One of the more controversial subjects in owning a retail airbrush studio is the subject of the Service Charge. Some artist charge a fee for customers who bring in an item for them to paint and some do not.
What follows applies to you if…..
1.) You are operating a “retail location” like a mall store, flea market, or free standing store front in a "non-tourist trap" area.
2.) You are operating a business that has at least one other artist working for you.….however it also has a lot of information that a “one man operation” should also consider
While anyone with a location in a tourist trap area or an amusement park location can also learn a lot from this, it may not all apply to such locations simply because of foot traffic/quantity of orders. meaning these places are less likely to get people bringing in their own items on a regular basis.
So….Why a service charge?
The main reason is because you are losing money each and every time a customer brings in an item to be painted….especially if it is an item that you sell.
Two other subjects that greatly influence the reasoning for the service charge are...
1.) the price you sell your items for
2.) pricing item and artwork separate?
These are two entire subjects in and of themselves that are covered in detail in other posts…. “pricing item and art separately” but we will have to touch on them briefly in order to completely explain the reason for a service charge.
What most artists have a tendency to forget is that they are running a “For Profit” business. This business is based on…
1.) your talent and ability to airbrush artwork on pretty much any item
2.) selling items to paint on.
Both of the above are the two things that are making you money.
It is a given that if you operate an actual retail location then you are more than likely selling blank items.
So with this in mind it is also generally accepted that the artist is making their money off the sale of the artwork and the store owner is making their money off either just a percentage of the artwork… or... the profit from the sale of a blank item AND a percentage of the artwork. It is important to note here that if you are a "one man show" and you plan on running an actual business then you need to separate yourself from the business. YOU ARE THE ARTIST....therefore you should be paying yourself AS the artist and the "store" should making the money off the sale of the blank items. The money that the "store" makes off the sale of the items and/or the percentage it is receiving from the artwork should all go back into supporting the business. This is where most artists fail when it comes to running their own business. They just think that EVERYTHING the store brings in is theirs to keep and do whatever they want with it. You can not run a business like this ....the store(the business) has to actually make money also in order to keep growing. This is called "cash flow" which is the money that is available to the "business" to keep it running and paying the bills. To many times artists fail to separate themselves from the business.
As the owner you have to pay rent, utilities, business insurance, office supplies, maintenence and up-keep on the studio space and all the expenses that come with owning a business. How can you expect to survive on just a percentage of the artwork? Most places can’t, which is why they start selling blank items.
As a store owner you purchase a blank item and then resell that blank item in your store at a marked up price. This marked up price is called the “Retail price”. The price you originally purchased the blank item for is called the “wholesale price”. Pricing items is an entirely different subject but we will briefly touch on it as a way of moving into the ”Service Charge” subject.
Here at Anything Airbrushed plus we generally purchase our blank white t-shirts at between $1.50-$1.80(these prices are for adult white t-shirts size Small thru XL) other sizes such as youth and 2x-3x etc... will have a different price.
The $1.50-$1.80 is the “wholesale" price. We sell these blank items at a marked up “retail” price of $9.00. So the studio is making approximately a $7.20-$7.50 profit off each shirt sold.
Now, think about that $7.20-$7.50 profit and multiply that by the number of shirts you sell…that profit adds up to THOUSANDS of dollars.
So why lose ALL that profit by allowing someone to bring in their own items?
You shouldn’t….you should allow someone to bring in anything they want but replace that “profit” with a service charge. Remember, it is the store owner that makes the majority of their money off the profit from the sale of blank items…when you do not sell blank items you lose all that profit. When you do not charge a service fee for painting on items that customers bring in….especially items that you sell. Then you are losing all that profit.
It is the profit from the sale of blank items or a service charge that should go back into the business.
This is where most artists lose when it comes to running their own business. They forget that you do not survive on just the sale of artwork, you survive and more importantly grow from the sale of blank items.
The service charge is not a punishment, or a deterrent for customers bringing in their own items. It is a reasonable and legitimate business decision that allows a store to grow.
One of our favorite sayings here at AAP is “Our inventory is only limited by the size of our customers imagination”….think about that.... It means we can paint on literally anything a customer brings us to paint. In reality you can walk into any big box store right now and conceivably paint on ANY item you pick up. ANY ITEM!. Granted, the chances of someone bringing in a Sirloin Steak are slim….but yes…you could paint someone’s name on that packaged Steak…the chances of someone bringing in an umbrella are slim….but yes you could paint on an umbrella…..and on and on and on
However, even though we can paint on anything does not mean we can possibly SELL everything we can paint on….otherwise you would not see airbrush shops INSIDE Walmart….the Airbrush shop would BE Walmart….but this isn’t realistic.
The typical airbrush shop carries the most popular items to paint on….t-shirts, sweatshirts, hats….etc. As the owner of a shop however you should not be forced to lose money just because someone prefers a different brand of shirt or likes their shirts a different style or color then you carry. You should not be forced to lose money just because your customer wants you to paint their helmets for their softball team….just because you do not SELL blank helmets.
Most artists, when this subject comes up usually say at this point….."but I am still making the money off the price of the artwork". Which is absolutely true….but you would be making more by charging a service fee for painting on an item someone brings in and that money can be put back into the business to help you grow without effecting the money the artist is making.
All these items you are painting on are taking money away from the profit you would have made if that item was one of your blank t-shirts.
For the sake of this topic lets say your artist is making 70% of the artwork…That means for every $10 in artwork that is sold you as the business owner are only making $3.00(30%) and the artists is making $7.00(70%)
If as the owner you have to pay rent, utilities, business insurance, office supplies, maintain and up-keep on the studio space and all the expenses that come with owning a business…how can you expect to survive on just 30% of the artwork?
Let’s take a typical sale of a $10.00 t-shirt design and a $9.00 t-shirt. The artist is making 70% of the $10.00 artwork which is $7.00. The business owner is making the other 30%($3.00)…but is also making the money off the sale of the blank $9.00 t-shirt which we already figured out above that the profit(after wholesale price) is $7.50…so now instead of just making $3.00 the business owner is making a profit of $10.50($3.00art+$7.50shirt profit)….a huge difference from just the $3.00
So where does the service charge fit in?
Here at AAP we have a general service charge of $5.00 for all items brought into the studio by the customer to be painted.
This $5.00 service charge is for such things as t-shirts, sweatshirts, hoodies, pillowcases, v-neck shirts….pretty much ALL the items we sell. But it will also be adjusted up or down for items such as motorcycle tanks, batting helmets, and pretty much all items that we do not sell. For example $8.00 for painting batting helmets but $3.00 for baby onesies
The $5.00 came about years ago when we first opened because it was the approximate amount of “profit” we were making off the sale of our blank t-shirts. We have never raised the service charge because $5.00 is a very affordable price for a customer to pay for an item they want custom painted.
The presentation and explanation of a service charge is something important to note. First lets note that we do have signs all over the store talking about the service charge…..its very important that you post signs saying there is a service charge on all items brought in to be painted.
Here at AAP we automatically include the service charge in ALL quotes we give when someone asks how much something is on their own shirt.
For example, lets just say a customer comes in and wants a picture of their car airbrushed on their own white t-shirt. We look at the reference picture and determine that the artwork is $35.00. So to the customer we quote them $40.00( $5.00service charge already added into the price)…they say "Great!….lets do it". So we pull out the order form and write up the order, placing $35.00 in the”Artwork” section of our order form and $5.00 under the service charge section of our order form. We never verbally say anything about a “service charge”….it is simply part of the price we quoted and the customer was happy with. It doesn’t matter how that $40.00 is divided up on the order form….it’s still $40.00. It’s not like we tell them $35.00 and then add the service charge in once they say “Great!…lets do it”
The only time a service charge actually has to be explained is when the customer comes in and looks at one of our designs that says $10 on it for the artwork and then ask how much is the total price of the shirt. We tell them the adult t-shirt is $9.00 so the total for that design is $19.00($10 art + $9 shirt)
Then if they ask how much if I bring in my own white t-shirt?…to this we simply reply “On your own shirt the cost would be $4.00 less”. We say it like this because once again we have included the $5.00 service charge without even mentioning the words ‘Service Charge”. $4.00 less would make the shirt $15.00($10 art + $5 service charge which is $4 less then original $19 for the art and our shirt). At that point if they question why is it $15 and not just $10 we explain the service charge. That explanation is simple. “The store makes it’s money off the sale of blank items, the artist makes their money off the artwork. If the store doesn’t sell any blank items, we go out of business.”….it’s very simple.
In most cases they just go ahead and buy one of our shirts simply because its to much of a hassle to go out and find a shirt and come all the way back to get it painted....why should they go and waste time looking for a good quality t-shirt that costs less then $4(the amount they would be “saving” by bringing in their own shirt)
Again, It’s important to stress that the service charge is not meant to be a punishment, and should never be presented that way.
Hopefully, after reading this you have a better grasp how implementing a "service charge" on items people bring is will help increase your bottom line.
As always feel free to leave comments or ask questions.