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Set Up Costs - What Are They?

Posted by Nicholas Letts on 1st Oct 2020

Typically when you're producing merchandise for a client, there are several costs that go into determining the price of that product: 

  1. The cost for the actual physical product
  2. The cost for the branding (printing, embroidering etc)
  3. The cost of freighting the job to the client
  4. The cost of the labor involved
  5. The "set up" cost

That last item, the "Set Up Cost", is something we see commonly being misunderstood within our industry.

Very simply, this refers to the cost of setting up the job to decorate. This can mean several different things, depending on the method of decoration. For printing, it can refer to creating the screen and mixing the ink, whereas for engraving it can refer to the cost of programming the design into the machine (similar to digital print and debossing).

Why is this regarded as a separate cost to branding, or the base product?

Set Up costs are regarded as separate to branding as the cost does not change based on quantity. This is the part of the job that isn't impacted by economies of scale. For instance, if we are setting up an engraving job, it takes the same amount of expertise and time to set up a job for a run of 100 units than it does to set up a job for a run of 1000 units. 

Why don't you show the set up costs on your quotes?

We made the decision to show one price on our quotes - the total price for the unit and the job. This is simply to make it easier for our clients, and more transparent. We regularly get asked to compete on quotes that have the unit price not including the set up, or project totals that don't include freight and GST. 

That's why it is so important for our clients to understand that we are more than happy to put our best foot forward for pricing, but we may ask for more information on a competing quote so that we can ensure we're comparing apples to apples, and there's no hidden expenses that can ruin your budget.