Northwest Custom Apparel Pricing Strategy NEW

Defending Our 48-Year Legacy of Fair, Consistent Pricing

Presented by Erik Mickelson | Tuesday Company Meeting | October 7, 2025

Critical Policy

Essential reference for all Account Executives

Executive Summary: Defending Our $30 Customer-Supplied Pricing

After 48 years in business, Northwest Custom Apparel maintains pricing that ensures both sustainability and fair value. Our $30 customer-supplied embroidery pricing is not negotiable—it represents the true cost of quality service, skilled labor, and business continuity.

The Economic Reality

A 5% discount destroys 50% of our profit margin.

When operating at 10% profit margins, every discount directly threatens our ability to maintain quality, pay fair wages, and invest in equipment.

The Seven Core Principles of Northwest Custom Apparel

These principles guide every pricing decision and customer interaction

1Quality Without Compromise

Every job receives the same attention to detail, whether it's 12 pieces or 12,000. Our reputation is built on consistency.

2Fair Wages for Skilled Labor

Our team members deserve living wages. Discounts come directly from their paychecks and our ability to retain talent.

3Investment in Modern Equipment

Quality requires investment. Our pricing maintains equipment that produces superior results.

4Sustainability Over Sales Volume

We choose profitable relationships over volume. 100 profitable customers beat 1,000 unprofitable ones.

5Transparency in All Dealings

Our pricing is clear, consistent, and fair. No hidden fees, no surprise charges, no games.

6Value Beyond Price

We compete on service, quality, and reliability—not on being the cheapest option.

7Long-term Relationships

We build partnerships, not transactions. Our pricing ensures we're here for decades to come.

The Economic Reality of Discounting

Understanding why "just a small discount" can destroy a business

Discount Given Profit Lost Additional Sales Needed to Break Even Real Impact
5% 50% +100% more volume Must double sales to maintain profit
10% 100% +∞ (impossible) Working for free
15% -50% N/A Losing money on every order
The Math Doesn't Lie

On a $30 job with 10% profit margin ($3 profit):

  • 5% discount ($1.50) reduces profit to $1.50 = 50% profit loss
  • 10% discount ($3.00) reduces profit to $0 = 100% profit loss
  • 15% discount ($4.50) = $1.50 LOSS per piece

Would you work for half pay? Neither should we.

Why Customer-Supplied Garments Cost What They Do

The hidden costs and risks of customer-supplied items

Additional Labor Required
  • Sorting mixed items
  • Quality checking each piece
  • Handling various fabrics/blends
  • Managing multiple brands
  • Extra documentation
Risks We Absorb
  • Damage liability
  • Missing items claims
  • Quality variations
  • Incorrect counts
  • Storage requirements
The Time Factor

Customer-supplied jobs take 40% longer to process than standard orders:

  • 20 minutes: Receiving and counting
  • 15 minutes: Sorting by size/color
  • 10 minutes: Quality inspection
  • 15 minutes: Extra handling during production
  • 10 minutes: Final count and packaging

Total: 70 minutes extra per job = Higher cost

Scripts & Responses for Common Scenarios

Professional responses that protect margins while maintaining relationships

Scenario 1: "Your competitor charges $25"

"I understand price is important. Our $30 pricing reflects our 48 years of reliability and quality. We've seen many $25 competitors come and go—usually when customers needed rush orders or had quality issues. Would you prefer to save $5 per piece or have confidence your order will be perfect and on time?"

Scenario 2: "Can you do $25 for a large order?"

"I appreciate your business, and I wish I could. At $25, we'd actually lose money on every piece. What I can offer is priority scheduling, free digitizing on your next order, or help finding ways to reduce the complexity to save costs. Would any of these alternatives work better for you?"

Scenario 3: "We're a non-profit"

"We deeply respect your mission and support many non-profits. While we can't discount below our costs, we can offer extended payment terms, help you design for efficiency, or suggest alternatives like patches that might fit your budget better. How can we help make this work within your budget?"

Scenario 4: "Just this once for a special event"

"I understand this is important to you. The challenge is that 'just once' becomes precedent, and we must be consistent with all customers. Instead, let me show you how we can modify the design to reduce stitch count, or explore other decoration methods that might be more budget-friendly. Would you like to see those options?"

Scenario 5: "I'll take my business elsewhere"

"I respect your decision and truly wish we could meet your price point. If you do find someone who can do quality work at that price, we'd love to know how they manage it. Many customers who leave for lower prices return when they experience the difference. We'll be here if you need us, and I'm happy to provide a reference for your files."

Value-Add Strategies: Erik's Beanie Approach

How to increase value without destroying margins

The Beanie Strategy

"I can't reduce the price, but I can throw in free embroidered beanies with your order. These retail for $25 but cost us $8. You get $25 in value, we protect our margins."

Free Digitizing on Next Order

"Place this order at full price, and I'll waive the $75 digitizing fee on your next order. That's like getting $3 off per piece on a 25-piece order."

Priority Rush Service

"At our standard pricing, I can guarantee 3-day turnaround on your next rush order—that's a $200 value when you need it most."

Extended Payment Terms

"While we can't reduce the price, I can offer NET 45 payment terms, helping your cash flow without affecting our costs."

Free Samples

"Order at standard pricing, and I'll include 3 free samples for your sales team—that's $90 in value at no charge."

The Cost of Bad Customers: When to Say No

Protecting team morale and company profitability

Red Flags to Recognize
  • Demands pricing before discussing project details
  • Compares only price, ignores quality/service
  • Has a history of complaints with other vendors
  • Refuses to pay deposits
  • Threatens negative reviews for leverage
  • Consistently pays late or disputes invoices

The True Cost of a Bad Customer

Time Drain
  • 5x more communication required
  • Multiple revisions and complaints
  • Disrupts workflow and schedules
Morale Impact
  • Team stress and frustration
  • Decreased productivity
  • Risk of losing good employees
The Professional Exit

"I don't think we're the right fit for your needs. Our pricing and processes are designed for customers who value quality and reliability over the lowest price. I'd be happy to recommend [competitor] who might better match what you're looking for."

Remember: Firing bad customers makes room for good ones.

The Seven Dangers That Destroy Companies

Why discounting is a death spiral for service businesses

1. The Precedent Trap

One discount becomes expected forever. "You did it last time" becomes your new price.

2. The Referral Poison

Discounted customers refer other price-shoppers. You attract the wrong clientele.

3. The Quality Slide

Less profit means cutting corners. Quality drops, reputation suffers, good customers leave.

4. The Morale Killer

Team knows discounts come from their raises. Good employees leave for better-paying companies.

5. The Cash Flow Crisis

Lower margins mean no cash reserves. One bad month becomes bankruptcy.

6. The Investment Freeze

No profit means no new equipment. You fall behind competitors who invested wisely.

7. The Death Spiral

Discounts → Less Profit → Worse Service → Lost Customers → More Discounts → Bankruptcy

This cycle has killed thousands of print shops. We will not be one of them.

Implementation Timeline

Rolling out the new pricing defense strategy

Week 1: Team Training

All AEs receive pricing defense training and scripts

Week 2: Customer Communication

Send pricing policy updates to all active customers

Week 3: Implementation

Begin using new scripts and value-add strategies

Week 4: Review & Adjust

Team meeting to share experiences and refine approach

Final Message: Standing Firm for 48 More Years

Our Commitment

We are not the cheapest. We will never be the cheapest. We are the best value.

After 48 years, Northwest Custom Apparel stands for:

  • Quality that exceeds expectations
  • Service that solves problems
  • Reliability that builds trust
  • Fairness that sustains relationships

Our prices ensure we'll be here for your grandchildren's orders. That's our promise.

Remember

Every time you defend our pricing, you're defending:

  • Your coworkers' livelihoods
  • Our ability to serve customers well
  • The company's future
  • Your own job security

Stand firm. Stand proud. Stand together.

Quick Reference
Key Numbers
  • $30 - Min customer supplied
  • 10% - Our profit margin
  • 5% discount = 50% profit loss
  • 48 years in business
Value-Adds Available
  • Free beanies ($8 cost)
  • Free digitizing ($75 value)
  • Priority rush service
  • Extended payment terms
  • Free samples