The Ultimate Guide to Screen Printing Cost Calculation and Profit Margins
Introduction
Running a profitable screen printing shop requires more than just great printing skills—it demands sharp business acumen. Many shops struggle with pricing, often overlooking hidden costs that silently erode their profits. This guide will walk you through a clear, step-by-step process to accurately calculate your costs and establish pricing that ensures healthy, sustainable profit margins.
Part 1: Breaking Down Your Screen Printing Costs
To price effectively, you must first understand all your costs, which fall into two categories: Direct Job Costs and Indirect Overhead Costs.
A) Direct Job Costs (Variable Costs)
These are expenses that fluctuate with every order you produce.
Materials (Ink & Garments): The cost of blank apparel (t-shirts, hoodies) and all consumables (ink, emulsion, screens, tape).
Labor: The direct wages paid to employees for the hours spent on a specific job (printing, reclaiming screens, drying).
Artwork & Setup: This includes creating separations, burning screens, and setup time on the press. Even if you do this in-house, you must assign a cost to this time.
B) Indirect Overhead Costs (Fixed Costs)
These are your ongoing business expenses, regardless of how many shirts you print.
Rent & Utilities: Cost of your workshop, electricity, water, and internet.
Salaries: Fixed salaries for yourself and administrative staff.
Equipment: Leases, loan payments, and maintenance for printers, exposure units, and dryers.
Marketing & Software: Website, advertising, and management software subscriptions.
Miscellaneous: Insurance, office supplies, and other recurring fees.
Part 2: A Step-by-Step Cost Calculation (with Real-World Numbers)
Let’s calculate the cost for a sample job: 50 cotton t-shirts, a one-color front print.
Step 1: Calculate Material Costs
Blank T-shirt Cost: $3.50/shirt × 50 shirts = $175.00
Ink & Consumables: ~$0.50/shirt × 50 shirts = $25.00
Total Material Cost: $200.00
Step 2: Calculate Labor Cost
Setup & Printing Time: 1.5 hours
Labor Rate (including a burden for taxes/benefits): $25/hour
Total Labor Cost: 1.5 hrs × $25/hr = $37.50
Step 3: Calculate Artwork & Setup Fee
Charge a flat fee for screen preparation to cover your time and materials. For a one-color design: $25.00
Step 4: Allocate Overhead Costs
Estimate your monthly overhead (e.g., $2,000/month). Determine a cost per hour.
Assuming 160 productive hours/month: $2,000 / 160 = $12.50/hour.
For this 1.5-hour job: 1.5 hrs × $12.50/hr = $18.75
Step 5: Total Job Cost Summary
Materials: $200.00
Labor: $37.50
Artwork & Setup: $25.00
Overhead: $18.75
Total Cost for 50 Shirts: $281.25
Cost Per Shirt: $281.25 / 50 = $5.63
Part 3: Setting Your Price and Profit Margin
Now, the crucial step: applying a markup to generate profit.
Cost-Per-Shirt: $5.63
Example 1 (Keystone Markup): 100% Markup = $5.63 × 2 = $11.26/shirt
Your Price to Customer: $11.26 × 50 shirts = $563.00
Your Total Profit: $563.00 (Revenue) – $281.25 (Cost) = $281.75
This represents a 50% Profit Margin ($281.75 / $563.00 = 0.50). For more complex jobs, you should aim for a higher margin (e.g., 60-70%) to account for additional risk and labor.
Part 4: Common Pricing Mistakes to Avoid
Ignoring Overhead: Never price based only on material costs.
Undervaluing Your Time: Your expertise in setup and printing has real value—charge for it.
Inconsistent Pricing: Use a standardized formula for every quote to ensure fairness and profitability.
Forgetting the “What-Ifs”: Factor in costs for misprints, reprints, and customer revisions.
Conclusion
Mastering cost calculation is not a one-time task but a fundamental business practice. By diligently tracking every expense and using a structured pricing model, you transform your screen shop from a creative hobby into a thriving, profitable enterprise. Start applying these principles to your next quote and watch your business health transform.
