Bob Baker's Indie Music Promotion Blog

Music marketing ideas for DIY artists, managers, promoters and music biz pros


March 15, 2006

Are You Shortchanging Yourself?

One of the things I'm looking forward to in Austin is finally meeting my longtime music pal Mark Gunn in person. He's a smart indie musician who has posted a lot of great promo ideas online over the years.

In an article called The Price Is Right, Marc gets pissed about people who suggest that indie artists should charge no more than $10 for their CDs. He writes, "How do I say this nicely ... That's Bull Sh*t! It's hard enough for us to make a decent living selling CDs, but to sell them for $10? Unless you have less than 10 songs, don't listen to 'em."

Marc continues, "Will more people buy the [lower priced] CD? Well, probably ... a few. But you know what? If people like your music, they WILL pay $15 for a CD! Surprise, surprise, surprise. They may hesitate a bit, but they will eventually buy it, and when they do, it will mean so much more to them. Don't be fooled. You are a professional. Now act like one."

Great attitude. In the article, Mark also points out another great reason to raise your prices: A higher price point allows you room to discount your CDs from time to time. This makes your fans feel good because they got a deal -- and you still make a few bucks.

-Bob

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posted by Bob Baker @ 1:21 PM   11 comments


11 Comments:

At Apr 25, 2006, 5:34:00 AM, Anonymous Anonymous said...

15$ ?? this is exactly reason why people are hating the big 4s as they have been greedy and they have been trying to charge a very high price for a cd. wake up man! a cd should never ever costs more than 10 dollars unlesss we are talking about the rarest music from a fogotten island.

you pay to produce a cd about 1 dollar. plus 1 dollar to record it (probably less). if you're selling for a tenna then you earn 8 dollars on a cd. it's a fair earning.

 
At Apr 27, 2006, 1:31:00 PM, Blogger Loren Davidson said...

I'm with Bob on this.

I have occasionally dropped prices on my CDs, to see how it might influence demand. And I didn't sell any more CDs at $10 than I did at $15. So why *not* charge the higher price?

As for the anonymous comment about how much it costs to produce & record: Unless you're doing it at home, and therefore getting a *very* "homemade" sound...you are *very* wrong about the costs. Even an inexpensive studio with good equipment and an engineer/producer who knows his shit is going to cost $250 or more per song to get it right. And until you sell more than a few hundred copies, the cost per CD is *much* higher than what you claim.

But let's ignore the direct costs for a moment. How long does it take to write a good, compelling song? How much practise does it take to sound good with that song and nine or fourteen others? Is the musician not "working" during those hours? Would you be willing to work for that many hours without pay? I doubt it.

Finally...how much enjoyment do you get out of the music? If you don't get 10-15 dollars worth of enjoyment out of a CD, or out of the experience of listening to the artist, then absolutely, don't buy it.

But if you like the music enough to want to play it more than a couple of times, then it's got to be *worth* something to you, yes?

*That's* what you're paying for.

As for greed in the recording industry...that's an entire other topic.

Loren
http://www.lorendavidson.com

 
At May 12, 2006, 12:41:00 PM, Anonymous Doug Alcock said...

Marc's post is six years old and he's selling his own CD here http://www.cduniverse.com/productinfo.asp?PID=7102530&style=music&frm=frooglemusic for $10.49. It would be interesting to hear what his thinking now is....

 
At May 12, 2006, 2:05:00 PM, Blogger Marc Gunn said...

Remember that most online retailers are coming from somewhere else. My Suggested Retail Price is $15. However, I sell Cds on CDbaby for a slightly discounted price due to shipping. I also raised prices since digital downloads are now at $9.99 regularly.

But imagine for a moment. That website got my CD via CDBaby. If I was selling my CD for $10 there. They would need to discount my CD further, say 30%. So They're charging $7 for my CD. Thus I am earning $3 as opposed to $6 per CD.

The point of selling the CD at $15 is to offer flexibility so that you can discount your CD. So my philosophy hasn't changed a bit.

 
At May 17, 2006, 9:18:00 PM, Anonymous Louise said...

I charge $15 per CD online, but $10 at a show. I think that provides an incentive for folks to come out to a gig and buy the CD there. That way I get cover money (or simply attendance which helps with getting gigs anyway) and the CD sale and they get the live performance. Not sure if this is sound, but it makes sense to me and I definitely sell more CDs at my gigs now.

 
At May 29, 2006, 12:22:00 AM, Blogger Jimmy Zee said...

I have been selling my CD on Ebay for 12.00 and it has been great.

http://cgi.ebay.ca/ws/eBayISAPI.dll?ViewItem&item=4888012989&ssPageName=ADME:L:LCA:CA:11

 
At Aug 2, 2006, 10:32:00 AM, Anonymous Dave Feder said...

I have been selling CDs at show and online for $15.00 going on 12 years now and sales have been great. The only discounts I give are when someone pays to enter a charity event. Then I'll usually knock off five bucks as a thank you. Or if someone buys a whole case, there will be a quantity discount.
Furthermore, people generally don't value things when they pay under the norm, whatever that is. "The more you pay, the more its worth"
I do however give away many CDs each year and that's way different. Each one comes back to me twenty fold. It can be great advertising if done wisely.
They are like groovy business cards for the appropriate people.
If you value your music, others will also. You are sharing a piece of yourself, something of value and unique. They will get it.

 
At Apr 19, 2007, 9:31:00 AM, Blogger William Zeitler said...

Here's my pricing strategy, the result of a lot of experimentation. (I've sold over 23,000 CDs so far). First, every successful retailer on the planet--Walmart, Sears, your local grocery store--charges $14.95 for a $15 item.

Secondly, at live shows, the FIRST CD is $14.95, after that they are $9.95. Consequently, almost every sale is for at least two (to get the 'bargain'), for an average sale of $12.50. By charging "14.95" I give the impression that they are WORTH $14.95, but they get a DEAL (that second one is under $10!!!! Buy Now!!!!) if they buy more than one--and mostly they do. This strategy has approximately doubled my sales (though you need more than one title for this to work.)

Look at how any other industry does it. They have MSRP (manufacturer's suggested retail price). You can always LOWER your price (at a given gig, or for a sale, ferinstance), but folks get upset when you RAISE it.

(BTW, do NOT include sales tax in your price. If you do, you are deviating from well nigh universal retail practice (Walmart, your grocery store--NOBODY includes sales tax in the price), and you're reducing your profit by 8% (in CA). That's a LOT! Once they've decided to buy, NOBODY has said to me: "Well, I'm not buying CDs after all because you charge sales tax". I just make a joke about not wanting to argue with Arnold [Schwarzenegger--the governor here] and they laugh and hand me their credit card.)

I also charge a little more online than live ($2). (When asked, I tell them that online sales are more work for me--I have to deal with shipping, etc., so I 'have to charge a little more'. But that's not the REAL reason...) The fact is that I'll have folks at live shows who say "well, I'll just buy some online" but that delay usually means a lost sale. If I can honestly say (and signs on the sales table say this): "this is a special live show price, and you save shipping too" I can close many of those otherwise lost sales.
There's what I call the 'magic moment' at a live show when they're really into the mood and your music, and you will NEVER have a better opportunity to put CDs in their hands.

A friend of mine is a professional inventor for a living. (His current product is a clever shade that attaches to your lawn chair.) His rule of thumb is that MSRP has to be at least 4 times your cost of manufacture. You have to double it the first time to pay for manufacture plus your other business overhead like marketing costs--that's your 'wholesale' price. You have to double it again to get your MSRP--so you have the option of selling it wholesale. Look at this for CDs. Let's say you do EVERYTHING yourself. You still have your equipment to amortize (you have to buy it in the first place and keep replacing it) and you have to pay yourself something to have done it (to recover your costs to do the next)--food and electricity are good, aren't they? Let's say you can actually produce an album for just $1000 (which is really low). That and your pressing costs mean that your CDs really cost you at least $2.50 ea., meaning you need an MSRP of AT LEAST $10. And that's assuming a truly barebones investment into producing your album. This helps you see why Sony etc.--even at $18/CD--are having a tough go of it!

With any luck you'll sell more than 1000 CDs, so theoretically you could spread your production costs over more than one run. But it's standard practice in the publishing industry to set your price to cover production costs (vs. manufacturing costs) on the FIRST RUN. That's because there may not be a subsequent run! On the second run--you're finally making a PROFIT! Imagine!

Also, think about this: suppose you raise your price by $1. What fan is going to care about one measly additional dollar? But to YOU, $1 times 1000 CDs is an additional $1000 in your pocket! That's a lot!

Words like 'greed' are worse than useless because they cloud your thinking about approaching pricing rationally. I've seen artists charge (and get) $20 for CDs. Since the whole transaction is voluntary, folks have the choice of not buying. But, frankly, if they dig your music, most people don't care about an extra few bucks--that's going directly to the artist. To me getting the pricing right (to maximize income) is just a practical aspect of making a living at this--no more emotional than getting the audio mix right. I do the pricing strategy I do because in the long run it seems to have maximized my sales.

"Music Business" is TWO WORDS! It's not just music! And with the right frame of mind, the business part can be interesting, and maybe even kind of fun! :-)

 
At Jul 20, 2007, 9:48:00 AM, Blogger Robert Steven Williams said...

People should charge what they want, but in this stream of bloggers, no one has looked at it from the customer's perspective.

What's the perceived value of a CD nowadays?

Your costs and time mean nothing to a customer -- I can buy a feature film for ten bucks -- are you telling me that your CD is worth 15?

Today some of you can still get 15 a Cd, but that's not going to last -- so you better factor in a lower price sooner, rather than later -- find alternate revenue sources eg: hats/caps/keychains --

and figure out how to contain your CD costs --

and make sure you've got great material -- most of you out there have too many songs -- i'll take 35 quality minutes over 60 minutes of crap

man, i hate paying 10 bucks for a CD with only one good song...if I paid 15, I'm friggin furious...


robert steven williams
againstgrain.com

 
At Nov 18, 2007, 11:13:00 AM, Anonymous David Kershenbaum said...

I'm also with Bob but as a Producer I think the most important thing is the quality of the songs and performances you are selling them. If they are great...the word will spread like wildfire and the next time you are in town you will have many more fans at your gig. Also,,,you can expect more internet visits and possibly sales as well. People are tired of getting ripped off with CD containing one cut that they like after they get it home. If you are truly interesting in building your career...give them a CD worth owning again!!

 
At Mar 25, 2008, 6:27:00 AM, Anonymous Anonymous said...

I am with Robert Steven Williams on this one...In almost all of these posts, including the original, we -- the artists -- sit from our lofty pedastles trying to come up with a way to trick our potential supporters. Yes, trick is the word however you want to sugar coat it.

Does anyone really think that customers are dumb enough not to understand a little bit about how the business works? "Hey some ass clown is trying to tell me his small time band has a *discount* policy!" C'mon people. Especially in this day and age, a 15-year-old is saavy enough to find areas where he/she can download thousands and thousands of the *greatest* material ever recorded for *free*. $10 bucks isn't enough for you?

I say call them your "supporters", not your customers. I say treat them like the friends they can be and don't treat them like mindless peons that are simply fuel for your own vain desires -- because whether you know it or not, that's exactly what you are doing.

And let's be real here. Who the hell is going to make a *living* selling CDs these days? For those who will inevitably respond "I do, you asshole!" I say, get ready for a day job. Especially without the exposure that labels once could provide. You're better off looking for money via licensing and other opps.

Sure we just released our first record and get sales on myspace, CD baby etc every week, but I have no illusion that this is any real source of income. Though it's only been a month, we are nowhere near covering the *mastering* costs (2K at Sterling)! You should feel damn good every time you sell a CD -- it's either because someone loves you and wants to support you, or simply you are not popular enough yet to have your material on piratebay. $10 is more than enough money for a disc that costs $1 to manufacture. If you are worried about the costs to record and produce, tough shit! Work harder!

In short, I think we as musicians who want to grow, need to accept the fact that we need to be flexible and find a balance of giving things away for the sake of getting your name out there. This is coming from someone who will not give a free download of the record, but will send a free CD to a fan who expresses interest, but needs to wait a week until pay day--I just give it away. No matter how great your material, you should be flattered when someone buys your CD. The world is flooded with half-assed musicians who have a grand sense of entitlement, who believe their close friends and family who tell them they are so great. Ultimately *the people* will be the judge if you put in the work and suck up the costs for a while. The cool thing about now is that we are in a position to touch more people than ever at a low cost as Bob Baker demonstrates. When did you quit your day job, Bob?

And also, yes, good call to spend more time writing decent songs than worrying about some penny-pinching marketing scheme. Why not just go to business school, sell widgets and be done with it?
--Phaedrus

 

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