A lot of new embroidery sellers underprice because they look only at thread and blank cost. That is the fastest way to build a busy business that barely makes money. Good embroidery pricing covers materials, labor, machine time, failed pieces, platform fees, and actual profit.
This guide gives you a real formula, real examples, and the pricing mistakes that cost new sellers the most money.
The Pricing Formula
Selling Price = Materials + Labor + Machine Overhead + Platform Fees + Profit Margin
Every component matters. Skip one and you are working for less than minimum wage without realizing it.
Breaking Down Each Cost
Materials
- Blank item: the cap, shirt, towel, or bag you embroider on. Costs vary wildly — $2 for a basic tee to $8 for a quality Richardson cap to $12 for a nice hoodie.
- Thread: roughly $0.15-$0.50 per design depending on stitch count and colors used.
- Stabilizer: $0.10-$0.30 per piece for cut-away or tear-away.
- Bobbin thread: $0.05-$0.10 per design.
- Packaging: poly bags, tissue paper, boxes — $0.25-$1.50 per order depending on presentation.
Labor
This is where most sellers cheat themselves. Count ALL the time you spend:
- Customer communication and order management
- Design selection or digitizing
- Setting up the machine, hooping, aligning
- Monitoring the stitch-out
- Trimming jump stitches and cleaning up
- Quality checking
- Pressing or steaming
- Packaging and shipping
A single custom embroidered cap typically takes 20-45 minutes of total labor from order to ship. Pay yourself at least $20-30/hour for skilled craft work. That is $7-$22 in labor per cap.
Machine Overhead
Your machine is not free to run. Factor in:
- Needle replacements (~every 8-10 hours of stitching)
- Machine maintenance and servicing
- Electricity
- Eventual machine replacement or upgrade
- Software subscriptions (digitizing, design libraries)
A reasonable overhead charge is $1-$3 per item depending on how heavily you use the machine.
Platform Fees
If you sell on Etsy, fees eat more than most sellers realize:
- Listing fee: $0.20
- Transaction fee: 6.5% of sale price
- Payment processing: ~3%
- Offsite ads fee (if opted in): 12-15%
On a $30 sale, Etsy takes roughly $3.15 (without offsite ads) or $6.75+ (with offsite ads). That is 10-22% of your revenue gone before you count anything else.
Real Pricing Examples
| Product | Materials | Labor | Overhead | Fees (Etsy) | Total Cost | Sell At | Profit | Margin |
|---|---|---|---|---|---|---|---|---|
| Embroidered cap (simple logo) | $8.50 | $8.00 | $1.50 | $2.50 | $20.50 | $28-$35 | $7.50-$14.50 | 27-41% |
| Monogrammed towel | $5.00 | $5.00 | $1.00 | $1.80 | $12.80 | $18-$25 | $5.20-$12.20 | 29-49% |
| Custom polo (front logo) | $12.00 | $10.00 | $2.00 | $3.50 | $27.50 | $35-$45 | $7.50-$17.50 | 21-39% |
| Embroidered patch | $1.50 | $4.00 | $0.75 | $1.00 | $7.25 | $10-$15 | $2.75-$7.75 | 28-52% |
| Baby onesie (name) | $5.50 | $6.00 | $1.00 | $2.20 | $14.70 | $22-$28 | $7.30-$13.30 | 33-48% |
Pricing for Bulk and Repeat Orders
Volume discounts make sense only if the per-unit labor drops significantly. For embroidery, it does — once you have the design set up and the machine configured, pieces 2-50 go much faster than piece 1.
A reasonable volume discount structure:
- 1-5 pieces: full price
- 6-24 pieces: 10-15% discount
- 25-49 pieces: 15-20% discount
- 50+ pieces: 20-25% discount
Never discount below your break-even point. Losing money on volume is worse than losing money on one piece.
Rush Pricing
Charge 25-50% more for rush orders (24-48 hour turnaround). Rush work disrupts your workflow, may require working evenings/weekends, and displaces other orders. The premium compensates for all of that.
Common Pricing Mistakes
- Copying cheap competitors. Some sellers underprice because they do not value their time. Competing on price with someone who charges $12 for a custom cap is a race to the bottom.
- Ignoring failed blanks. Thread breaks, misalignments, and bobbin issues will ruin 2-5% of blanks. That cost needs to be absorbed across all your pricing.
- Not charging for digitizing. If you spend an hour digitizing a custom logo, that is $20-30 of labor that needs to be in the price. For repeat orders, amortize the digitizing cost across the expected total pieces.
- Treating your time as free. “I enjoy embroidery so I do not mind” is fine for a hobby. For a business, your time has value. Pay yourself.
- Forgetting shipping supplies. Poly bags, boxes, tissue paper, and tape add $0.50-$2.00 per order that many sellers forget to account for.
How to Raise Prices Without Losing Customers
If you started too low (most people do), raise prices gradually:
- Raise prices on new listings first — existing customers do not see the change
- Improve your listing photos and descriptions at the same time — higher perceived value justifies higher prices
- Add value instead of just raising the number — better packaging, faster shipping, or a handwritten thank-you card
- Raise by 10-15% at a time rather than doubling overnight
Most sellers who raise prices lose fewer customers than they expect. The customers who only buy because you are the cheapest are usually the most demanding and least loyal.
Final Advice
If pricing feels scary, remember: cheap prices attract the most demanding customers and leave the least room for mistakes. Price for the value of skilled craft work, not for the cost of thread.
Related guides: How to Start an Embroidery Business | Best Machine for Small Business | Best Commercial Machine | Best Budget Embroidery Machines