5 Paths To $100,000 Per Year - Part 4: Randy`s Way

Welcome back to my little documentary (or moc-umentary as I prefer to call it). We are now on Part 4 of a 5 part series exploring the lives of five fictional characters who are all racing to a six-figure income with very different styles. Though the cast of characters in this moc-mentary are indeed fictional, the techniques are not. These are the same skills that artists - just like you - use day in and day out to survive and thrive as independents.

In this episode we'll visit Randy, who is a self-proclaimed recording nut. He records 2 CDs a year, plus all his live performances, music videos and even behind the scenes documentaries. We'll see how Randy's recording-ready attitude pushes his income to the six-figure mark...

"His mom would often find him stuffing his brother in a coat closet while trying to explain that it wasn't a closet it at all, but rather an isolation booth."

Recording-Ready Randy

[Act 4 Scene 1. Opens in a black and white childhood memory sequence.]

Since he was given his first Fisher Price cassette recorder (with dual microphones!), Randy has been bitten with the recording bug. His mom would often find him stuffing his brother in a coat closet while trying to explain that it wasn't a closet it at all, but rather an isolation booth.

Today we find that Randy has found a way to turn his penchant for recording into a fairly decent little enterprise for himself. He takes his Prog-Rock inspired Zydaco music and manages to create two well-crafted CDs per year.

Randy has gotten this process for recoding down to a science. For instance, he knows that if he gets all his band mates together to rehearse their songs until they hate them, then he will be able to get 10 songs recorded and mixed down in the studio inside 40 hours.

Let's go ahead and dive into the grade school math. 40 hours of recording at a rate of $35/hour costs all of $1,400 to record and mix an album. Now Randy has been around this business enough to know that a good recoding isn't really done until a competent professional has mastered it. So he splurges every single time for a low-priced mastering session that he gets for $500. Again doing the grade school level math we add $500 mastering to the $1400 recording and we are now up to $1900.

Randy is a realist when it comes to selling his CDs. Even though he wants to sell 10,000 copies of his masterful creations, he shoots for a much more reasonable total of 3000 CDs. Randy has shopped around on the internet and discovered that he can get 3000 CDs printed (with jewel cases and four page inserts) for $3,900.

"Now most people would go into sticker shock at seeing this number, but not Randy, he knows the full profit potential of his little gold mine."

This means that Randy shells out a whopping $5,800 to get his project in physical form. Randy prefers to say that each CD costs $1.93 (which we'll round up to $2.00) per CD. This cost includes the total to record, mix, master, and duplicate 3000 copies of his next hit CD.

Now most people would go into sticker shock at seeing this number, but not Randy, he knows the full profit potential of his little gold mine. For instance, because Randy writes good music and has become adept at marketing his CDs, he knows how to price and move his merch. He will be selling those 3000 CDs at a very reasonable $12 per CD.

Doing our grade school level math again we see that selling 3000 CDs multiplied by $10 in profit for each CD brings us to a $30,000 net profit for each of Randy's recording projects.

But that's not all; remember Randy does two CDs per year. The costs are exactly the same, but since there is only six months left in the year he only sells half as many before the year's end. Though he has next year to sell the remaining 1500 CDs, we will be lopsided and stack all of the costs into the first half-year of sales. This raises his costs per CD to an artificial $4, and lowers his return to $8 per CD.

Selling 1500 of these by years-end nets Randy an additional $12,000, bringing his yearly total up to $42,000.

Randy Has A "Brain Blast"

One day while watching "Making of the Chef," his favorite cooking documentary show, Randy had a "brain blast." He fathomed that he lives a fairly interesting life and decided that maybe he should video some of it for his fans. As this idea rattled around his mind, it began to snowball in a way that only self-absorbed ideas do. When the snowball had gathered size and momentum Randy decided that a Music Video on DVD was in order.

Taking his discipline and organization skills from his music productions Randy began to organize what he would put on the DVD. All of this work produced a list of needs and their associated costs.

Here's what he came up with:

$450 For 2 Mini DV camera rentals @ $225 per day for 2 days
$200 For Mini DV tape
$200 For desktop editing software such as Final Cut Express
$0 For a borrowed home video camera for the documentary
$1950 For 750 DVDs with a full color cover and 3 color on disc printing for $2.60 per unit

Total costs: $2800.

Randy figured he could get his music video shooting done in 2 days because he chose a simple theme, picked simple sets and locations and rehearsed everything like crazy before the cameras were even rented. He even went so far as to create a "mock-up" video using the borrowed home video camera that he used to shoot his documentary titled, "A Day In The Life Of A Zydaco ProgRocker." He was happy with the results and decided to move forward.

Once the 2 days of shooting were done Randy got to work using his desktop editing software to compile and edit all of the video. By the end he had a full 1 hour documentary, a music video and even a, "making of the video" documentary.
Randy offers his Zydaco Prog Rocker Video Spectacular to his fans for a very reasonable $15 each. Selling all of the DVDs at this price gave Randy a gross profit of $11,200. When he backed out the costs of $2800 he discovered a net profit of $8,450 for one video product.

Friend that's a 300% percent return on his investment of $2140... not too shabby.
The best part is that after Randy sold out of this run, his costs for the second run dropped by 30% because he didn't have to pay for rentals or software again. But that is a topic for another article.

So now Randy's yearly take is up to $50,450.

The success of Randy's first video got him thinking about other video projects. The next was a "live concert video." Of course Randy did all of his planning in advance and decided that he needed the following equipment to produce is full-scale concert video:

$675 For 3 Mini DV cameras to get lots of angles during the concert
$50 For Mini DV tape for all three cameras
$100 For a one-day rental of a 16-channel mixer and miscellaneous cables
$50 To rent a realtime CD-R recorder
$50 For a one-day rental of a 16-channel mic splitter to split the signals from the front of house mixer to the recording mixer
$1300 To replicate 500 DVDs at a price of 2.60 per unit

Total costs: $2225.

Here's how the whole thing went down. Randy had his friend Ross, who is a music-production student, sit behind the stage during the concert. Ross's job was to do a "live mix" of the concert straight to the CD-R recorder so that the video would have nice clean audio.

Randy placed two stationary cameras in the audience and one operator with a handheld to roam around on stage. He threw all of the footage into his desktop editing program - which was now paid for from his last video shoot. When the recording was done, Randy edited it down to the live audio recording that Ross made.

Now because of how late in the year Randy began this project he only sold 500 copies, which at a $15 price point grosses him $7,500. With production and replication costs of $2,225 his net profits are $5,275.

This is a 237% return on his investment.

Just ask those who dabble in the stock market how many times they've pulled off that kind of return and you'll start to think Randy is a financial genius.

The running total for Randy's recording mania total is now up to $55,725. A long way from 100k but hold on because we haven't factored in gigs and other merch.

Randy does a "massive" 2 gigs per week with a paltry guarantee of $300 per gig. This nets him $31,200 per year in revenue from gigging alone (104 gigs per year times $300).

This brings the new running total up to $86,925.

Now, Randy was in an Apple Computer users forum last year where he met a rapper named MacDaddi from Philly. Mac advised Randy on exactly how to make and sell a variety of merch. So at the beginning of this year Randy's first t-shirt was officially for sale, it's called the "Crazy Dancing Man" design, and his fans love it. These sell for $15 each, which yields a $10 per shirt profit. Randy sold an average of 13 shirts per gig, netting him $260 per week in additional revenue (13 shirts x $10 profit x 2 gigs per week). When calculated out over an entire year, Randy's t-shirt sales bring in an additional $13,520.

That's all it took. The final piece to Randy's profit puzzle is in place, and the picture is a grand total of $100,445.

[Editors Note: Last we heard from Randy he was in the throws of recording a crazy compilation EP with five other local bands. He created a mega-band by combining the performers from all five bands for just one song. Then he added one cut from each band for the remaining tracks. He figured they could all sell the CD at their own gigs and thus increase each other's market by a factor of five. Smart idea Randy. You go!]

Next, installment we'll visit Betty Balance, or "Steady Betty" as her friends call her. Betty's music career is a thing of beauty. She believes in balance in all areas of life and she'll show us how a career can be put together to have "just the right mix" of everything to safely and effectively arrive at $100,000 and beyond.

Sean Farrington is a band coach and studio mix engineer from California. He has been a full time music industry professional for over 12 years. During this time he has worked with hundreds of bands and artists in various capacities from the studio to the stage.

He authored the book "Band:Profit" which is designed to help independent bands, solo artists, and performers take their passion for music and turn it into profit.

Sean Farrington