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Wednesday
Dec052012

Playing Profitable Shows as a Band: The 25% Rule

A recent article by Last Stop Booking highlighted the fact that touring is now more important than ever. If you have the time, I highly suggest reading through the article to get a basic feeling for how you should be planning your tours as a band.

I’d like to add some tips/ideas to that post by going farther than just giving ballpark numbers and touring radiuses to go off of and instead dive into a profitable tour itinerary that just about any new indie band can use as a template.

Expenses

Before you begin planning where you can go on tour, it’s important to first list your expenses. I recommend keeping an Excel spreadsheet to monitor where your money is being spent and how much each item is costing you on the road so that you can make this a constantly updated process so you have previous data to work from to really hone your touring craft. Some of the most common expenses experienced by bands on the road, both new and old, are as follows: (A sample budget will be posted below.)

Fuel: The most obvious part of any tour is figuring out how much gasoline is going to cost you to go from city to city. To start with, assume that you’re paying the national average of $4 a gallon (at the time of writing, I’m hoping that number doesn’t rise much higher!). We’ll be using this number later on to determine an optimal driving distance for each of your shows.

  • Note: The standard Ford E350 touring van that bands use gets 16 miles to the gallon on the highway. This number is often less than the EPA rated highway MPG, so I like to round this down to 14 miles per gallon (MPG) just to be on the safe side. It’s always better to overestimate your costs to ensure your budget stays in check.

Food: Food costs are another important factor that you can’t leave out. Being on the road with a box of ramen at your side may work for a few days, but eventually you’ll have to supply your body with some actual nutrition. Avoid eating at restaurants and fast-food places and instead bring a camping stove, non-perishables, and some fruits and veggies you can buy every few days. These can all be kept in a cooler with a bag of ice that costs a few cents at the gas station you stop at to refill at each day.

  • Average Food Cost: Although it may seem tough at first, it’s very easy to get by on about$7/day per band member. This usually consists of a protein bar and coffee/juice for breakfast ($1.50 per protein bar and a tub of instant coffee + free hot water at most Starbucks/coffee shops), steamed vegetables (Enough broccoli, green peppers, and green beans can be bought for a meal for $1 per band member) and  & ramen/rice (less than 50 cents per serving) for lunch, and some form of tempeh/tofu or other protein and vegetable dish for dinner (a can of beans, corn, and another vegetable can be had for about 80 cents a can and can be cooked in a single pot coming out to another $1 or so per band member if you all eat the same thing). Dried fruits can be made very cheaply and are a great snack on the road. I add in a few extra dollars here and there to account for the candy bar splurges, nice coffee trips, and the inevitable “etc” that each person will probably face. $7/Day per Band Member

Merchandise: Although some bands may not be accustomed to doing this, keeping a running tally of your merchandise expenses on a cost per unit basis will help you not only keep your money straight, it will help you reinvest your money at a later date for a new CD printing venture while on the road or back at home.

  • Average Merchandise Cost: It varies wildly from band to band how much their merchandise costs them to print and produce, but for the band we’ll be using as an example below, each CD they sell costs them $4 to produce. $4/CD

25% Rule

This rule is self-instated and seems to work well for bands that are just starting out. The 25% rule says that out of the money you make playing a show (including the money you make from selling merchandise) you should be able to keep 25% of it as profit. That means that if the guarantee* that’s paid at your shows is $100, $25 should be able to go into your pocket or into the band bank account for future use or to cover unexpected tour expenses.

  • *Guarantee: Having a venue give you a guarantee is them saying “no matter what, we’ll agree to pay you this amount of money for showing up and performing.”

Example

The band I work with is based out of Nashville, TN. Playing once a week in town is enough for them to hold themselves over before going out on the road each weekend. Although they turn a profit during the week from playing locally, we’ll put this money out of the picture and simply consider what it is they’re spending on the road each weekend when they play out. The cities they decide to play are entirely based on how much they can afford to spend on their expenses and still be able to keep 25% of the revenue brought in by their shows. Confused? Let’s take a look.

On average, the band we’re talking about safely brings in guarantees of $150 per show that they play. And, their $8 EPs tend to sell at least 2-3 copies per show. Although this number fluctuates, we’ll use “2” as our guideline for revenue calculations.

(Before the flack comes rolling in about how $150 isn’t that much to be earning per show as a guarantee, know that many of the bands out there first starting out are going to be hard pressed to even get that. I know of plenty of gigs where $75-$100 has been the norm and when you’re growing, being able to play anywhere just to build name recognition in a place is more valuable than anything.)

Revenue: $150 (guarantee) + $16 (Merchandise Sales) = $166 per show GUARANTEED

Expenses:  $21 (3 band members food costs) + $8 (Merchandise Costs) = $29

25% Profit: 25% of $166 per show = $41.50

Money Left for Gas: $166 – $29 – $41.50 = $95.50

How Far Can You Go?

That last number is the most important part of this whole equation. Knowing how much money is left to pay for gas after every show is what we NEED out of all of these calculations. For easiness sake, we typically say that we have $100 to spend on fuel after every show.

Calculation: ($100 for fuel)/($4 per gallon) = 25 gallons of fuel to use after each show.

25 gallons * 14 MPG =  350 miles of potential travel distance after every show. 

BEWARE! - This also has to cover you on the round trip portion of every tour. Although you may have earned enough to go 350 miles to the next city, remember that eventually you’ll have to make your way back home. If you’re smart in your plan, you can start at home, play a show, and use the gas expenditure you make at that show’s $150 guarantee to make your way to city #2 and continue the cycle from there, ultimately ending up back at home.

Using this calculation, you can figure out exactly how far you can afford to travel and which cities will be the most economical for you to hit on any given tour leg. Guessing wildly at a good place to go may work for a little while, but eventually the randomness of it all will catch up to you.

Extra Money?

The budget we did above was very conservative in estimates. We assumed that the band was only going to get a meager $150 per show that they play. We kept the food budget very slimmed down and even built in a few extra dollars of “wiggle room” that could add up to a surprisingly large chunk at the end of things if it doesn’t all get spent. In addition, the 2 CD estimate we used was obviously very conservative as well and if the band does well at promoting themselves, this number could jump much higher.

Although extra money could be brought in on a per-show basis, these few extra dollars should also be put aside to cover unforeseen expenses and accidents that may happen.

The great part of being on the road is that things change. Often for the better and sometimes for the worst. Not every show is going to pay $150 as a guarantee and not every show is going to cost you your fuel budget to get to. Having a detailed account of all of your expenses is something that should stay constant though. The sooner you start keeping a detailed account of your band’s expenditures, the easier it will be to plan for future tours and expenses.

______________________________________

David Roberts is the founder of the Sunshine Promotion company. Based out of Nashville, TN, his blog “Sunshine Promotion” at sunshinepromotion.info helps artists achieve real goals with hard facts, case studies, and templates of music business plans to follow. 

References (1)

References allow you to track sources for this article, as well as articles that were written in response to this article.

Reader Comments (5)

what about accomodations?

December 5 | Unregistered CommenterJason

Most bands sleep on peoples floors.. but I almost think that if you can only make $150 a show you shouldn't be touring. Unless you have good opening slots and you are going to make a lot of fans so the next tour is more lucrative...

December 5 | Unregistered CommenterRoniit

this is a pretty cool article although it makes the act of touring seem very unappealing. That's not to say I think it should be glamorous from the beginning but yeah, crashing on floors, 7 dollar food stipends and 100 dollar shows are truthful realities I think but daunting to say the least.


Again, great article though and lot's to think about. Thank you!

Andrew
www.songsinpreparationfortheshift.com

December 6 | Unregistered CommenterAndrew

The 25% rule is not the main point to be taken from this article (IMO). What's really great about this piece is that it gives folks a general idea on the REALITIES of taking your show on the road (like $150 gigs). It is a gritty lifestyle for sure, and to be honest, if you do not have a couple of bucks set aside for emergencies (van breaks down), the occasional hotel and some GOOD MEALS, then you should not hit the road.

There's a reason that record labels used to provide tour support- you generally lose money while you're touring. Of course, that should change as you grow, and in the meantime, as this article shows, you may be able to just squeak by financially...at the expense of eating.

Cheers- see you on the highway.

December 7 | Unregistered Commenterslaphappy

$150 per show?! Holy shit. What kind of lavish wonderland allows a venue to pay a band playing original music, playing a standard 45-1 hour set that kind of money? Maybe it's just Chicago, but you're lucky to see $50 if you fill the place. The highest I've ever seen a band bring in was $200 from an evening's worth of music. We brought in 150 people to a medium-sized venue. And before you go, "you're just bad at making bookings/negotiating" this was an incentivized deal at one of the better venues in the city. It's a venue that's easy to get to, popular, and well-liked amongst concert-goers. Had we passed, there would have been someone else in line and we would have had to do a show in a shittier venue in a shittier part of town, most likely not getting as many people out.

December 25 | Unregistered CommenterNathan H

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