First off, take a hard look at what's involved in the embroidery business. You stated you know nothing about the business. It's easy to get sucked in by listening to the sales reps at the trade shows.
I would actually expect this more with a single head then a multi-head. Single heads are where you get the more "business in a box" type of mentality and far easier to get sucked into that. At least in my experience.
With a 2 head, you're not going to be doing production contract work. You simply can't get enough throughput on 1 machine to make it worth while. At least in my opinion.
Hmmm, that's strange. Now, granted any multi-head that is bigger then a 2 head will do better, one can get production contract work with a 2 head. How big those runs are is the question. More heads you have, the bigger the run, but even with a single head, can get production contract work. How many items and lead times are what people have to learn to handle (and how many hrs one is willing to work over in case that figuring is wrong(I've been here many a time when I started out in this work)).
One off work sucks. You'll only get about $12 to put a name on a polo and after all is said and done, you have spent 45 minutes on the entire process. Sales, design & production. You'll spend a lot of time explaining to customers that come into your shop with a crappy jpeg and want you to embroider a hat. You'll have to tell them that you need a special file to embroider the logo and it will have to be digitized. You'll then have to explain what digitizing is and how much it's going to cost. After you then tell them that one hat is going to be $60 with the digitizing, hat and labor, you've just wasted 30 minutes of your time.
I agree with you there, one offs do suck, but if done right, one will actually make more for that run then a production run. Just not as consistent as a production run. And with a single head, will be doing a lot more of them more often then not.
If you are doing one offs that just about anyone can do, even those with a single needle home machine, then those one offs are really painful.
As to the rest of that quote, I hate to break it to everyone, but that is a conversation one has regardless if it's a production client or a one off client. I have that conversation on a regular basis, even with people that are in other trades that have to deal with the exact same thing with whatever they do (oh the irony).
As to the 45 minutes, I've spent 4 hrs on just digitizing alone for a hat design (realistic animal embroidery, lots of one stitch at a time digitizing, old school) that was a one off. There are going to be some jobs that digitizing alone can take all day (full backs especially) just on the digitizing alone. Depending on the design and the production worthiness of the digitizing, stitch out can take that long for just 1 (if single head).
45 minutes for the entire process can be a breeze at times.
But that situation of interaction between you and the customer above happens a lot. Some listen, some don't.
Unless you have a niche market, embroidery is a low margin business.
It is definitely heading that way and oh so quickly. Between software vendors selling POS auto conversion techniques in their software, to people not knowing what good embroidery should look like. Or because they buy that cheap software that is mainly (or exclusively) auto converting can't fix the work to make it look better. Then of course, there is the traditional low ballers that either price things too cheaply (or not at all).
Don't necessarily have to be in a niche market to get better margins, just have to market and deliver better then what others do. For some customers that won't matter, but like in any trade after so long, it becomes easy to identify those. Of course, having better economy of scale helps with those margins as well.
But have to be honest with oneself and do a proper C/B and business plan to figure out what machine is the best fit. What market to go after and how long does one have to where should be showing a profit or it's time to get rid of the equipment and bow out.