As a print shop owner, whether you’re printing signs, T-shirts, DTF transfers, or other custom-branded merchandise, calculating labor costs is crucial to your business’s profitability and long-term success. 

If you need help estimating your labor costs, grab a free copy of our Labor Rate Calculator, created by SignTracker cofounder Joe Arenella. 

This downloadable, customizable spreadsheet features key factors nearly every business needs to consider when calculating labor costs, ranging from billable hours and holiday pay to insurance and utilities. 

Curious why knowing these costs is so important? 

Here are five big reasons why you should have a firm grasp of your labor costs:

Cost Control and Pricing Accuracy 

Calculating labor costs helps you set accurate prices for your products and services. 

That way, you’re not underpricing your work, and there’s consistency to what you’re quoting every customer instead of putting together ad hoc calculations. 

Effective pricing takes into account all associated expenses, including wages, benefits, and overhead.

Operational Efficiency

Getting a clearer picture of these costs helps you identify inefficiencies in your workflow and where you can improve. 

Maybe certain parts of your printing would be more profitable outsourced, so your team can focus on custom jobs, or perhaps you’ve been sourcing materials from a supplier whose prices don’t fit your budget. 

Financial Planning

An accurate report of your labor costs makes it easier to create a realistic budget and make informed financial decisions. 

Whether that’s hiring new staff, financing new equipment, expanding your production space, or even spending money on advertising, you’ll be able to allocate cash towards what’s most important for the growth of your business. 

Employee Productivity

Knowing your labor costs lets you assess your team’s productivity and performance. 

By tracking labor costs against output, you can identify high-performing individuals or shifts and address productivity issues. While that might sound like policing your workers, identifying and fixing inefficiencies will make life easier for everyone on your team. It will translate into smoother shifts, orders going out on time, and happier customers, which will feed back into your profit growth. 

Competitive Edge

The marketplace continues to get more crowded and competitive, especially in the decorated apparel space, where print-on-demand and B2C suppliers are starting to take up more real estate. However, understanding and managing labor costs can set your print shop apart from competitors.

By having a comprehensive understanding of your costs, you can make strategic decisions that position your business for long-term success and sustainability.

If you want help estimating and managing your labor costs, download your free copy of the Inktavo Labor Rate Calculator here today!

This tool takes into account various factors, including wages, benefits, taxes, and overhead, to help print shop owners like you effectively determine and analyze their labor costs. 

Not an Inktavo customer yet? Book a demo today to learn about our solutions! 

Behind The Signs 

If you’re a sign professional interested in gaining industry knowledge and building connections (or a print shop interested in expanding into signage), be sure to join our Behind the Signs Community on Facebook and Behind the Signs Podcast on YouTube.