The Hidden Cost of Saying No to Short Run Screen Print Jobs
In screen printing, there are many pitfalls that can affect your bottom line. Some are obvious like not generating enough sales or having negative cash flow. Others are more subtle like employees taking advantage of overtime or not understanding the true cost of goods sold. Still others, can go totally unseen until it’s too late. This article focuses on one of those…..the risk of saying no to short run jobs.
You’re probably thinking “what exactly is the risk of saying no?” It’s actually pretty simple. Customers have a variety of garment needs. Some are large and some are small. We all love getting the larger orders with good profit that keep our presses running non-stop, but it’s those small shirt orders that create opportunities for your competitors.
Think about it. Did you get big garment orders right away from your best customers? For most screen printers the answer is no. Most customers will try you out on something smaller until they get to know you and your quality of work? It’s all about building trust. If you say no to those small orders, you are handing your competition an opportunity to prove themselves and build that trust. If they, in turn, service those small orders well, you are now at risk of losing your larger run garment jobs. You may be thinking, “As long as I continue to do a good job, I don’t have to worry”. This may very well be true, but is it worth the risk? Let’s look at an example to illustrate the point.
Saying no to short run jobs is dangerous to your bottom line.
Customer ABC orders 500 t-shirts every month printed 2 color on one side. You sell them for $5.50 each with a cost of $3.50 including the shirt, labor & ink. You make $1,000 per order or $52,000 for the year. If you keep this customer for 5 years, their lifetime profit value is $260,000. Now that is a customer we all want! This same customer averages 5 small orders a month ranging from 6 to 12 shirts, which you elect NOT to print. One of your local competitors invests some time and is willing to make very little on these small jobs for the chance at the larger, more profitable jobs. Let’s say they sell those for $12 each and make $4 net per shirt. They place 5 orders for an average of 9 shirts. At $4 profit per shirt they will make a whopping $180. If each job takes 2 hours, they will make an impressive $18 per hour. They certainly aren’t going to get rich doing this, but they are creating the opportunity to swoop in and steal your larger orders if you ever have a problem with the customer’s order. Now if you’re perfect and never have an issue, then quit reading right here. This article doesn’t apply to you. But if you’re honest with yourself, you know you’ll eventually make a mistake. When you do, won’t it feel good to know that your core customer, worth over a quarter of a million dollars in profit, doesn’t have a second screen printer just waiting to pounce on your mishap?
Say Yes to Short Run and Protect Your Larger Orders
The moral of this story is simple….protect your large screen print orders by saying yes to the smaller garment orders. The risk is too great not to. Even if you don’t make a dime on the short run t-shirt orders, it’s still worth it because you are eliminating the opportunity for competitors to steal the much larger orders. And no we’re not saying you need to go invest in new direct to garment printing equipment. Simply find a partner who can efficiently handle these orders for you and you both win.