Countermelody

Keeping costs down

A funny fact of modern capitalism is the way many companies offer all kinds of software and services at no charge, or very inexpensively… as long as you are only using them for your own private purposes. You can easily find ways of sharing your music for free. Yet once you set out to make some money, the costs begin to mount at an astonishing rate.

So the only way to turn a profit is to minimize these costs in every way available to you.

Let’s focus for now on the expenses associated directly with getting a piece of music into a customer’s hands. I’ve concluded that all such costs fall into two broad categories: production and distribution.

Production is the process of transforming a finished composition into a format that can be used by a performer. As I write, it is generally still very much necessary for it to be printed on paper… eventually.

Aside from production, you also have to get the music to the musician somehow. And shipping is deadly expensive.

Computers (and the internet) offer an appropriate solution to both problems for small independents. There is no reason that the printing itself can’t be done by the user, if he or she has the legal permission of the owner—so by making computer files of the music, you can leave this step to them. Distribution can then take the form of a single CD-ROM, an email attachment, or a download.

Thus you use other resources to decrease the cost of each unit.

Traditionally in business, costs that can’t be reduced any further are passed on to the customer. This makes perfect sense: the final price must be higher than the cost of goods sold if there is to be any profit.

For the same reason, the virtual elimination of something like distribution expenses allows you to reduce your price and increase the chances of selling more copies. And if you are handing off physical production directly to your customer, you owe it to them to lower the price even more. They will undoubtedly notice the increased cost to them.

There are numerous considerations to explore in detail in future posts. For now, the crucial point is to remember that you have to deal with some costs no matter what; the best strategy is to anticipate them and build them into the overall business plan.