BUDGETING

Intro

Welcome to the sobering reality of being an independent musician…

Do you want to leave yet or do you have even more sacrifice in you?

If you wanted to skip past this section… don’t.

If you saw this module and immediately thought “but i’ve got no money”… stop thinking that. 

If budgeting isn’t your thing… It’s about to be baby!

Now, with all the best will and strategy in the world, you won’t get very far without having a clear plan on how to finance your next release. Of course, you can “just put a song out” – post a couple times and then get tired, bored, deflated and demotivated. We have yet to see that work for anyone but you can do this. You can also put together an immaculate plan, but have no idea why, how and where you are spending which results in you wasting a lot of money… We have seen this happen a lot. Or alternative to the previous two options, you can plan, budget and make careful decisions about how best to use any capital you have available for your release – sounds much better, right?

Now, creating a budget can be daunting, scary and deflating especially if you’re not 100% sure where the initial investment is coming from. There are many ways to fund your music career which we will get to in the final stage of the programme. However, we believe rather than trying to work with what you’ve got, you should figure out what you need and work from there. Identifying the budget and areas of spend are going to solidify and create real clarity about your financial goals and responsibilities when it comes to your art.

Do you feel as though the time is right to take the plunge and you need guidance on how? Or, have you already taken the plunge and things just aren’t working for you as is? In any case, one of the most important things you can do as a musician is to create a budget for your musical activities. Knowing and understanding your budget is a key element of a successful and profitable business.

A budget will help to create a clear roadmap of your financial goals, how you’ll reach them, and help you to monitor your progress along the way. Budgeting can also take away some of the emotional stress that artists experience when it comes to releasing music, as quite often independent artists fret about how they will afford to continue to pursue their passions.

We totally understand that the idea of this level of organizational administrative tasking makes a creative brain want to run into a booth and never come out. HOWEVER, if success is what we seek to achieve – then we must very quickly become accustomed to the idea of becoming more organized and structured. Once the art is created a business savvy brain must be applied to get the maximum results and make sure your art is seen, heard and recognised. There is only one way and that is to go through it. Planning is great for your mindset, it drives accountability and assists with the discipline required to run and launch a music release to a high standard.

Planning Your Budget

Determine your financial goals and assess what you need to progress with your career.

Consider and assess all the costs associated with your next release.

Categorise all your expenses, creation costs, marketing costs and additional expenses.

Prompts

– Do you need new band photos for the press?

– Do you plan on printing or manufacturing new merch?

– Are you going to buy any new equipment?

– Do you have a digital presence outside of socials that you need to pay for?

– Will you be releasing new music this year? – How many songs will you be releasing? Is there a bigger project to consider outside of single releases?

– How do you plan to pay for the cost of production? – if recording yourself are you factoring equipment costs, plugin costs etc 

– How will you distribute your music to digital stores?

– What areas of marketing will you focus on (PR, Social Media, Playlisting)

Really consider all elements and be super clear but remember this is all an estimate at this point. When you solidify your strategy you may find that your budget needs to be adjusted. Note down the answers to each question above to give you some direction and focus. Be as specific as you possibly can, to create clear projections and really begin the path towards gathering the resources you need to make your project a success.

Create an Estimate

Once you’ve established your goals, outline the actual expenses associated with those goals that you’d like to accomplish. These estimates will form the basis of your budget which you will tailor depending on your final strategy decisions. 

Note: Try to adopt a flexible mindset, be prepared to be responsive in your decision making and account for things you may not expect. 

Below is a list of the areas of cost to factor and consider. Start reaching out and getting quotes for the areas you plan on spending in. It is also always valuable to look into areas you may not yet be considering so you have a ballpark figure for things that might crop up. The more you plan and budget for, the better prepared you will be for such eventualities.  

Develop Your Knowledge – Exercise 

1. Write an estimate for your project or single release once you have received all your quotes and compare your estimated budget to your actual budget. Was it higher or lower than you expected? Do you have a good idea of the pricing of other creatives and artist services?

2. Compare quotes for your services – When selecting videographers, pr people etc It is important to find people who understand your project, your vision and like your music as this is where you will find the most effective results. However it is equally important to try and recruit within your budget. Shop around and find other quotes to compare quality against prices. This will help you to build a budget that is realistic which will help to take some of the overwhelm out of releasing.

3. Compare your budget with another artist. Look to see if there is anything you have not yet considered, or anything you are spending too high or too low on. Speak with other artists or artist managers in our discord and ask for reasoning behind their budget decisions. This will help you build your knowledge of how artist teams build campaigns and why they spend the way they do.

Below you will find a list of the various different costs you should account for. 

Music & Merch Production 

Recording, mixing, and mastering: If you are the kind of artist that does not record yourself this will be a significant portion of your budget. As well as the cost of  recording, do not forget production costs if you aren’t doing this on a split, mixing and mastering. If you produce yourself, think about any equipment costs and plugins/

Physical Copies: How much would it cost to manufacture  physical copies of your project in various formats and quantities. What formats would be most popular with your audience (e.g cd’s, Vinyl, cassette, novelty usb etc). 

Online distribution: Alot of independent distributors charge, per release or yearly if you are planning on using this kind of distributor you need to factor in this cost.

Merch: Merch is a great tool for promotion and generating revenue. There is a cost involved in making merch especially if you decide to venture outside of t-shirts and hoodies. Think of the type or merch you would sell at shows and get quotes for the cost to manufacture.

Live Shows

Rehearsal space: How many rehearsals will you need, where will this be and will you need to factor in travel costs. 

Equipment: Some artists like to have lighting concepts or personal mics. If you need any physical equipment for live shows then 

Musicians: Will you be a hiring a band for live shows, or providing any backline equipment

Crew: Do you need a driver, sound tech merch person -this line becomes fuller the more budget you assign and the bigger the shows.

Travel Expenses

Food: It can be hard to stop and cook when on tour, you will find yourself reaching for a takeaway 

Fuel/Public transportation: Work out all the costs involved with physically getting form A- B for anyone who will be traveling to and from the event 

Accommodation: Where will you and any crew members stay, shower and get ready for shows.

Publicity and Promotional

Graphic design: Think of different items you may design for, flyers, social posts etc 

Photo shoots: Imagery is important for press, Press Kits and sometimes even for artwork. How many shoots do you need imagery for? etc 

Posters, flyers, and postage: Will you need any printed promotional assets, like posters, business cards or banners for in person promotional activity.

Publicity: PR and radio pluggers plus other promotional staffing. To get the right service for you be sure to select service providers who are well versed in your genre and will be excited for your release. 

Website: Having your own website can  help to sell music and merchandise, collect email addresses, run fan subscriptions, and more. For many artists the website is the hub of their community. In this day and age websites are simple enough to build, you may be able to complete it yourself. There will still of course be costs for domain registration, hosting and a host of potential additional extras depending on the kind of site you want.

Mailing list: An additional plugin to your website to send out newsletters often involves a monthly/annual subscription fee. 

Videos: Music videos, lyric videos and social media continent… The list of visual content goes on and on. It can be hard to keep up with at times. If you need visual content creation or don’t know how to edit you will need to hire someone to do it for you.

Ads: Social media ads, website ads even billboards – depending on your budget this can include many things. You should try and assign some budget to ads – we recommend online like google or facebook ads.

Important Note!

It is crucial, in particular for independent artists to develop an agile and market led approach to their marketing strategy. This is something we can often get mistaken for in the creative process. Our marketing strategy is what we should tailor to our audience, not our music.. Music is subjective and although you may put a lot of energy into understanding your audience you can never be truly certain which release they will be most responsive to. 

In many cases of artists we have worked with, extensive listening and review sessions often reveal the artist’s least favorite song to be an audience favorite. Such findings may at a surface level impair any existing plans you have made and it is important to be responsive and flexible with your approach to marketing. For example, you may not plan to do a video for a track on your project, which then becomes the most listened track! In this case do you plough ahead and spend money on a video for your favorite track? or do you pivot your strategy and create a video for the song your audience likes the most? As an independent artist each time you send money on your craft you are essentially investing into your artistry business – and so to protect and get the most return from your investment it is highly necessary to be open to making fast paced decisions and changes to roll out to capitalize where the moment is building.

Remember, this budget should be a flexible fluid plan to give you clarity at your start point, but also a working document that grows and changes as you learn more information about what your audience is responding to.

Projecting

Projecting your income can be a daunting task. Many musicians don’t know where to begin when it comes to forecasting potential earnings. Create targets of what you seek to achieve and work out what the return you can expect from achieving those targets is. When you start creating targets, think of where you are now and where you would like to be after your project release. Somewhere in between your now and your ideal is a realistic and achievable target.

Next  you need to really assess your streams of revenue, this is perhaps where you learn that you need to explore multiple channels of income. Be realistic, especially if you are very early on in your career. With any business ROI isn’t necessarily achieved quickly or early so you need to be realistic in what you expect to achieve. 

Music

CD sales/ Vinyl sales: Having physical copies of your music at your shows is a way to generate revenue and enhance your audience’s experience.

Digital sales: You can push the merch you sell at shows digitally, again this is a great way to enhance an audience connection and drum up additional revenue. 

Streaming revenue: Let’s be real, the price per stream is abysmal. Relying on streaming when you have a smaller online presence this can be more difficult to achieve. This is why it is important to tailor your budget to your strategy – For example if you plan on spending on a playlisting campaign chances are you are expecting to get higher streams – If this is the case your projection for this area may be higher than if you were focusing on another area of promo.  

Publishing royalties: Your PRO (performing rights organization) will collect royalties on your music, including public performance royalties (radio, TV, live venues), mechanical royalties (sales through retailers, streaming, etc.), and sync royalties (commercials, film, TV). Whenever you play your music live, submit a copy of the setlist to your PRO and receive royalties for your own performances. Ensure that you register all your songs each time you release.

Digital royalties: These royalties get paid to you when your music  is played on services like Mixcloud, SiriusXM radio or Pandora, those webcasters must pay royalties. You can sign up to a SoundExchange account to make sure you’re getting those royalties.

Licensing: TV shows, Films and adverts must pay you a licensing fee when using music. The specifics of how much is entirely dependent on the specifics of any  deal you negotiate- You may sign up to an agency that pitches your music to tv, ad and film companies on your behalf. We will find out more about this in the Licensing your music segment of the programme

YouTube: On YouTube, whenever your music is used in videos that are running ads, YouTube pays a portion of that advertising money to the rights holders of the song. This includes videos on your YouTube channel, as well as videos that are not on your channel but are using your music in the background. Your digital distributor can also help you monetize your music when your songs are used in videos. 

Live Shows

Performance revenue varies from performer to performer, however you can generate a consistent revenue stream 

Ticket sales and guarantees: Whether at home or on tour, if a venue or promoter is profiting from your performance, you should be too. If the show is being run by an outside promoter, your agreement will usually be handled by the production company. If the venue itself booked you, you’ll need to discuss the splits with your point person there. Many talent buyers offer splits over a certain number of tickets sold for local shows, while venues that book touring bands are often open to offering guarantees, leveraged against the projected sales and popularity of your band in that market. Some smaller venues may look to hire you as entertainment with no ticket entry requirements for their customers. This kind of gig can be very good for regular consistent income for artists with the necessary equipment to facilitate a show in a smaller venue (for example a PA system)

Merch: Physical merchandise often accounts for the largest portion of most artists’ revenue. T-shirts, hats, posters, and miscellaneous goodies like stickers and buttons are a must. This is how you will monetize your audience. If merch isn’t in your plans you may want to consider, even if you create a small test run to see how your audience responds.

Show day meals or rider items: If a venue provides you with meals travel costs etc these are all factors that will take away from your upfront costs and should be factored into your overall budget

VIP experiences: Many bands and artists offer some type of VIP experience for fans that pay extra for a more exclusive treatment. Some examples might be having drinks or dinner before the show with the band, an intimate and private acoustic performance, or a meet-and-greet including a photo op and bundle of personalized merch.

Other Revenue

Crowdfunding: A crowdfunding campaign can help generate enough money to offset the cost of producing your album or merchandise. Just make sure to factor in any additional costs that the campaign itself may create, and estimate your target goal as accurately as possible.

Fan subscriptions: If you’re an artist with an established fanbase, offering fan subscriptions on a monthly basis is a great way to generate regular income. It also compels you to create consistent, quality content, so determine how much you’ll spend, and how many subscribers you would like to attain.

If you don’t have a large following, establishing a subscriber community early is a good way to encourage new fans to follow suits and a good way to start identifying superfans early. You will find out more about super fan theory in the marketing module.

Teaching: Many musicians now use Zoom to teach lessons to students all around the world. This can be a great way of not only generating extra revenue, but deepening your engagement with fans. If your music appeals to other musicians, holding song clinics while on tour can also help generate some additional income.

Balance Earnings & Expenses

Now for the not so fun part. We need to get our budget and expenses to balance. Make sure it makes sense financially. If you are looking to make profit, look at what adjustments you need to make for you to achieve profit. If you have other goals outside of profit make sure your activity is aligned with it so any spends you make are serving the correct purpose. 

Tracking Your Budget

Finally, you’ll want to track your budget as the year progresses. Create a spreadsheet that lists all of your expenses and income projections. 

Make sure to create two columns, one for projections, and one for the actual results. This way you can adjust accordingly throughout the year, and there’s an extra bonus too; you can use the same spreadsheet while preparing your incomes and expenses for your taxes!

Happy budgeting! 

Budgeting Template Tool

Click below to access your very own budgeting template tool.