Hey friend,
For a signification portion of last year, I focussed on fixing my pricing. I was trying to figure out how to price jobs the right way. And I realized pretty quickly that I'd been doing it completely wrong.
The Old Way (That Wasn't Working)
Like most printers, I priced based on costs. I'd calculate what the shirts cost me, what the ink or transfers cost, how long it would take, add a margin, and that was my price. It felt logical. It felt safe.
And it kept me stuck.
Because when you price based on costs, you're just reacting to the materials and the time. You're not thinking about what you're actually delivering to the customer or what it's worth to them. And when a competitor comes in cheaper, you have no defense. You either drop your price to match or you lose the job.
I read an article recently from the Apparelist about why so many print shops are "busy but broke," and it nailed something I'd been experiencing but couldn't articulate: Most shops are blending fixed costs and job costs together, which makes profit a mirage.
That was me. I was trying to make every job cover a portion of my overhead—my utilities, my ink costs, my monthly expenses. But those costs are fixed. They don't change much from job-to-job. So I was distorting what jobs actually cost and making pricing way more complicated than it needed to be.
What I Changed: Contribution Margin
Instead of trying to make every job fully profitable on its own, I started tracking contribution margin. Here's how it works: When I sell a job, I subtract the variable costs—the stuff that only exists because of that job. The blanks. The DTF transfers. What's left over is the contribution—the dollars that job is giving me to help cover my fixed costs (supplies, equipment, insurance, etc.). As Nick Gawreluk from Print Profit explains it: "How tall is my mountain? My fixed costs. I want to get to profit land. And each job is giving me fuel to climb that mountain."
That completely changed how I think about pricing. I'm not trying to load every job with a chunk of overhead. I'm asking: How much is this job contributing to covering my fixed costs? Once my total contribution dollars for the month cover my fixed costs, everything after that is profit. This also means I'm not freaking out over every individual job. Some jobs contribute more than others, and that's fine. As long as my total monthly contribution is healthy, I'm good.
The Shift to Value-Based Pricing
But the bigger shift was moving from cost-based pricing to value-based pricing. Instead of asking "What does this cost me?" Instead of just calculating costs and adding margin, I started thinking about:
What does this customer actually value?
How can I make this easier for them?
What would make saying yes to my quote a no-brainer?
Sometimes that's an online ordering portal. Sometimes it's faster turnaround. Sometimes it's just clearer communication and fewer headaches. But the point is: I'm not selling shirts. I'm selling a solution to their problem.
How This Changed My Business
Tracking contribution margin and pricing based on value has been one of the biggest impacts on my business. It's changed which jobs I take. It's changed how I talk to customers. And it's made the business way healthier overall. I'm not reacting to competitors' prices anymore. I'm not stressed about whether every single job is "profitable enough." And I'm not stuck in the trap of being busy but broke. I know my fixed costs. I know how much contribution I need each month to cover them. And I know that if I focus on delivering real value to customers, I can charge accordingly.
What I'm Still Learning
I'm not saying I have this all figured out. I'm still refining how I price. I'm still learning what customers value most. I'm still tracking and adjusting every month. But the shift from cost-based pricing to value-based pricing—and understanding contribution margin instead of trying to force every job to carry overhead—has completely changed how I run my business. If you're pricing based on what things cost you and hoping customers will pay it, I'd encourage you to flip the question: What are you actually delivering that's valuable to them? Because that's what you're really selling.
Talk soon,
Jesse