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February 21, 2023 • 9 mins read
Financially, is this performance viable?
“Is this show financially viable for the band and myself?” Or, in other words, will I make money from this show? It is so important to ask yourself before you lock in a performance. Is it worth the time and effort that you are about to commit? There are a bunch of ways you can figure this out before you jump in head first!
The best way to learn about your financial obligations is to ask upfront! Make sure you know the answers to the following questions before saying yes to a gig.
You may ask:
Just as it is important to know your responsibilities, it is also key to know how the venue will support you financially and promotionally if you say yes to this performance. Some venues are more hands-on than others and you need to clarify exactly what the venue needs from you and what they will do for you to help sell tickets.
You might ask the following:
Even though some of these questions are logistical, they all pertain to the amount of effort you may end up putting in throughout the lead-up to the show and on the night.
There are an array of deals that occur in the music industry. If you have begun performing, you will no doubt have experienced at least a few of these.
Here is an outline of the main deals that exist:
A door deal is a common type of agreement between a live music venue and a performer or band. In a door deal, the venue and performer agree to split the revenue from ticket sales.
Here’s how it typically works:
A typical door deal might be a 70/30 split, where the performer gets 70% of the revenue and the venue gets 30%. The percentage split can vary depending on the negotiating power of the performer, the size of the venue, and other factors.
A door deal can be a good option for performers who are just starting out or who are playing at smaller venues. It allows them to keep a larger portion of the revenue from the show, rather than having to pay a flat fee to the venue upfront for hire.
However, door deals can also be risky for performers, since they have to rely on the venue to accurately report ticket sales and expenses. It’s important to have a clear and detailed agreement in place to avoid any misunderstandings or disputes. It’s also risky because if you don’t sell enough tickets to cover the expenses, you may find yourself owing money to the venue for sound and lighting.
These deals are quite confusing! Let’s use an example to make this as clear as possible!
If the deal is a $2,000 guarantee vs. 70% of $30 full-priced tickets + 70% of $25 concession tickets, and the capacity is at 300 people.
What this means is that regardless of whether you sell 0 tickets, you are guaranteed $2,000. However, if you want to earn more than that, you have the opportunity to by selling more tickets. Once you reach over your $2,000 guarantee in ticket sales, you have the chance to earn additional money.
Consider this, if you sold 100 full-priced tickets you are entitled to 70% of those sales.
By selling 100 tickets and calculating 70% of those ticket sales, you have made $2,240. This is already higher than the $2,000 guarantee and this is the amount you would walk away with.
If you sold 300 full-priced tickets and calculated 70% of those sales it would look like this:
By selling out you stand to make $6,720 instead of just the guaranteed $2,000! This gives artists an incentive to sell more tickets but also alleviates them of the large risk of underselling tickets with the guarantee in place.
One thing to be careful of here is the concession prices. You want to look at worst-case scenarios just in case. If you sold all 300 tickets at concession prices only it would look like this:
This is the lowest possible amount you could make from selling out. Make sure you plan for some financial flexibility when it comes to this deal. Don’t overspend on other things before you have assurance you can make up the difference.
We love these! A guarantee is very straightforward and is what it sounds like. You are guaranteed a certain amount of money for your performance. No matter how many tickets are sold you will still be paid the same amount. This is a really nice and stable offer to get. It tends to happen when you are more established and the promoters or venue bookers know you have a loyal audience that will show up regardless.
A venue may also take a small fee off the top of each ticket. For example, if you agree to make the cost of a ticket $22.50, a venue may take $2.50 off the top of each person. This leaves you with $20 per person instead. If there’s a large number of people attending this can really add up and be problematic. This needs to be carefully thought out in terms of pricing the ticket. You don’t want to go so high that the price is unappealing, but you also don’t want to underprice and end up creating financial issues for yourself and the other bands later.
The best thing to do is calculate your expenses and then price your ticket so that you can realistically afford the event.
Venues will often charge a venue hire fee which can range from $200-$1000+. It all depends on the size and caliber of the event and venue. Sometimes this is a stand-alone fee and sometimes it is in addition to a door deal or versus deal. Once again, make sure that however you are making money from this performance you calculate your expenses and ensure you can realistically pay for everything you need.
These deals are also exactly how they sound! You get a percentage of either ticket sales or the bar takings during your show or maybe both! It all depends on what agreement you come to with the booker. Make sure you ask for a high enough percentage that this is worth it for you!
*Side note – this list in no way covers all of the potential deals you may encounter. However, being across these will help you decipher whether any other versions of these deals are worthwhile!
Go through the worst-case scenario and see if this is worth your time. Ask yourself, what is the worst thing that could happen? If you sold zero tickets how much money would you owe? Is that amount something you can justify financially?
Don’t forget that time is money! Ask yourself, how many hours am I really committing to this and what is that worth? It could be worth calculating how many hours you anticipate spending on this event in its entirety and adding a reasonable hourly rate for yourself into the budget as payment.
Create a profit and loss spreadsheet and estimate what you stand to make or lose. Don’t forget any booking fees or venue hire fees.
Think about all of your expenses and write them out. Your expenses will be a combination of set fees and flexible ones. The flexible ones may be what you can pay your band members and supports if the show does well. It might also be more finances to spend on ads and promotion. For now, put the bare minimum that you would like to include.
Expenses might include but are not limited to:
Revenue might include but is not limited to:
Do the maths and figure out how many tickets you need to sell to break even. That means you don’t make money and you don’t lose money. This doesn’t necessarily mean this is financially viable yet. Then, ask yourself, how many tickets do you need to sell to make money? Is that number realistic? Be very prudent about answering this question. It could be the factor that makes this show something that will help or hurt you financially.
This bottom line should help you make up your mind about the financial viability of the show. That means when you deduct your expenses from your revenue, what are you left with? How hard will you really have to work to sell tickets from this starting point?
When you first get an offer from a venue, even though it may be exciting, give yourself time to process what that offer entails financially and time-wise. Many bands are just so thrilled to have an opportunity to play that they rush into an agreement and then find themselves in way too deep with commitment. Make sure you understand the deal, ask questions and ascertain where your responsibilities begin and end.
Delegate tasks to others and don’t try and do it all yourself! Ask your support acts to promote the gig on their socials, and give your bandmates a social tile to share on their personal profiles as well! The more reach you have the more likely more people will come. Message people personally as well. There’s nothing quite like having someone invite you directly to something. It leans on the notion of that person being important and a valuable person to have at the gig. It also shows that you took the time to think about them and put the effort to ask them individually.
Have a social media and promotional strategy ready to run from the announcement of the gig up until gig day. Don’t just accept the offer and then wait until the last second to hussle and sell tickets. Ask to be added to weekly ticketing updates so you can track how sales are going and start planning some posts to get people’s attention. It’s also worth running some ads to similar audiences so you are upping the chances of new people with similar interests attending.
If this isn’t a financially viable performance and that is clear based on the budgeting and discussions you have had, the other way to see if a performance may be viable is to weigh up other kinds of value that this gig may produce.
For example, the venue may be a prestigious one and it could add serious clout to your reputation if you played there even once. You are getting some free live footage that you could use for social media promotion down the track. Or, the venue patronage may be an audience group that is very well-suited to your target audience and this is a prime opportunity to reach more like-minded fans. This may mean the gig is still worth playing regardless of a loss financially.
Either way, you should use your better judgment to decide whether any of these other reasons are valuable enough to go ahead with the performance regardless of finances.
You could even think ahead to your future self and ask yourself, will I feel frustrated after the fact if I say yes to the gig for any of these reasons? If you get that irked feeling – say NO! It is important to listen to your gut and stand up for what you are worth! Set the standard so other musicians follow suit.
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