.00 before selling it. 

So, that's why Organic Shirts need to sell for $34.00

Yes, it is true that I can factor in the FACT that not all my shirts are printed with 4 colors or on color shirts, but the ONLY way to start and run a business is to look at the WORST CASE scenerio along with the BEST case scenerio.

Now, granted I personally HATE when I see organic cotton shirts selling for more than $34.00 I just spelled out the actual costs. Yes, a lot of people have a lot more overhead. But I also think there are a lot of people out there jumping on the green band wagon who think bored rich housewives will spend $45 $85 on a t-shirt (and many do) because it is "healthy" but that is just crazy. I believe in being fair. 

If I can lower my costs, I WILL lower my prices.

As a business owner, I'd rather have COSTCO'S turnover than MACY'S. Though, as a customer (and biz owner), quality is always at the top of the list.

If my #s are off and anyone has any ideas on where I went off track, kindly let me know. I am open to ideas.

For the record, I DID have an opportunity in the past to buy white shirts for $1.25 and spend another $2 - $3 to print them, but I just didn't have it in me. Why? Because one of the first rules of marketing is to NEVER try to compete on price. There will always be some huge or renegade company that WILL be able to outbid you or sell for less. I did not want that anxiety. Threadless can sell shirts for $5.00 forever and still make money.

It seems to me, doing something unique is better for my mental health. If someone doesn't buy from me, it's because the designs suck --- or my marketing sucks. I can live with that because I can change that. But how do you lose money just to gain customers? I don't want to play that game. Everyone else can play in that sandbox.

Oh, and the above #s are for organic cotton only. Want to be sick? I'll let ya know the #s for hemp and bamboo shirts!


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## Fresh Mode (Apr 9, 2008)

I wouldn't worry too much about equations per shirt based on your whole marketing budget. I would focus more on seeing what strategies give you the best ROI and exploit them.


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