How to calculate cost of goods for printed apparel: blanks, print charges and misprints
7 min readUpdated By the thruflow team
The short answer
The cost of goods for a printed garment is the cost of the blanks plus everything the print job cost (the printer's per-piece charges, setup or screen fees, and freight to and from the printer), divided by the good pieces that came back. Misprints aren't sold, so their cost is carried by the good pieces. Keep the blanks on your books while they're at the printer, and fix each piece's cost on the day it ships, so the margin on that order doesn't change later.
Why it's easy to get wrong
Printed apparel goes through two steps of cost: you buy blanks, then pay a printer to turn them into product. The blanks leave your shelf before the printed goods come back, the printer bills separately, and a few pieces come back spoiled. If the blank price alone goes into cost of goods, every order looks more profitable than it is.
The calculation
- Add up the blanks sent to the printer, at what you paid for them.
- Add the printer's bill for the job: per-piece print charges, setup or screen fees, and anything else on it.
- Add freight to and from the printer, if you pay it.
- Count the good pieces that came back.
- Divide the total by the good pieces. That's the cost of each printed piece.
A worked example
| Calculation | Amount | |
|---|---|---|
| Blanks | 200 tees at $3.00 | $600.00 |
| Printing | 200 at $1.20, plus a $45.00 screen setup | $285.00 |
| Freight to the printer | $25.00 | |
| Total cost of the job | $910.00 | |
| Good pieces | 200 sent, 4 misprinted | 196 |
| Cost per printed tee | $910.00 ÷ 196 | $4.64 |
Sold at $9.50, each tee makes $4.86 before overheads, a gross margin of about 51%. An order of 120 tees is $1,140.00 of sales and $557.14 of cost of goods, leaving $582.86.
Dividing by all 200 pieces instead gives $4.55 a tee. That looks cheaper, but it leaves $18.20 of real cost (the four misprints) out of every margin.
Blanks at the printer are still yours
Between sending blanks out and getting printed goods back, the blanks are still your inventory, just in another place. Keep them on your books at the printer's location, so stock counts and the balance sheet stay right at month end, and so you can see what each printer is holding.
Freight, duty and the cost on the day it ships
- Freight in and import duty on blanks belong in their cost, spread over the pieces they brought in.
- Fix each piece's cost on the day it ships. If a later batch costs more, it shouldn't rewrite the margin on orders already shipped.
- Returned goods go back on the shelf at the cost they left at, and back into that order's margin.
Common mistakes
- Using the blank's price as the product's cost, and leaving printing in overheads.
- Dividing by pieces sent, not pieces back, so misprints vanish from cost.
- Taking blanks off the books when they go to the printer, so inventory looks short.
- Recalculating old orders' margins every time a cost changes.
How thruflow does it
In thruflow, sending blanks to print moves them to the printer's location, where they stay on your books. When the printed product comes back, the printer's bill and freight are spread over the good pieces, misprints are absorbed, and each printed product carries its true cost per piece. Cost is fixed the day goods ship, so every order shows its real margin, and returns go back on the shelf.
Request accessQuestions
- Do misprints count as cost of goods?
- Their cost does. The blanks and printing spent on misprints are part of what the good pieces cost you, so they're spread over the good pieces rather than left out.
- Should screen and setup fees be spread per job or per piece?
- Per job, then over that job's good pieces. A large run makes setup cheap per piece; a small run makes it expensive, and the cost should show that.
- What about blanks still at the printer at month end?
- They're still your inventory, valued at what you paid for them, at the printer's location.