How Much Does It Cost To Start A Record Label?

Read the article version of this video below.

The cost of starting a record label has reduced to a large extent from what it used to be. There used to be no way you can start a record label without having money, but things have become easier due to the daily advance in technology globally. All you need these days is time and an internet connection to promote your label. The record label business is a large industry and there is room to promote and distribute music everywhere. The average startup cost of a record label is between $200 – $50,000. But, for large labels, the average cost can be from $100,000 – $500,000. This cost usually varies from country to country and from state to state. In this video, the cost required to start a record label is explained in detail.

What are the costs to consider when starting a record label?

The following costs should be budgeted for when starting a record label.

  • Business start-up costs – This cost includes the cost of getting a recording space (costs about $500), filing for an authorization from the government and business name which costs about $3,300 (this varies from state to state).
  • Equipment cost – The equipment cost varies between $7,000 to $50,000, the breakdown of this cost includes the cost of purchasing equipment such as acoustic drum kit ($800), audio interfaces ($1,000), stationery ($500), microphones ($100), monitors ($300), mixers ($800), tables and chairs ($1000), phone and utility deposits ($2,500), cables ($600), etc. You can rent any of this equipment to save on costs.
  • Legal advice for artist agreement deals and recording contracts cost – You will need to hire a lawyer to help draw out a standard contract that binds artists to your record label. The cost depends on how elaborate the contract is, but it is better to stick to something simple if you are just setting up your record label. 
  • Manufacturing cost: This is also called inventory cost, it includes the cost of producing music on CD`s and/or vinyl, CDs supply, ink/cartridges, pen and stencil, notice board, printing papers and printing. This usually costs about $2,500.
  • Promotion cost: To promote or market your record label it will cost you about $3,580 and this includes printing fliers, which costs about $580, if 2,000 flyers are printed at $0.04 per copy. It also includes the grand opening marketing promotion expenses which is around $3,500. You can also use social media, press, or any relevant radio to promote your label. This helps you save thousands of dollars, but it requires hard work and consistency.
  • Label identity and operational cost: Label identity includes the cost of getting a logo ($150) and designing a website ($600). The operational cost should be about $50,000 and it includes the salaries of employees, payments of bills, etc., within the first 3 months of operating your record label.

Starting a record label is quite affordable, but to gain recognition and thrive in this industry, you will need to nurture a world-class music artist under your record label. If you need funding to start your record label, reach out to our business planning and funding experts at QT Business Solutions to learn more.

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