Data Source and Methodology

The calculations provided by this tool are based on a standard Job Costing methodology commonly used in the custom apparel and manufacturing industries. This model aggregates direct costs (materials, goods), direct labor (setup, run time), and applies a user-defined profit margin to determine a final retail price.

All calculations are based strictly on the formulas and data provided by this methodology.

The Formulas Explained

Here is the exact math used to calculate your pricing.

1. Machine Run Time (in minutes)

This is the time the embroidery machine is actively stitching. We add a 20% buffer to account for thread breaks, bobbin changes, and speed variations, which is a common industry practice.

$$ \text{Machine Time} = \left( \frac{\text{Stitch Count}}{\text{Stitches Per Minute}} \right) \times 1.20 $$

2. Total Labor Cost

This calculates the cost of human labor for both preparation (hooping, setup) and monitoring the machine. The total time in minutes is converted to hours and multiplied by your labor rate.

$$ \text{Total Labor Cost} = \left( \frac{\text{Setup Time (min)} + \text{Machine Time (min)}}{60} \right) \times \text{Hourly Labor Rate} $$

3. Total Material Cost

This combines the cost of the blank item (COGS) with the cost of consumables (thread, stabilizer), which is calculated based on the stitch count.

$$ \text{Material Cost} = \text{COGS} + \left( \frac{\text{Stitch Count}}{1000} \times \text{Cost per 1k Stitches} \right) $$

4. Total Cost and Suggested Price

The total cost is the sum of your labor and material costs. The suggested price applies your desired profit margin to that total cost.

$$ \text{Total Cost} = \text{Total Labor Cost} + \text{Total Material Cost} $$
$$ \text{Suggested Price} = \text{Total Cost} \times \left( 1 + \frac{\text{Profit Margin \%}}{100} \right) $$

Glossary of Variables

  • Stitch Count: The total number of stitches in your embroidery design. This is the primary driver of machine time and thread cost.
  • Machine Speed (SPM): The average number of stitches per minute your machine runs at. Use an average, not the maximum.
  • Prep & Setup Time: Time (in minutes) spent on non-stitching tasks, like hooping the item, loading the design, trimming, and bagging.
  • Hourly Labor Rate: The amount you charge for one hour of your time. This should cover your salary, overhead, and other business expenses.
  • Cost of Goods (COGS): The wholesale cost of the blank item (e.g., the t-shirt, hat, or patch) you are embroidering on.
  • Material Cost (per 1k stitches): The cost of consumables like thread, stabilizer, and needles, averaged per 1,000 stitches. A common estimate is $0.15 - $0.30.
  • Profit Margin (%): The percentage you wish to add to your total cost to determine the final selling price. A 50% margin means you are charging 1.5x your cost.

How It Works: A Step-by-Step Example

Let's price a job for a custom logo on a polo shirt.

  1. Inputs:
    • Stitch Count: 8,000
    • Machine Speed: 600 SPM
    • Setup Time: 10 minutes
    • Labor Rate: $20/hour
    • COGS (Polo Shirt): $5.00
    • Material Cost: $0.20 per 1k stitches
    • Profit Margin: 50%
  2. Step 1: Calculate Time
    • Machine Run Time: (8,000 / 600) * 1.20 (buffer) = 13.33 * 1.20 = 16 minutes
    • Total Labor Time: 10 min (setup) + 16 min (run) = 26 minutes
  3. Step 2: Calculate Costs
    • Total Labor Cost: (26 min / 60) * $20/hr = 0.433 hr * $20 = $8.67
    • Total Material Cost: $5.00 (shirt) + (8,000 / 1,000) * $0.20 = $5.00 + $1.60 = $6.60
    • Total Cost: $8.67 (Labor) + $6.60 (Materials) = $15.27
  4. Step 3: Calculate Final Price
    • Suggested Price: $15.27 * (1 + 50/100) = $15.27 * 1.50 = $22.91

Frequently Asked Questions

Why do you add a 20% buffer to the machine time?

Embroidery machines rarely run at their top speed for an entire job. The 20% buffer accounts for slowdowns on curves, trims, color changes, and potential operator interventions like thread breaks or bobbin changes. This ensures you are charging for the *actual* time the job takes, not a perfect-world estimate.

How do I determine my 'Material Cost per 1,000 stitches'?

To calculate this, add up your costs for a spool of thread, a roll of stabilizer, and a pack of needles. Estimate how many stitches you get from each (e.g., a 5,000m spool of thread has ~1,000,000 stitches). Divide the total cost by the total stitches to get a cost-per-stitch, then multiply by 1,000. For most, $0.15 to $0.30 is a safe estimate.

Is 'Hourly Labor Rate' my salary or what I charge the customer?

It should be what you charge for your time, not just your base wage. This rate should be high enough to cover your salary, plus a portion of your business's overhead (rent, utilities, software, machine maintenance, etc.). A common method is to triple your desired personal wage (e.g., if you want to make $20/hr, set your labor rate at $60/hr).

What is a good profit margin for an embroidery business?

This varies widely, but a 30-50% margin (a 1.3x to 1.5x markup on your costs) is common for wholesale or large-volume orders. For direct-to-consumer or small, custom orders, margins of 100% or more (a 2x markup) are often necessary to be profitable.

Does this calculator work for multi-head machines?

Yes. The calculation is for a single item. If you are running a 4-head machine, the 'Machine Time' and 'Labor Cost' are for all 4 items simultaneously. You would calculate the price for one item, and your labor cost would be divided across the 4 items, making each item cheaper. Alternatively, you can divide your 'Setup Time' and 'Hourly Labor Rate' by 4 in the calculator to get the per-item price for a full run.

Tool developed by Ugo Candido. Business logic and content reviewed by the CalcDomain Editorial Board.
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