Here is an example of the true cost of a standard rectangular mouse pad for someone using desktop equipment and buying small quantities of the blanks. We will err on the higher side as you want to make sure the efficiencies you can gain improve your bottom line, not help you break even.
Blank Mouse Pad = $1.75
Do not forget to factor in the inbound freight into this figure-that can drastically change the cost of the blank. You want to try to buy in enough quantity to gain price breaks, but not so much that you would not be able to sell that inventory in the course of six months to a year. There are costs to carry inventory for extended periods of time.
Paper and Ink = $.75
The printer you use can make a difference in this area, but in general, you are looking at about .0095 per square inch with small format and .065 per square foot with wide format.
Pressing Labor = $.50
To calculate this, you want to take the cost of an employee you trust to do production as your base for this figure. This isn’t what you think you should make in an hour for your time, even if you are the only employee. Look ahead on this one or you will price yourself out of the market. You also should assume that you are going to be pressing one at a time especially at the beginning because you want efficiencies like pressing multiple at a time to improve your bottom line.
Packaging = $.30
Even if you hand-deliver your finished product to the customer, a legitimate business is going to put the finished goods in some sort of a package. In this case, a poly mailer bag works great, but remember for other items that are breakable, this cost might be higher.
Additional Labor = $.75
Many small businesses, especially one-man operations, miss out on this. Just like pressing labor, you need to factor this based on the cost of an employee. This should factor in the time it took someone to take the order, prep and print the job, and then the time to package and handle the job before delivery.
Scrap and Other = $.20
This must be included in some form, otherwise you might come to find that six months down the road you are losing money on every job because of these difficult-to-measure factors. With sublimation, the permanency of the ink is its draw, but for the producer, it is also a challenge. If something is messed up in production, there is no fixing it-you must make a new one. Even the most efficient production facilities should factor in about a 5 percent defect rate. This cost should also factor in inventory that you can’t sell. Lastly, this cost should account for the trial and error that comes along with perfecting your production of a new product.
Outbound Shipping = $2.75
I always recommend adding this cost in and then you can use it as a profit center when dealing with bulk purchases or giving free freight to compete with online retailers. If your business is only walk-in then you could remove this, but make sure you will never have to eat the cost of shipping something before taking this off your cost calculation.
Total cost to produce = $7.00
-Aaron Montgomery, 2 Regular Guys, MontCo Consulting