How To Calculate Profit Margins For Small & Home Based Businesses

Calculating profit margins are important for any small business. Regardless of if you're looking to take a hobby to a full-time business or if you're an existing apparel decorator trying to bring in more revenue, calculating your profit margins is an integral part of profit in your apparel business.

WHY IT MATTERS: With a detailed cost & profit analysis, you can clearly see how much money you're actually bringing in.

◾️ With accurate profit calculations you can modify your margins to win more business for budget-minded customers.

◾️ You can say 'no' to jobs that won't be profitable.

◾️ With a clear picture of profit and expenses, your small business can identify a low profit margin and explore ways to increase your take home pay.

Factoring in hidden costs like overhead or labor can account for shorting your own pockets, and while your incoming revenue might look good, you're not actually making enough to cover your expenses.

In this video we're breaking down how you can accurately calculate your profit margins and how they impact your business.

We'll cover overhead expenses, things like utilities, services, equipment, labor and technology.

Then we'll look at your small businesses cost of goods, essentially what costs go into creating printed apparel (at any scale).

Next, we'll calculate our gross and net profits, diving into calculating the actual profit margin as a percentage.

Then we apply everything to a real-world home based business to help guide future business decisions.

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[RPtheceo]

I currently own a small IT and Security installation business, but looking to get into this business as a side Hussle to assist with our slower times in the tech field. Purchased a Cameo 4 and a Heat Press a couple months back for $100 for all equipment. So naturally we do our own company apparel! Its a learning curve but so easy to get started. Thanks for all the content and looking forward to using Stahls when the need arises.

[Fancylooks]

Thank you for this analysis, pricing is not easy when you begin!

[FlourishGiftShop]

Great breakdown! So when we are considering paying ourselves, how do we calculate what we can actually put in our pockets if we are basing our pay on the profits? I factor my labor cost into the price of my items, my gross profit, and my profit margin... I just don't know where or when I should *actually* put some money in my own pocket! I hope that makes sense.

[mikeferretti]

What about pricing for volume. Xs 2 works for smaller orders but eventually pricing will have to be reduced. 1 vs 200 vs 1000