Music Business 108; Making a Profit

The parts are:

• Characterize yourself and the other performers...
• Now that you know what people expect to be paid...
• Now that you know what your expenses are...

This section may cause you to re-think your performance strategies, or may cause you to change your performance methods. No matter how much or little effect it has on what you are currently doing, the exercise will definitely help you determine the value of your efforts and be able to apply that to the marketplace.

You'll find that every group of performers will have different expectations and goals - these will alter the equations to determine

Profits. Some costs will be fixed, and simply knowing them may help you earn more money (by contractually making someone else supply some of these things).

If you have access to a spreadsheet program for your PC, you might want to define all of the things listed here and toy around with different aspects of costs/payment/profits as it relates to you.

Keep in mind that sometimes you will need to perform for free, or for the 'door' (the amount of money charged to get in to see you). This is a fact of life for a working musician.

Characterize yourself and the other performers...

Each of us has different goals, and as such, many enter music with different expectations - There is nothing wrong with that. You need to determine what success means to you, and plot a path that attempts to get you there. You may have different goals at different times - some things may come up that set you back, or opportunities may present themselves that move you forward. Having a long term goal will allow you to see things better and make better decisions about being a musician.

There are common personalities that you will encounter frequently. Each has a different vision and concept of making a profit. You probably fit into one or more of these categories to some degree. If you are working with other artists (for example,playing in a band), it might be useful for you to find out what other people expect to earn from their efforts. It will help you put a price on a performance and a profit philosophy that will either move you forward, or cause you to rethink your goals.

• Performing for the fun of it

  Some people simply enjoy what they are doing. They want to perform only want interests them. They don't see themselves as making any serious effort to be come a semi-professional or professional performing artist. They may want to play a few friends parties, down in their basement, or out in the garage. They may participate in a friendly musicians get together, jam session or a moderately serious rehearsal.

  Many very talented musicians and vocalists get together just to play. Even if they are heavily involved in other established acts. People who love to make music tend to like to perform with others who like music too. Money doesn't come into play and there is no real profit motive.

• Earning extra spending money

  Many people consider Music a hobby that has potential to earn them extra spending money. A large majority of people that play in bands fit into this category. They are not often very concerned about expenses, and often will perform for most anything that people will pay. Many of these people are very talented and are exceptional performers - this sort of arrangement works well for some people because they have other things in their life that is driving them, and music is something they enjoy doing, and they can afford to earn a little less as long as they are having fun.

• Making a living playing music

  A few people are willing to work towards a musical goal and then are prepared to drop everything else to push towards success. It is possible to survive entirely by playing music. In order to do this, they will need to have a serious plan in place to keep themselves booked 6 to 12 months in advance. A good Booking Agent can do this, however, they need to decide what market they plan to go after and be comfortable with the 'requirements to be successful' in those markets. If they live in an area that has many resorts, or clubs, they may be able to become a 'house band', or rotate thru many of the available places in the area, working frequently. Many of the resort town establishments have 2 week on - 2 week off policies, and are constantly rotating performers to keep the locals coming back, as well as bring in tourists.

  They might be able to be booked into a chain of hotels around the country (typically Cover band work), or tour doing fairs, shows, etc. (perform Covers or Originals, depending on what you have scheduled). They might be opening for a name act (usually 1 hour of your own material), or might be the main event (they play whatever they are known for).

  They are ready for some lean times and lots of bad food and poor accommodations when performing away from home. If they are able to play around their own town, this will be a lot like any other job anyone might have. Many sell merchandise (CD's, Audio tapes, T-Shirts, etc.) at their shows for extra cash and build a following.

• Creating a market

  Some people desire to make it big, with a vision of where they want to go in the long term. Its quite possible that people with this vision might have problems finding paying work that earns them as much money as they want, or even pays them at all. In some places the local market may not support their style or direction of the music and they might have to travel outside their area to perform.

  They probably have their own recordings, or are working towards getting them done. They might also have targeted a specific market (radio stations, etc.) that they are attempting to get some airplay on. They may not want to put a barrier between their music and the audience by charging them anything, so they have no objection to performing for free and giving away their recordings.

The more members there are in the band, the more difficult this gets.

Individual performers costs may all be different depending on what role they are playing. If only one member of a band handles the bookings, its likely that they have many more costs than the rest of the performers - don't forget to count the time involved to do the bookings. If another member of the band performs less (for example, a person sings backup and plays tambourine) than the others, their percentage cut, or salary maybe lower than performers who provide more of the basis of the sound (Main instrument performers, Lead Vocalists, etc.).

Now that you know what people expect to be paid...

From here on, you need to figure out your expenses - this will determine what you need to charge to see if you can match your members expectations.

Booking Costs

• Cost for phone calls (some will be long distance) for potential, and established bookings.
• Cost for each PR package sent out, including any costs for Audio Cassettes, CD's or Video tapes.
• Postage costs for anything mailed (PR Kits, Contracts, Press Announcements, etc.)
• Cost for printing posters/advertisements.
• Travel Costs.
• Time required to do bookings (your time is worth something, assume $5.00 to $10.00 per hour at a minimum).

Simply doing these things doesn't automatically provide you with paying work. You may end up with 'Showcase' jobs (ie. you play for free) or charity work (which can earn you publicity). Its likely that only 1 out of 10, or 1 out of 20 calls to people for potential bookings will result in earned income - Time is money and your costs should reflect that time being spent.

NOTE: A good working relationship with a Booking Agent may prove very cost effective - they will often find performance jobs that you would never find on your own. Booking Agents are not going to work with you if you are not interested in getting paid for your work - their income is a percentage of your performance payment and their time is valuable to them.

Performance Costs

• Rentals (PA system, Lighting, Stage Effects, etc.).
• Repeating Costs Associated With Specific Performance Visual Effects (Fog Machine Fluid, Pyrotechnics, Items That You Give Away During Shows, etc.).
• Sound Crew.

Anything that you don't own or the place you will be performing at doesn't provide will cost you money. Find out in advance you need to provide, or have it written into your contract.

Performer Costs

• Clothing.
• Costumes.
• Equipment Maintenance (Guitar Strings, Drum Sticks, Cables, Light Bulbs, New Gear, etc.).
• Food.
• Instrument Insurance.
• Medical Insurance.
• Miscellaneous Expenses.

Each person may have unique costs associated with their part of a performance. One band that I saw frequently a few years back did magic tricks at peoples tables between sets, giving flowers away to many of the women in the audience. I used to make balloon animals between sets (This got me a lot of wedding bookings - When you keep those kids at the reception happy, the parents notice; When someone else has a wedding, you often get a profitable referral).

Transportation Costs

• Fuel for Cars/Vans/Trucks.
• Vehicle Maintenance.
• Vehicle Insurance.
• Rentals (Large Truck, Trailers, Limo, etc.)
• Road Services Coverage (Auto Club Road Services and others).
• Road Crew.

Hopefully your vehicle is in good shape and you don't have any problems traveling to and from performances. If you need to make a spectacular entrance, you may need to rent a special car for the purpose.

In the United States, most of these expenses are tax deductible to some degree, as long as you are making a profit with your performances/musical business; keeping a record of the costs will allow you to gain the tax benefits that you are due.

NOTE:You may not be able to write-off expenses on your taxes at a level of more than 50% of your costs unless you use the specific items entirely for your business. This is often hard to prove without extensive documentation on your part. I suggest that you work tax issues with your tax accountant - they will be aware of what can be written off and what can be depreciated. I don't know what the tax laws are in countries outside the U.S.A. - I suggest that you find out what you need to document for taxes where your live and keep good records.

Not everyone will have all of the expenses listed here. I'm sure that I missed some that other performers routinely need to deal with. I've played in Duo's (2 People) through 10 piece bands - these sorts of costs show up no matter how big or small your band is.

Now that you have some idea what it costs to put on a performance, you can determine what it takes just to meet expenses, and from there see what it takes to actually make a profit.

If you have a Sound Crew, they may be a part of the rental expense, or they may be paid separately (weekly salary, or for individual shows). If you have a Road Crew, they are typically paid a weekly salary or a per booking rate.

Once you subtract expenses, and remove a 10% cut for the person in your band who has taken the leader role, you should divide up the rest equally among the remaining members (unless there is an agreed upon percentage distribution that is different than this). It doesn't take long to realize that the more people there are, the less money each person gets.

Now that you know what your expenses are...

You can now figure out what to charge. For the purpose of examples, I used a 4 member band, and tried to show how they might react to different situations. Everything is simply stated and there are no surprise expenses or problems that occur. All members get paid the same amount, just to keep it simple. There are no management charges. The band plays exactly the same music in all cases.

All prices shown are for example purposes only, and are in U.S. Dollars - your market may differ greatly.

Some Examples

• Situation 1: Weekend Band that performs in town

  Booking Costs: $100.00 per job
  Members income expectations: $50.00 each per performance
  Number of members: 4
  PA: Own
  Road Crew: None
  Additional Rentals: None
  Costs Covered: None
  Transportation Expenses: $10.00 per member Other Expenses: None
  

  Per performance price: $240.00

• Situation 2: Performance to promote a CD

  Booking Costs: $100.00 per job
  Members income expectations: $0.00 - Free
  Number of members: 4
  PA: Rent - $400.00
  Road Crew: 2 - $50.00 each
  Additional Rentals: Sound Crew $50.00
  Costs Covered: None
  Transportation Expenses: $10.00 per member Other Expenses: Food - 1 meal - $100.00 for band and crew
  

  Per performance price: $790.00

• Situation 3: Touring band, traveling lite - per day costs

  Booking Costs: $100.00 per job
  Members income expectations: $75.00 each per performance (6 mights a week)
  Number of members: 4
  PA: Own
  Road Crew: None
  Additional Rentals: None
  Costs Covered: Free Rooms and Dinner
  Transportation Expenses: $100.00 for all members Other Expenses: Food - 2 meals (breakfast/lunch) - $60.00 for band
  

  Per performance price: $460.00
  or $2760.00 weekly for 6 performances

• Situation 4: Touring band - with road crew - per week costs
  3 performances per week.

  Booking Costs: $100.00 per job
  Members income expectations: $400.00 each per performance ($1200.00 per week)
  Number of members: 4
  PA: Rent - $1000.00 per week
  Road Crew: $500.00 week
  Additional Rentals: None
  Costs Covered: None
  Transportation Expenses: $1600.00 per week for all members Other Expenses: Food - 3 meals (breakfast/lunch/dinner) - $1400.00 per week
  

  Per performance price: $3133.33 per show
  or $9400.00 weekly for 3 performances

You may be able to contain your costs far better than these examples show. Experience and accurate book-keeping will tell you what the reality is.

Getting Paid

Always cash checks as soon as is humanly possible. When on the road, you will have to establish a method to move any cashed checks into your local account. Typically, a business manager (that is not traveling with you) will handle this aspect.

Taxes

Keep good records since many expenses are tax deductible. A good tax accountant can help you take advantage of every legal deduction - I highly reccomend finding one to advise you once you start performing.

Questions? Comments? .

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