Re: average loop music CD price ... recalculated

[buzzard@world.std.com (Sean T Barrett)]

At a certain point, when you've already
spent the money, you may want to ignore
the profit question and focus on the cash
flow question.  If you can't sell 300 CDs
at a profit, you may well decide to mark
them down to less than what you made for
them.  Beats have them sitting in a box
under your bed for the rest of your life.

Of course, the point of this exercise was
for you to try to guess what the market
would bear.  If you can create a market 
for your music, sure, you might sell them
for $20 a pop.  It doesn't seem very likely
to me that you could get distributors to
sign up for that price unless they know
there's that market, since if you're not
priced 'competitively' there'd be low odds
of them ever getting sold.

In some sense, you really just have to price
them based on what the market would bear
independent of what you put in.  If you
were to have spent $30 US per CD in the
act of creating them, I think that would
be pretty obvious.

Let's look at the numbers.

>300 CDs (just got them fresh from the factory). That's the
>lowest possible number for 'real' CDs (not CDROMs) you can
>have made here in Germany.

By getting the lowest number, you're getting the _worst_
price/unit on the production costs.

>For the CD/printing production, I paid about 990 American $

In this case, about $3.30 per unit.  Suppose you could get
1000 for $2 a unit instead.  (That's 2x as much money for 3x
as much product.  Maybe that's not plausible.)

>I've done the graphics myself, but paid $152 for the films.

The 'films' I take it is a one-time cost (it's the source
from which things are printed).  So the cost is fixed.
The unit price for 300 is $0.50; for 1000 it's $0.15.

>Studio costs (this is a widely varying item of course)
>were $1640 altogether 

The studio costs, of course, won't change if you press more
CDs.  So, 300 CDs, the studio is costing you $5.50 a unit.
1000 CDs it would be costing you $1.64.

>Unless I forgot something, this looks like I spent about $2782 for 300 
>CDs, = 
>$9,30 per CD. <sigh>

So I come out to:

300 CDs:
  $3.30  reproduction
  $0.50  films
  $5.50  studio time
  $9.30  TOTAL

1000 CDs:
  $2.00  reproduction (guess)
  $0.15  films
  $1.64  studio time
  $3.80  TOTAL

This is not to say that you *should* have gotten 1000 CDs.
If you end up selling fewer than 300, you've definitely
saved yourself money.  But in this particular case, it's
clearly the studio costs that are making things difficult.

Here's a different way to analyze the scenario.  Often people
evaluate these situations by 'break-even point': how many
CDs do you have to sell before you've recovered your money.

Suppose you accept that you can't get that $9.30 that you'd
need to to get your money back.  Suppose you say, 'Ok, heck,
I'm willing to price them such that if I sold *600* I'd make
all my money back'.  How can this affect the price you sell
the first 300?

Assume you sell the first and second 300 (if the second were
ever to happen) at the same price.  The the cost of the
studio times and film can be leveraged over both printings:

300 CDs, done twice:
  $3.30  reproduction (same as before)
  $0.25  films (1/2, because we're splitting the cost)
  $2.75  studio time (1/2)
  $6.30  TOTAL

Here, you don't leverage the advantage of getting cheaper
reproduction by printing more at once, but you leverage
the initial investment across both printings.

With the above number, if you sold only 300, you'd end up
getting back $1900, which is $900 short of what you wanted
to make.  If you then printed another 300 (cost: $1000),
you'd be $1900 in the hole--so you'd break even after selling
the second 300.

Another, similar, way of looking at is this: you *oops*
spent way too much money in the studio (for a CD selling
so few copies).  Maybe rather than passing that cost on
to the consumer, you should chalk that up to experience.
Pick an amount of money you should or could have spent
in the studio, and evaluate your "true" investment that way.

For example, you could write off the studio costs entirely
("the experience I gained is worth what it cost me").  Then
you're only trying to make back the $990 + $152, which means
about $3.80 per CD.

Alternately, you could say, "I could/should have done it for
$600"--that brings it to $5.80 per CD.

It's all just silly numbers, in the end.

For everyone who was saying, "hey, don't devalue your
music, it's worth more than X"--keep in mind the previous
thread in which it was discussed how much of that "more
than X" all those poor souls with "real" record contracts
are seeing.

Sean