Before I ever did the math, I thought an hour on my press cost about half of what it really does. I had run the shop for years at that point. I was not new, and I was not careless. I just had a number in my head that felt right, and every quote I wrote inherited it.
That is the whole problem with the hourly rate. It is the one number every price in the shop is built on, and almost nobody calculates it. They feel it.
Why the guess is always low
A guess is built from the costs you see every day: ink, shirts, the one employee standing next to you. It leaves out the costs that arrive once a month and get paid without a thought.
Three lines are missing from almost every guess I have heard:
The equipment payment. The press, the dryer, the exposure unit, the van. If any of it is financed or leased, that payment is a cost of running the press, whether or not you think of it that way.
Your own pay. If you take a draw, or you would have to pay someone to do what you do, that is payroll. A shop that prices as if the owner works for free is a shop where the owner works for free.
The hours the press sits idle. This is the big one. You are open eight hours. The press is not printing for eight hours. Setup, art, teardown, waiting on approvals, the phone, the customer who stops by: none of that is a paid impression. For a busy shop, half of the day is a normal answer. For a newer shop it is less than that.
Miss those three and the number comes out at about half. Which is where mine was.
The math, in plain words
There are only two things to know: what it costs to keep the doors open for a month, and how many hours in that month the press is actually printing paid work.
Monthly nut. Add up rent, utilities, insurance, software, supplies, equipment payments, and the other fixed costs (phone, internet, marketing, the accountant). Then add payroll, plus your own draw, plus the burden on top of wages (payroll taxes, workers comp, benefits). That total is what the month costs before you print a single shirt.
Billable hours. Days you run in a month, times production hours per day, times the share of those hours a press is really printing. Twenty days, eight hours, fifty percent utilization is 80 hours. Not 160.
Break-even rate. The nut divided by the billable hours. That is what one press hour costs you before a cent of profit.
For a small shop with a $27,250 month and 80 billable hours, that is $340 an hour. A one-person hobby shop with a $3,400 month and 27 billable hours is about $126. A production shop with two employees and a $54,000 month lands near $472. Those are the same presets my pricing tool uses, and they surprise people every time.
What to do with the number
Two things.
First, add your margin. If you want to keep 40 percent, you charge the break-even rate divided by 0.6, not the rate plus 40 percent. On a $340 hour that is $567, not $476. The difference is the part most spreadsheets get wrong.
Second, put it under every quote. Setup time on a job is press hours. Run time is press hours. The rate turns both into dollars, and once you have it, the question “what should I charge for 48 two-color shirts” stops being a feeling.
Run your own numbers
I built a free calculator that does this math with your real costs, live, with nothing to sign up for. It starts with the presets above so you can see the shape of it, then you overwrite them with your own rent, payroll and hours. It also shows you the eleven fields to carry into PrintGrid if you want the full pricing matrix built from it.
Calculate your shop’s hourly rate
If your number comes out near what you already had in your head, good. Most people find it is about double. I did.