Artist merchandise profit creation tips

Written by Kyle Kraft of Krafty Entertainment

Krafty Entertainment is a music business development coaching company dedicated to providing guidance to musicians (and their teams) on how best to nurture supporters and profit from doing so. Krafty Entertainment’s founder Kyle Kraft has over 20 years experience in assisting both developing and established artists in substantially growing their net income from their music. Interested in working with us? Let’s talk!

In spite of the attention that streaming gets these days it's not uncommon for artists with developing audiences to make the majority of their income from physical product sales, and established artists can still make a double digit percentage of their revenue from physical product sales if they’re doing things right. Whether or not the artist is performing live (and selling physical products at their performances), there is a healthy income stream to be built from selling physical products online. 

While streaming is the primary means of consuming music these days, that doesn't mean its the best path to artists maximizing income. Self-releasing artists make roughly $30 per 10,000 streams on Spotify (the largest audio-only streaming platform), or to put it another way you make about as much from selling a shirt as you make from 10,000 streams. With that being said it makes sense for artists at all levels to dedicate a substantial amount of their effort towards physical product sales.

Here's some tips to help you maximize potential profits from creating and selling merch:

- If you're less experienced with selling merch or aren't confident in how well a design is going to sell, running a pre-order campaign in which you take orders with the understanding that they're going to be fulfilled after the campaign is finished is a good way to get an idea of demand and not risk making too much merch. This also allows you to generate some income before you have to pay to have the products created. Let your supporters know in advance that its a pre-order and when they will be able to get their merch, and they will be fine with how long it takes them to receive it. As long as you set realistic expectations and communicate you can be profitable and maintain support with a pre-order!

- Be sure to charge enough to make a healthy profit from each sale. While your merch does have some promotional value, you should generally be looking at it as a source of profit and set your prices accordingly. At the very least you should charge double your cost of goods to make them; make your money so you can reinvest it it growing your business!

- Merch can be profitable in low quantities, provided you price it properly and don't order too much more than you are confident you are going to sell quickly. There is no shame in saying a merch drop is limited to 24 pieces; in fact, scarcity is a powerful sales tool that can help get people off the fence and pulling out their credit cards so you would be wise to highlight the limited edition nature of a drop assuming it is (which would be advisable for most merch released by artists with developing audiences).

- If you are just starting to offer merch for the first time or are trying out a new design you would be wise to consider starting by just offering one color way per design to start with. That way you can see how well received the design is without having to invest multiple times the amount into manufacturing by having multiple color ways. Black shirts are often the bestselling color, so are a good choice to offer a new design in first.

- Aim to have merch designs that are so good looking that people who aren’t even familiar with you would be interested in wearing them. Investing in some graphic design for your merch is a wise idea, don’t just make merch that is little more than your name on a shirt.

- Each color you use in a design on each side of a blank adds roughly a dollar per unit to the cost of printing, so ideally have as few colors as is possible in your design to keep your costs down and only print on both sides of the blank if the additional printing is likely to increase sales.

- Be conscious of seasonal temperature differences when considering new merch offers and making orders. Heavy hoodies and beanies are not going to sell as well in the summer, and tank tops are going to be a harder sell in the winter. 

- Poll your supporters online to see what design options you’re considering that they like the best. After all, they are your target audience who you are trying to sell your merch to so you would be wise to get their input before investing in new merch. If you have a list of past customers, pay the most attention to what they say; if you have a mailing list (which you should), ask the people on it as they are more invested than people 

- Don’t cheap out on the type of blanks you use. You will make more sales by selling high quality items that people actually want to wear, and offering anything that isn’t high quality has the potential to have a negative impact on people’s perception of you. Make premium products!

- Consider the social ramifications of the blanks you choose to use. Clothing that is manufactured in third world countries may be cheaper, but are very likely to be manufactured in sweatshops. Being able to say to your supporters that you are doing your best to ensure that you aren’t supporting sweatshops will often not only be likely to have more people support you, but likely also result in more sales. 

- Don’t forget to order a full range of sizes, and be sure to get the split of sizes right. The exact range or sizes should depend on your specific audience, the region you are trying to sell merch in, etc but will likely include at least M – 2XL shirt sizes. Don’t order as many of the smallest and largest sizes in the range you are ordering, as you are most likely to sell mostly the middle range size(s). If you order equal amounts of each size, you are likely to run out of the middle range size(s) first.

- Silkscreening usually involves set up costs for each time you print so you are going to get cheaper prices per item by ordering more at once BUT

- You don’t want to tie up your cash flow by sitting on tons of unsold inventory that is getting dusty, so it would be wise to only order as much merch as you expect to be able to sell in the next few months based on past sales as well as upcoming opportunities.

- Price breaks for blank shirts/ sweaters/ hats etc are usually in quantities of dozens, so aim to order blanks accordingly. Keep in mind you can always order more blanks than you are getting silkscreened right away for better prices per unit, and then use those blanks for future printing.

- Offering bundles with merch and experiences at the same time as you start taking pre-orders for a new project is a great way to upsell supporters and maximize your income per supporter. Don't just take $50 from someone who is willing and able to give you $500 or even $5,000 with the right offer!

- Analyze what merch of yours is selling best that make sense to make more of (or something similar), and what designs you should consider discontinuing.

This information was compiled by Kyle Kraft of Krafty Entertainment. Whether you are an artist who is in the early stages of building your career looking for the best paths to generating income, are an artist that has established a following and are interested in getting assistance with securing tens of thousands of dollars in funding to further your career, or are an artist or collective with an extensive fan base that would like assistance with increasing the efficiency of your business development, we can help you.

 Want to read more articles written by Kyle? You can do so here.