What Does It Cost to Run A DTG Business
If you have ever considered running your own business you have often thought about what it takes to run that business. Will you make money? Will you be able to afford to live? Will you be homeless in two weeks? It can be scary. The goal of this article is to give you an idea of the overall costs of running a DTG Business.
We are going to make some assumptions in this scenario. The first assumption is that you are going to have an employee. The second assumption is that you do not own your DTG equipment. Rather you have taken out a loan to purchase the equipment. Third, is that you are going to work a standard work month which would be 4 weeks of 5 day work weeks. This would be 20 working days per month.
How Much Does It Cost To Produce and Sell T-Shirts With A DTG Printer
So the first factor to consider is how much can I sell a t-shirt for? Let’s say that you can sell a t-shirt for $15 and your overall cost to make the shirt is $5.
What does the $5 cover in making the shirt? It covers the blank, the pre-treat, and the ink. A decent blank will cost $3 and the ink will cost around $1. This leaves a $1 for pre-treat and maintenance costs.
Which means that what is left after the costs of the shirt is $10. As an example, if you print 12 shirts per hour then you are making $120. This is profit. Costs to create the final product have already been accounted for.
Remember that you control your costs. Not every t-shirt blank is the same. Some are better quality than others. Plus, how you purchase your t-shirts is also a factor. Are you purchasing in bulk? Are you finding the lowest costs? These factors have a direct impact on your bottom line. If you can’t keep your costs down then you can’t make a healthy profit.
Should I Hire Somebody to Print My Shirts?
Let’s talk about labor. Let’s face it, labor costs money. It is probably the most expensive cost that a business has. It takes time to make the products. You will need to determine a rate to pay somebody to print the shirts when you are not available to print the shirts.
Here’s a simple formula for determining how much money to pay somebody to make those shirts.
For our example we will use $15/hour. (You may pay less. You may pay more.) For this example we are going to use what is considered a "living wage". What we are not including in our labor costs are taxes which must be paid. Taxes will currently run you 7.65% of the hourly wage.
$15 x 7.65% = $1.15
We must combine this with our wage to get the total amount for labor.
$15 + $1.15 = $16.15
You may also want to offer benefits. We're not going to add that into the mix. That is your decision and you need to account for it appropriately. $16.15/hour is the total cost for labor in our example.
The Cost of Leasing DTG Equipment
So let’s say that you got a loan for the DTG machine. The monthly payment must be factored into the cost of running the business. If the cost of the loan is $550/month. That means that you need to sell 55 shirts to cover the cost of the equipment because your profit for every shirt is $10. (You may pay more for your loan, or less for your loan. When running through your own calculations you will be able to use this information as the basis for running your own calculations with your own numbers switched out.) You will need to take the cost of the loan out of your profit because the original $5 just covers the cost of the shirt.
Then you divide the number of shirts by the number of working days/month.
55/20 = 2.75
So in the course of a month you need to sell roughly 3 shirts a day to cover the cost of the equipment. This is based on a 5 day work week. (Even though it is entirely possible to sell shirts 24 hours a day/7 days a week).
DTG Labor and Equipment
Let’s combine the two together. In our example you must print 55 shirts to cover your equipment lease. Plus you have to pay someone to print the shirts. (That comes out of your profit as well.) We already calculated our labor cost at $16.15/hr (How many shirts can they print in an hour. The Epson F2100 can print roughly 20 - 30 shirts an hour.)
Let’s say that they are only going to print 20 shirts an hour. You will need to pay somebody for 3 hours to create 55 shirts.
3 X $16.15 is $48.45.
This must be added to the total costs.
$550 + $48.45 = $598.45
So instead of just covering a $550 payment, you are looking at $595. Which means that you actually need to sell 60 shirts/month to cover your equipment and your labor.
What Does That Mean For Your DTG Business?
In just 3 hours out of a 40 hour week you will cover the cost of your printer, labor, and cost/shirt. This is your break even point. This does not factor in how you sell and store any of your shirts. There is no discussion of a website, taxes , or post-it notes. We left those out. (Even though we know you need post-it notes. Lots and lots of post-it notes. ) This just looks at the bare minimum essentials to run a DTG business. (There are some additional costs such as electricity and storage that must be figured into the calculations, but we are not going to focus on those.) So yes, your breakeven point for your new business comes after 3 hours of work.
Let's Go Further
If we continue looking at a 40 hour week and we know that there are 4 weeks in a month, then there are 160 hours a month that your business is operating. Lets subtract the 3 hours for your break even which leaves 157 hours to earn. 20 shirts an hour at 157 hours comes to 3140 shirts that can be produced in one month.
157 X 20 = 3140
Now lets calculate the profit on each shirt. (Remember it was $10/shirt)
3140 X $10 = $31,400
Wow! That’s a lot of money per month. Hold on. Don’t get too excited yet. Don’t forget that you need to include your labor costs. Labor is $15/hour
157 X $16.15 = $2536 (rounded)
Now we need to subtract our labor cost from our profit.
$31,400 - $2,536 = $28,864/month
This would be your potential profit off of running your business 40 hours a week for 4 weeks.
If you were to run your business for 40 hours per week for 52 weeks a year your profit would be $346,368.
Unpacking the DTG Printing Data
We made a number of assumptions in this calculation. We assumed that you are going to sell shirts for $15. We assumed that you are going to earn $10 profit per shirt. We assumed that you are hiring 1 person to print the shirts. The biggest assumption that we make is that we will be selling 20 shirts/hour for 160 hours. In all, you would have to sell 3200 shirts a month to make that kind of money. That’s a lot of shirts to sell, but it is not unachievable. What is also not factored into this calculation is design. Somebody has to come up with the designs for the shirts. You may have to pay a designer for your business as well.
You will make more money if you can do all of these tasks yourself, but remember that it takes a lot of work to do that. You would have to design the shirts, make the shirts, sell the shirts, and ship the shirts. That is a lot for any one person to do. If you can take on any of these tasks then you will save money. But you really need to pick your battles. If you could have somebody printing the shirts then you can focus on sales and design. You can choose to not focus on any of these factors and just focus on driving the business.
Potentially you could work more than the 20 days a month. You could work longer than 40 hours a week. There are a lot of variables. These are all part of the art of running a business. You have to control the variables. You have to control your costs.
The Final Word on DTG Printing Costs
It is possible to make a lot of money with a DTG printer. You have to source a good supplier of t-shirts. You have to control your labor costs. You have to constantly be selling and increasing your sales. Making great designs. You control all aspects of your business so you will need to make some tough decisions. You may determine that you need at least two employees or that you want to pay for your employees health insurance. You might want to have a storefront. There are so many details that to consider in running your business. You have to think through each aspect of the business and determine how you would make it work.
You have to know your costs. The devil is in the details.