The best file would be an eps or wmf (vector artwork).
I can also work with a jpeg but it should be reasonably high resolution.
The cleaner the artwork, the better the digitizing will be.
There is no "setup fee" but if the digitizing is complicated or more than 3-4 colors then there may be an additional charge. But I would discuss that upfront once I saw the artwork.
(Digitized Dregamire sigil still in the hoop photos attached)