Wholesaling Custom Heat Transfer Paper(s)
Making Huge Returns With DigitalHeat FX
If you’re considering creating custom apparel using a DigitalHeat FX, another aspect of business you should think about is selling transfers wholesale.
You would be selling custom printed transfer sheets, which you create, to other shops or individuals who have heat press equipment.
Here, we’ll give you some of the reasons why this can be highly profitable, and go over the numbers and the Return On Investment (ROI) you might expect.
How To Determine Your Heat Transfer Paper Costs
What ROI can you expect?
First off, let’s talk numbers.
The OKI Pro 8432WT retails for $6895. And this comes with a full set of toners to get you started.
Depending on what part of the system you have already, the heat press will be $1,175 – 2,100.
And, to get you started, we recommend at least 200 sheets of Transfer paper = $449 – or bulk pricing (min 5 boxes) = $369
When creating a custom full-color transfer, the cost per sheet is calculated like this:
$.09
TONER
$1.85
+ PAPER (at bulk pricing)
$.13
+ WASTE / ERRORS
$2.07
= TOTAL CONSUMABLES
You’ll also want to take into consideration your labor cost. For this example, we’ll set it at $15/hour. You’ll, of course, make more than this most likely overall, but this is what the labor might cost if you paid someone else to do it.
As your business grows, you’ll need to get some help while you go out and find the next job and run your business.
In an hour you’ll be able to produce approximately 30 transfers. Labor cost per design would then be $0.50. Bringing the cost per custom transfer to $2.57. (Approx 10” x 12” design)
How To Determine Your Selling Price
In the wholesale business, it is standard to sell items at 2.5 times your production cost. Each transfer would then (in this case) sell for $6.43.
Rounding up to $6.5 for this example, for every sheet, you’re making approximately $3.93 in profit.
Of course, it takes more time than that to set up. So you may well want to have a setup fee of $15 to $20 to make sure you cover your costs.
Alternatively, when selling wholesale, you’ll probably also want to establish and enforce a minimum order rule.
These rules will help you to meet your selling goals. And ensure you’re not spending time just doing small batches.
Developing a Pricing Strategy
For this to be an effective selling tool, you can create a pricing strategy such as:
$8.00
PER UNIT FOR 100 UNITS
$6.50
PER UNIT FOR 500+ UNITS
This Strategy incentivizes customers to order in bulk because they receive a better deal. While your profit margin is lower per unit, it increases overall profit because you are selling more in a single transaction.
For every 500 unit sale, you’re making $1,965 in profit. For 100 unit sales, $761.
You can pay off the Digital Heat FX printer after 1,000 – 1,700 sold transfers.
The cost of the heat press, $1,175, would be paid off with another 150 transfers.
When creating invoices for clients, don’t forget to add the cost of shipping to the invoices. You don’t want shipping costs to cut into your profits.
Important: Before giving your clients a final wholesale cost per unit, do your math. Your price may vary based on labor and supplies.
Why Would Custom Apparel Shops Buy Your Custom Printed Heat Transfers?
Realize that many shops may not be in a position to invest in a DigitalHeat FX machine. A heat press machine has a considerably smaller stake ($945).
If they’re not selling as much of this type of custom apparel, it may not be the correct business decision for them to buy their DFX system.
Some business owners just don’t want to get into any more areas of work. They like the niche they create and can still make good profits by flipping the jobs to you.
Heat presses also have multiple uses so that they may be already be using it for bling. They may want to test the demand for a different type of custom apparel before investing. Or they need a partner business to supply them with the transfers for the rare orders they do get.
They may not have space either. Many custom apparel businesses are in spare rooms and garages that do not have enough space for more machines.
Where Should You Sell Your Custom Printed Heat Transfer Papers?
Custom T-Shirt Shops
Businesses that specialize in embroidery may have customers that occasionally request printed designs. By selling them transfers, they can fulfill their customer’s orders in their shop. Without investing in a whole new machine.
Bling Startups
Bling startups already have heat press machines. They often want to expand their offerings with full-color images. They are sometimes tired of losing the big jobs while they get the smaller ones.
Schools, Universities, Charities
…and other local groups. They may have invested in a heat press machine already. They can buy the transfers from you, blanks from somewhere else, and use this to fundraise.
How do you know which stores to approach?
Take some time to research. Make a list of the other custom apparel shops are in your area. Find out what services they are currently offering customers. To do this you can visit their websites, Facebook pages, give them a call and ask what they offer, or visit them in person if they have a storefront.
Once you know what they sell you can determine how to approach them. Maybe it’s asking if any customers have requested printed shirts before. Or if they’d be interested in offering their customers full color printed shirts, that are also covered in rhinestones.
Who are you selling to?
Who is making the purchasing decision for the business? Find out who this is. Then try to speak with them directly.
In small custom apparel shops, it is likely the owner. If you’re approaching a chain store, you may need to deal with a dedicated buyer.
Tailor your approach to the buyer. And make sure that you include how this deal is beneficial to them and their profits. How much can they expect to sell printed shirts for and what would their gain be?
How do taxes work when selling wholesale?
One thing that often gets overlooked or done incorrectly is taxes. When it comes to selling wholesale, you don’t charge sales tax. The shop you’re selling to will tax the customer on the final product.
Do get tax ID documentation from the shop you’re selling to. Your accountant will thank you later.
Stand out from the crowd
To help convince shops to buy your product you’ll want to do a few things.
Bring samples. Not only the transfers but also the final product. They’ll want to see how the transfers look on the shirts.
Get customer testimonials. These can be of both the printed shirts you’ve sold and the other shops who’ve purchased from you. Don’t have any reviews yet? Give some free samples to a few reputable businesses and ask them for feedback.
Give a product demonstration. Bring a few transfers and blanks to the shops with you. An excellent presentation gives you an opportunity to show how easy it is to use the transfers. Let them heat press the transfer on as well.
Dealing with rejection
Not every business you approach will want to buy transfers. It might not be the right fit for their business.
If you can, find out why they’re not interested. It might not be the right time. It could be that six months from now they’re ready to make a new investment. Or expand their product offerings.
Leave them with a card – and let them know you’ll follow up with them again in the future if it’s appropriate.
Final thoughts
Selling wholesale transfers is another way for your business to earn a profit.
When you’re not using the machine to print designs for your customers, it’s not making you money. By expanding your business to wholesale, you can increase the number of hours your machine is running.
When approaching potential shops to sell to, ensure you’re addressing their question, “How will this benefit my business?” You’re looking for a win-win situation for both businesses.
