The first step in embroidered custom decorated apparel has an acceptable and accurate art file to work from.
All digital files are redrawn as virtual stitches to communicate the design to the embroidery machine. The process for redrawing a design or logo as stitches is called digitizing. The cleanest files produce the perfect embroidery.

Letter Size – For better result letters can be no smaller than 0.25″ high and line thickness should be more than 0.05” or they will not embroider well. 
Detail – Super fine detail will likely be compromised. Most embroidered logos are small by nature, the thread is a fixed width, and the fabric adds an element of compromise.
Gradients – Complicated gradients can sew very well. However, keep in mind that stitches do not blend, so the gradient will be less smooth in appearance than what you see on your computer screen.
Photography – Photographic image can be done in solid shape.

Vector files (ai, eps, pdf, EMB) with fonts converted to outlines. This format produces the highest quality embroidery.

Raster files (jpg, tif, gif, png, eps, EMB) at a minimum of 150dpi at the final image size.
These images, designs, or logos are composed of pixels rather than paths. When zoomed in it is more difficult to see detail and where shapes begin and end. For this reason a digitizer must do some creative estimating. Your end embroidery may not be as exact as you would like it to be.
Machine file format DST

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