Here’s a core concept to embrace: Your work is only worth what someone will pay. Focus your efforts on positioning your products to have the highest perceived value possible because in the eyes of the client, perception is reality. Forget pricing formulas that say silly things like double the cost when setting a price. Why not triple or quadruple it? It can be done, but only if you fully understand how to position your products correctly. The first step is determining which markets make sense to focus on.
Identify your strengths and weaknesses, then capitalize on the strong points. What do you have to offer, besides price, that the competition does not? A lot of the discount shops have long turn-around times. Maybe you can offer quick delivery. Many of the discount shops have poor quality work. Focus on having the best embroidery quality and letting your potential customers know that. If they don’t care, maybe you don’t want them as a client. And be sure to refuse any job you have doubts over. If you aren’t sure you can do it right, don’t do it at all. The hardest thing to say is no, but sometimes it’s the most important word in a shop owner’s vocabulary.
Finding a good niche is another piece of the profitability puzzle. Look for specialty markets that other shops have either ignored, or never identified. Niche markets can be very lucrative. Typically, they will take research and possibly a special approach, but the long-term results can be quite profitable. If you are the first and only shop serving this market, then you’re in the position to control price points significantly.
By focusing on specific markets, you put yourself in a position to know and understand your customer base quite well. This makes it easier to understand their perceptions and their needs. Instead of focusing on producing embroidered products, focus on fulfilling needs. If you have a solution to someone’s problems, then you’re in a good position to make a decent sale.
For example, how do you define a baseball cap with a corporate logo? Is it embroidered headwear, or is it advertising? Businesses need good quality advertising to bring in new customers. Do you have a compelling pitch for delivering an advertising product that will do that? And why should they pay top dollar for your product? Let’s face it, any embroidery shop can put a logo on a cap.
A key point with advertising products is that they must be seen as effective. The more people who see the product, the more impressions are made. So, if you’re pitching an embroidered cap as a critical advertising tool, you need to have supporting data to offer the customer. Here’s a fact to use: People will only wear something if they like it. Cheap caps and poor embroidery usually end up in the garbage, thus any cost savings evaporated because the advertising goal was never achieved. In fact, it cost the client more money because it was a total waste of effort.
I saw this with a prospect who had super cheap screen-printed caps – he was fixated on the price of $1 per cap. But he was selling high-dollar boats, so why would he want to give out an advertising product that was at the other end of the quality scale? In spite of giving away 500 caps a year, you never saw anyone wearing them. Eventually, he saw it too, and he started ordering higher-quality embroidered caps.
But the story doesn’t end there. Because he was selling a very popular, classy brand of boat, the caps had the brand and the name of the marina. People wanted the branded cap, enough so that when he had embroidered caps sitting in his showroom, people wanted to buy them. So, after some tweaks to the logos and cap selection, he started selling products that advertised his business.
When you find a way to solve a problem or fulfill a need, you have a much better chance of getting the sale and increasing your profits.