Why do prices go down when printing or branding volume increases?
We’re often asked by potential clients for small volume orders of branded merchandise, and we have to say no. It’s not that we’re in the habit of turning down orders, it’s more likely that it wouldn’t be economically viable for us to take them and unrealistic for our potential clients to pay the price. Many clients often ask why unit costs go down so much between 50 and 5000 units for example, so in this blog, I’ll cover the three main reasons for this and the one exception to the rule.
Machine Set-up Costs
Each brand we work with needs to be carefully applied to a template and set up for the machine that it is going to be run on and this varies from machine to machine. For example, it takes longer to set up a logo file on an embroidery machine than it does on an engraving machine.
The time this involves, and the materials such as printing plate costs, are all taken into account when pricing. The higher the volume of products being printed, the more units this cost is spread over, in turn, reducing the unit costs.
Pre-production print trial
We’re print perfectionists at heart and we always trial run a new logo a few times before we apply it to a product. This gives us time to see how the colours appear on the substrate, the accuracy of the registration, and the quality of the end result. This is a hidden cost and the smaller the order volume, the sooner we have to stop bulk production to run more trials for the next project. Again, impacting the price on smaller quantities.
Efficient printing or embroidery machines run at 100% capacity in a perfect world. This is impossible to achieve but Streamline is striving to be as close to maximum capacity as possible to be a competitive supplier for our clients.
Switching over projects on the machines from one brand to another means resetting all the machines ready for the next brand. This takes time and is what makes volumes of 1000 or 5000 more cost-effective than switching the brand every 30 minutes for a product with a volume of 50.
When volume doesn’t equal economies of scale
After all I’ve just said, there’s just one exception. When it comes to Streamline’s Luxe range, volume doesn’t always equal economies of scale.
If the product cost is over £50, such as our Herschel, Patagonia, Under Armour, Barbour, or Sony products, the print cost is more marginalised. For example, a £45 machine set up charge and a print cost of only a few £ per item spread over the cost of 150 Patagonia Backpacks worth £120 each becomes a much smaller contribution. Therefore, the volume makes a much smaller impact on reducing the unit price of the product.
If this blog has got you thinking about your own economies of scale, maybe you don’t have the space for higher quantities of merchandise, or maybe you’re considering how to make the most of your clothing or merchandise budget this year, why not speak to our team of experts to find out about Streamline’s free stockholding and how we can help?