CD costs
mail order, cost breakdown and calculations

CD mail order costs

Here’s a rough guide to CD mail order costs. Duplication starts at less than £1 a CD depending on:

• printing, booklets, inlays;
• cases—gatefold Digipaks are expensive;
• volume—high volume is cheaper;
• urgency—more urgent is more expensive.

The example below allows £1.50 which is probably the most you’d pay for a low volume, full colour job. If you’re pressing a high volume (thousands) and it’s not urgent you could pay half that. There’s more about duplication in CD release.

Postage and VAT changes 2008

I weighed these options and got them priced in the post office (Autumn 2005). Since then the Royal Mail have introduced a new price structure for postal packages. I’ll update this as soon as I get time. In the mean time treat this as a rough guide—check the exact weight of your own packages and get up-to-date costs.

VAT is temporarily 15%. I won’t change the examples here, they’ll be right again in a couple of years.

Digipak mail order

Digipaks and other light cases are more expensive to buy than standard CD jewel cases but cheaper to post, although wallet sleeves are cheapest all round. You can also get mailers cheaper than this (the cheapest I found is about 6p CDs, post and packing).

Standard jewel case mail order

The standard jewel case is the cheapest rigid case but the most expensive to post (again, you could use cheaper mailers).

There’s quite a range of packaging and mail order and you might opt for a different payment method. You can find a lot more about packaging options online. Try a small sample to start with, you can always change your mind when you see how it works. You only need to commit to volume for the final pressed CDs.

CDs, post and packing

Here are some links with more information about CDs, postage and packing choices.

CD total cost breakdown

This is how to cost your own CDs and how retailers cost theirs.

The component costs of a CD package

To decide an all-in price you could add up the costs and guess a margin, but there’s a better way. First make a list of all the costs you might need to cover. Whether you allow for these examples or not depends on who’s involved and the expected volume of sales.

Some of the one-off costs and running costs might be paid out of writer, artist, label or publisher income. This list assumes the artist is also the performer—otherwise allow for session payments or points. When you’ve got a rough idea of the costs you can work out a price.

A complete CD cost breakdown example

To work out a CD price for direct sales we’ll assume:

• the cost for writing and publishing is 6.5% before VAT (whether through MCPS or not);
• the artist deal is the same as Sting, about 20% of gross;
• the label makes the same as the artist, 20% (they normally take more and spend more);
• one-off and running costs are 10% (this may need refinement later on);
• promotional CDs and other publicity costs are covered by the profit margin;
• there is no additional retail mark-up to the selling price (i.e. you are the retailer);
• the other costs we know: duplication, post and packing, VAT and WorldPay commission.

These are only assumptions for this example. You might want to do everything differently.

The final CD cost calculation

So we have an unknown price, some percentage amounts and some money amounts. If you’re really afraid of numbers it’s time to give up and get that accountant, but bear with me, this really is quite easy.

Now you can work out the unknown money values from the percentages of the total (e.g. VAT = £9.34 x 0.175 = £1.63).

Obviously, you can change the numbers but the technique is always the same. The price you charge is up to you but be sure your tax is covered. At this price you’d need to pay the VAT on about 6,000 CDs a year, so keep 17.5% safe unless you’re certain you won’t sell that many. This example also assumes 10% general one-off and running costs, and if you don’t have evidence for that it’ll become taxable as income too.

Here’s a summary of this mail order example to compare against the high street CD cost breakdown below:

Calculating VAT from an ex-VAT price

Our example is complete, but you might have totalled all your costs and simply want to add VAT. The VAT on an ex-VAT price is 21.2%, so multiply your total by 0.212.

An example of high street CD costs

By way of comparison a £15 high street CD breaks down rather differently. There isn’t a standard or average breakdown—a lot depends on the artist’s deal with the label and the number of records sold.

Distribution costs vary from 25%-30% down to 12% for a hit, or as low as 5% for a big major label artist.