Set up fees are a scam employed by distributors in an effort to do a couple of things.
The first thing this accomplishes for suppliers is a revenue stream. As a long time ad specialty supplier and having worked in big suppliers in the 90’s and 2000’s I can tell you this…
“Set up fees represent as much as 32% of a suppliers gross revenue!”
Secondly, the use of set ups has come about as a way for suppliers to try and fool the unsuspecting distributor into thinking the actual price of the product is less that it is.
Set ups are also always on some weird coded price so that the supplier gets paid but you as a distributor can’t actually charge your customers any profit on that part of the sale.
“If you think of set ups as a TAX on your sale you won’t be happy!”
The other issue I have with set ups is that they are totally unnecessary and generally are a cost to you the distributor that is NOT an actual cost to the supplier. Here’s how:
Suppliers either bring in decorated products direct from offshore or decorate domestically.
As a supplier myself, who brings them in directly from China I can tell you the following. I never, ever, pay China a set up fee! NEVER.
If I don’t pay them, why should I charge you?
If a supplier decorates here in the States the idea of a set up is even more ridiculous. Ask yourself, what does a set up fee cover?
Labor? Does a decorator only pay their labor on each job (i.e. call someone in to print your job only)? No, these people are fully employed at the supplier and as such their labor is easily accounted for in the suppliers overhead.
Materials? The cost of ink is nada, zilch, bupkis.
In closing. Let’s be honest, if a supplier is charging you set up fees then you are really getting duped. The only thing that is worse than you getting duped is the end user as they hate set up fees (when they are charged by the distributor) and this is causing them to look online.