No video this week as I am recovering off camera from a dislocated shoulder after a nice snowboard fall. So today it’s typing only and it’ll be quick.
In last week’s video we talked about how to actually make money and $50,000 was pretty much our median number. In the comments Chris mentioned that selling high priced products is the way to go. And I agree. You can’t be in the “Dollar Store” business and expect to get rich. It’s just not going to happen.
What you can do is charge money based on the value that you provide. In the consulting and marketing world I started out charging $25/hour and I was scared to ask for that much. It was just less than double my hourly wage at my at the time 9-5.
Then I realized how much value I could bring to a company, an artist and a business. If me working a few hours a week for $25/hr was contributing to thousands of dollars of profits, then why shouldn’t I charge more.
If I have a $47 course on music marketing (which I do) and a band uses it to get a sponsorship that nets them $1,000 or more, was their value in it for them? Uh, yea.
So as a musician, if a fan is going to get value out of your music and your products, should you be charging more?
If your CD was $5, and you sold 10 at a show you would make $50.
But do you think those same fans would buy it at $10 or $15?
Probably. And now you are looking at $100 and $150. If you played 4 shows a month averaging 10 sales per show that could be a difference of $200/mo to $400 more money in your pockets.
Same goes for shirts, digital items and pre-launches.
I Should Have Kept My Mouth Shut
I just pre-ordered the new album from one of my best friends in the business and one of the most talented MC’s on the planet, Kap Kallous.
The album is being put out by Ever Ready Records, a really cool indie hip-hop label out of California. Kap’s new album “I Should Have Kept My Mouth Shut” is available right now for pre-order for $15. This pre-order package comes with the album (in CD format) along with a t-shirt.
There are 2 schools of thought that go into pricing on something like this:
1. Make the offer irresistible. A CD and a shirt for $15. That’s a no brainer. Kap’s shirts cost $20 and more on tour.
2. Make more money with higher margins. We all know the margins on a t-shirt and CD ($3-5 cost on a shirt and less than a buck on a CD). So they aren’t losing money on this deal. Far from it. But would a Kap Kallous fan (the one who is going to pre-order anyway) buy this package for $25? Probably.
If they added scarcity and only had 50 shirts, or 100 shirts and the only way to get them is to buy the pre-release, I bet they could sell them out and collect some more on the backend.
I’m not saying what Kap is doing is wrong. In fact, I think the offer is irresistible and think every hip-hop fan reading this should go cop it right now.
I am just making an argument that most musicians may be undervaluing themselves and the music. We all want fans and we all know that giving away music is key. But when you do charge, know what your fans will pay. Especially if you watched the video from last week and know your number.
What about you? Are you charging too little for your products and music? Are you charging too much?
How much extra income would doubling your prices add to your rent money? Chop it up in the comments below.
-G
Tags: kap kallous, Music Marketing, pre-launch, pricing, selling
Leave A Reply (2 comments So Far)
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Chris "Seth" Jackson
432 days ago
Hmmm. I think the laws of supply and demand apply here as well as the laws of “don’t be a dick”. As far as supply and demand, the price of your CD is proportional to how many people are willing to buy it. If you make your CD $15 when everyone else’s is $10, you’ve just lost sales except to your die hard fans. If no one knows who you are, a $15 CD might prevent someone from buying. (I actually refused to buy a local band’s CD at that price point before.)
The “don’t be a dick” aspect is pricing your normal fans out of the picture. Yeah, you might be able to make a few more bucks, but then someone who only has $10 can’t buy your album. Fan letdown and sadness.
I’d would think that having price points for all levels would be a better way to go. Have that $5 CD, but also have the $20 limited edition, autographed, bonus CD with songs you’ll never ever hear unless you buy now!
I went to a Suicidal Tendencies concert recently where every shirt was $35 to $40. (Same with Slayer.) I refused to buy at that price. A month later, GWAR came to town. Their 4-color t-shirts were $20. I definitely bought and proudly wear that t-shirt.
But, also at that GWAR show, they had broken drum heads on sale for $100 each. Each drum head had autographs and unique artwork. THAT’s something for the true fan.
Seems “price gouging” is a risky business for today’s musician/band. I, personally, wouldn’t do it for my band. I’d probably go more of the route of “pay-what-you-want”.
gregrollett
429 days ago
@Chris – you raise some good points. I don’t think price gouging is good for anyone. What I wanted you to more look at was the take home difference in subtle price increases.
The best point you made was having multiple items for fans at all levels.
I don’t think musicians are being “a dick” by charging some premiums for their stuff. Now if you are asking $15 for a 3 song sampler, yea, you’re a dick. But $5 for a 15-song album is possibly undervaluing.
My analogy comes back to the free economy. That which you pay for has more value. If you get a free CD and buy one for $10, which one are you going to play more, hold with higher value and get the most use out of. Same when you are selling your stuff. Will the fan that got the album for $1, be the same type of fan that the one that shelled out $10? It differs for everyone, but the fans willing to pull out the wallet are going to be the fans that come out to the next gig, guaratneed.