Setup fees are one of the most misunderstood parts of branded product pricing. Customers often ask why a setup fee is charged when they are already paying for the item and the branding. The answer is simple: before branding can happen, the job must be prepared for production.
What is a setup fee?
A setup fee covers the preparation needed for a specific branding job. Depending on the branding method, this may include embroidery digitising, screen setup, laser setup, artwork layout, print preparation or machine setup.
The setup fee is separate from the unit branding cost. The setup prepares the job. The unit branding cost is the cost of applying the branding to each item.
What makes a setup unique?
A setup is usually based on three things: the artwork, the branding method and the branding position.
- Artwork: the logo, design or message being branded.
- Branding method: embroidery, screen print, laser engraving, digital transfer, sublimation, pad print or another method.
- Branding position: left chest, front panel, back print, sleeve, bottle side, lid, plaque face or another position.
When should setup fees be grouped?
If the same logo is applied using the same method in the same position across different sizes or variants, the setup fee should generally be grouped once. For example, if one company logo is embroidered on the left chest of Small, Medium and Large golf shirts, that is normally one shared setup.
The unit branding cost still applies to every shirt, but the setup should not be repeated just because the size changed.
When do multiple setup fees apply?
Multiple setup fees may apply when something important changes. A front logo and a back logo are different positions. Embroidery and laser engraving are different methods. Two different logos are different artwork. Each unique setup may require separate preparation.
Why Lilly White shows branding separately
On branded orders, Lilly White shows product prices separately from branding and setup fees. This makes it easier to group setup fees correctly and avoid charging the same setup repeatedly across sizes or shared artwork.
Final thought
Setup fees are not hidden costs. They are part of preparing branded products correctly. A transparent quote should show product costs, setup fees, unit branding costs and any artwork preparation needed before the order is approved.