If you have shopped at all for any custom logo embroidered apparel, you have probably been introduced to the set-up fee. Also referred to as digitizing or tape charge, the set-up is the process by which a company logo or graphic image is converted into a file that the embroidery machines can read and then recreate in embroidery.
The set-up or digitizing process is something every embroidery shop must do in order to embroider a logo onto a polo shirt or other item. It represents a real cost.
If you have done any shopping for embroidered apparel or any research on the topic, you know that the fees companies charge for the set-up can vary widely. Some charge as much as $150 for a left chest-sized logo and some charge nothing at all. That is a huge variance in a how companies are covering a cost. Why is that?
The answer represents variations in the different business models of different embroidery companies. It is a real cost, so customers are paying for it one way or another.
Some companies may not charge for it, but require a minimum order. By doing so, there is enough profit margin in that minimum order to cover the digitizing cost.
Other companies recognize it is a one-time expense, so they charge the customer up front and then not again on any repeat or future orders. This is a common scenario, but the amount actually charged can vary widely.
Still other companies use it as a revenue center and build in a profit margin. Their cost may be X and they charge Y more than X to create some profit.
Some use it as a loss leader knowing they are going to cover the cost in some other way-either with a minimum order, a long-term relationship or charge of some other kind.
At Thread Logic, we actually use a combination of these examples to cover our digitizing costs. Our set-up cost for a left chest logo is $40 for any order less than $300. For any order over $300, the digitizing cost is waived. It is a combination of the minimum order and the one-time expense models.
So what is a customer seeking logo embroidered apparel to do? That really is up to you and your situation. There is no free lunch or free digitizing, that cost is being covered somewhere.
My advice would be to not make a purchase decision on the set-up fee alone. Consider other factors like the price of the items you wish to purchase, quality, reputation, turnaround time, customer service, minimum order, etc.
Basing a purchase decision on set-up fee alone is short sighted. There are so many other factors that should be considered when purchasing quality logo embroidered apparel, and set-up cost is just one of those factors.