Retail vs Contract Screen Printing | What is Contract Printing?

Let's compare contract screen printing with retail screen printing. Contract screen printing is printing for someone else (like another print shop) behind the scenes. Retail screen printing is printing directly for the customer. Pricing for contract screen printing is much more competitive than retail screen printing - so setting up your business correctly is crucial.
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Remember: do jobs that are within your scope! That's why contract printers exist.
Contract screen printing: Your brand is not shown to the end customer. The products you print are often drop shipped.
Retail screen printing: You work with the end customer to fulfill their goals. The products you print may be shipped or picked up by your customer.
Pricing for contract screen printing versus pricing for retail screen printing
In contract screen printing, you typically price for a flat-rate “print cost” per print. A ballpark rate that’s often tossed around as a back-of-the-envelope number is $0.50 a print. Since profits are so low, contract printing requires a high degree of efficiency. There are very low margins and certainly little room for markup since contract printing is so competitive. A setup fee may help pad your margins, but as you start to print in high volume it doesn’t cover much risk.
In retail screen printing, you typically price by marking up your garments and adding print costs to that. This means you dictate your own pricing based on how you communicate your value to the customer.
Setup fees and other charges (like screen and color charges) are part of the game for either type of screen printing. Whether you do contract printing or retail printing, definitely add upcharges and fees to your pricing model. Bag-and-tag, custom colors, unique prints and other services add real value to your customers - no matter who they are.
Contract printers should find other shops to network with. You’ll help other shops by taking their overflow and printing things they can’t (or meeting deadlines they can’t). Working with ad agencies is another option, as well as distributors and private labels.
Some shops are purely contract printing or purely retail printing. But most screen printing businesses do a mix of contract and retail printing.
Q&A with Steven Farag from Campus Ink
Q: Does Campus Ink do a lot of contract printing?
A: We’re not set up for being a contract printer! Those businesses are run differently than ours. We make money on selling garments. People wind up running their presses just to keep their businesses open but they're actually accumulating more debt.
Q: What do you mean, not set up for it?
A: Big contract shops have everything set up and dialed in. They charge for screens, ink replacements, unpackaging. There’s a dollar associated with every task in the business. It’s calculated manufacturing. There’s a very small margin for error. Normal direct to consumer shops that dive into contract printing take a lot of jobs that make a small amount of money. You can lose money that way.
Q: So, ultimately, why not contract print?
A: You have to go direct to screen so you can eliminate setup time. You need a good system for artwork approvals. You need print-ready artwork right away. Your artists shouldn’t make custom art. Your press operators need everything dialed-in perfectly. They need to know how long set up takes, how long they’re going to be printing. Not that we can’t do those things, but the level that contract printers are at is extremely high. Unbelievably high.
Q: Do you use contract printers? How did you find them?
A: We looked at 1-day shipping or pick-up near our facility. We needed a contract printer, ideally, within 100 miles of us. We have different contractors for screen printing, DTG, embroidery. It’s not bad to broker out jobs you can’t handle! Send big things out to experts. They are there to compliment your business, not compete with you. Contract printers are like an elastic cloud for printing capacity. You need really good relationships with them.
Q: How do you know to contract a screen printing job?
A: We look at whether the scope of the job is outside of what our shop is capable of doing. Does it fit in our profile? We can do 4 or 5 colors really well. Not crazy simulated process. Will this jam up production for us? I notice whether it’s going to stretch us thin. I just instantly call another contractor. You may make less money, but you know it’s going to be done right. Then you can focus on jobs you can do that will be profitable for your business.
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[@mauricewilliams2594]

Great video