The setup and tooling line
Setup is the fixed-cost line that runs once per SKU per decoration, regardless of volume. On screen-printed apparel, setup covers the screen burn per colour, the artwork preparation, and the registration set-up on the press; a four-colour one-location print therefore carries four screen burns and four setup charges. On embroidered apparel, setup covers the digitising of the design into stitch file and the multi-head machine set-up; it is one digitising charge plus one set-up charge per colour change. On digitally printed apparel, setup is small relative to screen and is often absorbed into the per-unit figure. On hard goods, setup covers the decoration jig, the print pad and the screen or laser file. The negotiation on setup is a negotiation on the screen-burn or digitising rate and on the number of charges applied; a buyer who asks for setup to be amortised into the per-unit figure is asking for the supplier to show one lower per-unit number and a higher real cost, which is the worse outcome on a small run and the better outcome on a large run.