Pricing is one of the most important things to figure out as an indie band. It’s what can make you look out of touch and irrelevant or what can make you into a financial juggernaut. Merch is where the real money is made and people expect to see markups of 1000% or more on a regular basis. This is important to realize and you have to keep in mind that no matter what you do with our band the primary financial driver, at least in most genres that traditionally appeal to youth, is going to be merchandising. As difficult as this might sound at times ultimately knowing how to price your items properly is what is going to keep your band in the black. I’ve written plenty about the types of merch you should have (TLDR: The more the better) but now we need to sit down and look at how to make the most money off of it, and at times quite literally get the most bang for your buck.
The most important thing when deciding how to price your music is to keep track of profit margins. Remember that when it comes down to it you need to be earning at least double what you put in on pretty much any piece of merch. Sure there are occasional exceptions to this – like really nice shirts or specialty items that you simply can’t price too high but the point largely remains. Note however that if you want to keep margins low but still make money that means you can still sell CD’s for $3 and make 1.50 a piece if you know where to look when buying. With every piece of merchandise be aware what your net profit is and also how many you need to sell to recoup your investment. It’s quite the balancing act since you want to maximize the net profit, minimize the pieces needed to be sold to recoup and simultaneously make sure that things are reasonably priced so that you don’t need to worry about people not buying your merchandise.
This is why you need to be flexible. If you’re at a show and tried pricing your CD’s at $15 a pop with the hope that the reduced sales would be overcome by the increased price or that the higher cost would create a perceived value, and it’s not working then that’s a sign you need to change your strategy. That doesn’t mean you’re an idiot or inherently wrong. It just means that you need to be able to change prices on the fly if you’ve got to. You’re still at the gig and you still need to move units and make money, that’s just how the cookie crumbles. If someone comes up and asks to buy your $15 CD for $10 because that’s all they have on them then it’s probably worth your while to say “Fuck it” and let them have the CD. You’re still making money on the sale and the fan feels valued. Just make sure that it doesn’t become widely known that you’re willing to dip prices. The point is more to feel out the market and try and see how much money you can make off of it.
There’s a lot of psychology to selling and pricing merchandise too by the way. I think the most obvious example of this is with package deals. While you certainly need to make sure that package deals fall the same rules of having a solid mark up and are covering costs they can be a great way to make someone spend $25 at your merch stand rather than $20. You need to keep people constantly informed of the packages and encourage people to take them on at every turn. People aren’t looking to spend money, but oftentimes with the right suggestion they will buy in. This ties into the argument that you should be pricing your items on the higher end of things – perceived value. While this might not fool the hardened punk crowd if you are catering to an audience that isn’t heavy show goers they might be impressed by higher prices and think you are offering a superior product. The catch being – you need to be sure that your product truly is top notch.
The final thing that’s important needs to be taken from the book of bands like KEN Mode, a group whose core members were accountants, you need to track everything. Figure out your average merch sales per head. Figure out how much merch you sell on average in certain sized markets and use this as a basis for planning future shows. Sure this isn’t always easy and some markets are just anomalies but putting together some fairly basic projections shouldn’t be out of the question for a band who has played a fair bit regionally. There’s a lot of money to be made out there to be sure and you need to take advantage of simple economic facts in order to work towards dominating your local scene. Figure out what price points work too – I’ve found that pricing things around 5’s is generally a good idea since most people don’t like to have to make change, and holding a bunch of change sucks for the merch guy. Again – these are all things that should come with experience, but a little encouragement never hurt anyone.
Long story short – merch sales are one of the most cerebral parts of being in a band but also the part that lends itself perhaps the most nicely to spreadsheets. It doesn’t require a lot of high level economic knowledge but you need to be aware of a few basic vocabulary terms and master their implementation. Once you are able to do that then you know that you are going to be able to come through the struggle laughing. When it comes down to it sometimes the best thing that you can do is just be smart and follow what the other bands in your scene do. Odds are at least one person has figured it out and is able to keep their merch making money for them through the long haul. These aren’t jealously guarded secrets but rather ones guided by common sense.