Here's what I am thinking so far, let me know how you feel about it:
Cost would be $25.00 set up including one label. Additional labels at $11 each including shipping. Words would be priced at a per letter charge of 10 cents. Order 10 labels at once for $100.
Size is 4x6 inches. The fabric I use is pre-washed quilter's sateen in off-white. I can also use your fabric if you mail it to me. No break on cost.