When it comes to order size, is bigger better? Most of us would prefer a 12-dozen-piece order over a 12-piece order, but in the grand scheme of things, are you really making more money?
Perhaps in gross sales, the larger order seems to be the ticket, but gross sales don’t mean very much. In reality, you could be just barely breaking even once you factor in your true production costs.
In the world of decorated products, customers expect the per-piece price to decrease as the number of pieces in the job increases, which means slimmer margins on bigger orders. In theory, the increased efficiency level that comes with producing multiple pieces of the same product with the same image predicates that the price per piece can be lower, but how much lower? Are you still making enough money to justify the job?
In my early days in a production role, I yearned for the big orders assuming that they were the path to profits. Eventually, I discovered that I made a lot more money on 12 orders of 12 pieces than I did on one order of 12 dozen pieces. Certainly there was more downtime associated with the smaller jobs, but the reality was that all my competitors also were striving to get the big orders. So a large gap effectively was left in the marketplace because almost no one wanted the small jobs. (To be honest, multihead embroidery machines and automatic screen printing presses were not built to handle small runs, so most companies steered clear in terms of practicality.) This void left consumers frustrated with the lack of options; thus, they were more willing to pay a premium price for small runs of personalized products.
ENTER DIGITAL OPTIONS
But digital printing changed all that, as most processes have quick setup times, meaning that you efficiently can tackle jobs containing as little as one piece. I know that doesn’t excite most people, but when you factor in the realities of small-piece margins, there is something positive about focusing on some of these opportunities, especially when it falls into the realm of personalized consumer products. That’s because, by nature, they have a high level of perceived value.
For example, when personalized, sublimated cell phone cases routinely sell for $30-$35 at retail. Yet the production costs typically are no more than $5 each. And even the smallest sublimation system can easily output about 20 units per hour. (Do the math!) The key here is personalization on hot consumer items; in this case, that usually means a picture of a person or special event that is near and dear to the end user.
On the other hand, if you put a corporate logo on a phone cover and positioned it as a promotional product — where you expected the client to buy 50-100 pieces — you would not come close to that $30-$35 retail price because you are no longer in the retail/personalization market.
The drive here is personalization and customization. As we all know, a product is only worth what someone will pay for it. Thus, we must focus on raising the perceived value of anything we sell to the highest level possible in order to routinely generate reasonable profits.
The core factor of profitable personalization sales is the ability to print and apply high-resolution, full-color photographic images to a wide range of quality consumer-oriented merchandise, including mugs, water bottles, flags, photo panels, home décor items, picture frames, jewelry, apparel and more.
In the past, various techniques were used — including “peel-n-stick” and heat-bonding solutions, which typically yielded low-quality products that were prone to scratching, peeling and cracking. Essentially, a photo was printed onto some type of bondable material, which was then applied directly to the surface of the item being decorated. Though the process was quick and easy, the quality just wasn’t there — especially in the long term. It was OK for home hobby applications, but not for commercial production. With the advent of high-resolution digital transfer systems such as sublimation, everything changed.
Today there are several reliable digital transfer processes that rely on inkjet and laser printers, plus specialty systems such as ultraviolet (UV) printing and sublimation. A key factor is matching blanks to applications, as there is no one type of digital ink that bonds to every surface. Thus, when researching equipment, pay close attention to what can be decorated and the range of products that is available.
MARKETING TO THE HEART
Regardless of the digital process you decide to use, creative marketing is key for making the highest margins. This begins by figuring out how to play on people’s emotions. Remember, you don’t want to take advantage of them, but rather get their attention in a positive way that captures their hearts while getting them to ignore their brains. Your product is only worth what customers perceive it to be worth to them. Therefore, your goal is to raise their perceived value to your level of pricing rather than dropping your pricing to a poorly perceived value of worth on the customers’ part.
How do you develop a line of profitable consumer products? Start by focusing on the emotional aspects of the situation as seen through the eyes (and heart strings) of customers.
For example, consider an image on a cell phone case. To you and me, it could simply be a cell phone cover with a picture of a cute young child along with her name. But to the grand-parents, this is an important memory that captures a moment and preserves it forever in a format that can easily be used to show her off to others. That, of course, raises the perceived value into the $30-plus range. It’s the emotional aspect that is driving the price, not a formula.
If you are a creative marketer, you can put together all kinds of other angles to accompany this. For example, if you were creating this for a parent or grandparent, there may be other children who are near and dear to them. Thus, make sure they have a different cover for profiling each one. (Some manufacturers offer packaged blanks that consist of one frame and multiple inserts.)
LOOK TOWARD TOMORROW
Generating future sales is just as important as maximizing the initial sale. A simple way to do this is to customize products with a date, as in many cases it will make the initial image obsolete in the near future, causing the customer to find it necessary to update and replace the original item.
Though photographs can have a profound effect on an item’s perceived value, a great product usually only needs unique graphics and limited text to give it personality and value. For example, a laptop sleeve that has been created with a paisley pattern, a cool graphic and the owner’s name. It makes a statement while also delivering a decent margin. The blank bag costs about $8 and the production cost is about $0.80 in sublimation ink and paper. Throw in $2 for labor and overhead, and you have a total cost of about $11. With a retail value in the range of $30, this product generates a great margin and took only about three minutes of production time (not including art).
Another interesting angle with consumer items is promotional products. At first glance, this sounds counter-intuitive to the personalization concept and the resulting margins that can be generated, but it still all comes down to perceived value.
In the world of advertising specialties, the most effective products get used frequently, such that a given brand gets frequent visual attention. One of the best ways to do that is by creating a personalized promotional product. For example, consider a coffee mug with a logo and the name of the person to whom it will be presented. This practically guarantees that it will be used frequently and, in turn, raises its perceived value.
In the world of sublimation, a coffee mug logo is around $0.20. Adding a name has almost no effect on cost, but can lead to margins that are double or more because of the perceived value of the extra benefit that comes with the personalization.
At the end of the day, the best products are those that capture a positive emotional experience and preserve it forever. This simple concept, which can be achieved so easily with digital decoration, can make a huge impact, not only on the customer, but also on your bottom line. Just remember, a product is only worth what someone will pay for it, so focus on creating personalized products that get the customers’ attention while generating excitement.
Award-winning author and international speaker Jimmy Lamb has more than 20 years of apparel decoration experience. He currently is manager of communications for Sawgrass Technologies, Charleston. S.C. For more information or to comment on this article, email Jimmy at jlamb@sawgrassink.com.
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