Yes, decorated-apparel shops are dropping prices to win post-pandemic work. Lucas Guariglia, CEO and co-founder of Chicago-based Rowboat Creative, has definitely noticed, and doesn’t think it’s a good idea. “While shops are using this as a survival tactic to get back above water, it’s setting the tone for us to be taken advantage of due to low pricing,” he says.
When you’re simply trying to survive the pandemic, it’s easy to justify taking orders without thinking enough about profit margin, fit for your equipment, or alignment with your goals. Even before the virus, pricing was an issue, leaving decorators trying to find the “magic number” to appeal to customers, while still netting a profit.
“The decorators who’ll enjoy long-term success are those who’ve pursued new products and different imprinting methods to serve their customers’ changed needs, while reducing costs and maintaining a profitable position,” says Erich Campbell, program manager for the Commercial Division at BriTon Leap. “Rather than shift to a lower-margin pricing scheme, many retooled their equipment and processes to decorate new products and to serve markets that haven’t been as adversely affected.”
The Impact of ‘Low-Price Shoppers’ During COVID-19
In two months, the United States lost over 36 million jobs. This translates into much smaller budgets for buyers, especially on the marketing side. Because of this, many decorators are steering away from raising prices, even with increases in production costs and materials. “Ultimately, you get what you pay for,” Guariglia says. “We’ll always stand firm on wanting to provide superior products with superior service.”
Campbell says post-pandemic shoppers may opt for simpler decoration or lower-volume orders. However, quality will win out. “Every decorator should ask a couple critical questions,” he says. “What new problems can you solve with decorated apparel and accessories? Where do people need the identification, promotion and recognition we provide with our products?”
Many shops are promoting a multi-tiered pricing option, featuring budget-friendly basics and higher-quality options for buyers willing to spend more. While budgets may drive comparisons, Campbell says that if you address this correctly, and provide the right product mix and experience, it becomes easier to capture the limited dollars available.
Howard Potter, CEO of Utica, NY-based A&P Master Images, knows his shop isn’t the cheapest around. “We’ve taught our customers what they get by paying a little more per screen-printed shirt,” he says. “Our prints last a minimum of one to three years due to better ink quality and higher-quality apparel. When customers pay less, their screen prints last six months. They’re throwing away marketing dollars by purchasing a lower-quality item.”
The Amazon Effect
Many smaller decorators are feeling the pinch because of online retailers like Amazon. Some shops fight this by selling through Amazon and other platforms that have a “marketplace,” allowing outside retailers to sell on their site. The platform takes a cut of the profits, so this may not suit everyone.
Another option is to offer personal service. By focusing on the “locally owned and operated” angle, a company can bring in customers who don’t want to shop with a major Goliath of an online site. “The feedback is always the same: Consumer experiences aren’t the best at Amazon or other big-box retailers,” Guariglia says. “Even some of the largest agencies and brands we work with prefer the human touch and sounding board we offer. We’re a vital partner to a lot of these brands, as opposed to offering just automated overpriced online experiences.”
However, Campbell says that with delivery slowdowns and stock shortages, Amazon doesn’t seem like the juggernaut it once was. “More engaged buyers want to support local businesses and receive personal service,” he says. “Take care with packaging for shipped orders, and always offer touchless delivery and curbside pickup as options.”
If you stock inventory, advertise quick turnaround to local buyers. “More and more businesses delay delivery, so if you’re quicker, you’ll stand out in the current market,” Campbell says.
Raise Prices Intelligently
Guariglia argues that the decorated-apparel industry as a whole has needed to raise prices for years. “The margins are too slim, and we’re doing a disservice to each other,” he says. “Baseline pricing models would be great.”
One of the best options for those ready to raise their rates? A two-pronged approach. First, be upfront with your customers about the reasons for an increase. Communicate through all available channels. Post the new rates in your shop as well.
“Be transparent and honest,” Guariglia says. “Look, costs across the board increase yearly for companies. If you offer a superior experience and products, your consumers really shouldn’t mind a reasonable increase that’s justifiable due to global conditions.”
Of course, raising your pricing will be based on your shop’s unique numbers. “Are you still netting the same or less?” Potter says. “You need to know if you can pay your bills and still have a profit left over to get ahead. If you don’t, raise your prices.”
Potter suggests knowing the percentage of what you’re losing and need to recoup. Then, divide that by the number of pieces you’ll produce the rest of the year. “If you can get by without raising your prices this year and still maintain your quality standard, that might give you an edge over your competitors,” he says.
Is Print-on-Demand the New Normal?
Campbell sees an uptick in heat printing and other POD methods to produce garments without holding a larger inventory. “As an embroiderer, we’ve always kept single-head machines for small-run work even in larger shops,” he says. “Before the pandemic, I saw more shops with small fleets of single-heads rather than larger multi-heads, ready for a smaller-run, POD market.”
Setting your shop up to offer more print-on-demand options can help you build a new pricing structure, that’ll enable you to capitalize on new expanding markets like those involving PPE.
Rowboat Creative has provided POD services to bigger clients for five years. “The key to being successful is reading the times and reacting nimbly,” says Guariglia, who used his Creatives Who Care initiative and existing e-commerce platforms to immediately help raise funds for businesses and individuals affected by the pandemic.
Potter points to the number of ailing big-box stores closing locations. “People love to design or receive one-of-a-kind custom apparel for all occasions,” he says. “However, to fill these gaps, you better be on point with customer service, turnaround time and quality or you’ll lose customers as fast as you get them.”
Decorators are addressing this shift in a few ways. “Some shops produce simpler, less expensive decorations,” Campbell says. “Other shops are producing fewer, higher-quality pieces or items like masks or promo products that weren’t previously in the mix.”
Campbell also noticed a massive rise in non-sized decorated items like hats, along with a demand for emblems or patches. “Shops are using sewn or heat-pressed patches to decorate a wider range of products,” he says. “The name of the game is flexibility.”
The Perfect Way to Price and Prospect
Like Guariglia, when Campbell talks to decorators who’ve been in business long term, he often learns that they haven’t updated their pricing structure in years. “Though you can never totally avoid budgets, you can create points of differentiation with prospects and customers that allow you to charge more,” Campbell says.
For prospects, reach out with a sincere message of care and unity, without the pitch, and then look to solve problems. “If you haven’t been part of your community before, it may be hard to claim that ‘local partner’ status immediately,” Campbell says. “If you want that clout, start building that relationship with local clients and engaging with your community in other ways than offering services. Just like any other time in business, this is a time to look for underserved niches, unsolved problems and blue sky territory.”