Love the Band, Bought the:
a) Pen
b) Shot glass
c) Thong
d) Apron

A huge part of being a fan is feeling an emotional connection to the band. Fans are drawn to the music first (one hopes), but if they really like you, they will buy in to your whole look and feel. Buying a piece of merchandise gives fans a chance to identify as part of the tribe. As the artist in question, who are you to deny your fans?

As with all projects - especially ones that cost you money - do your research before starting a merch program. This includes understanding who your audience is. Believe it or not, not everyone wears black t-shirts. If yours is not a t-shirt crowd, you may want to come up with some alternative products. "When you think of a typical promotional item you think of stuff like pens, which are probably not appropriate for the music market," says Jeremy Black, president of Toronto-based music merchandiser Third Estate. "But if you research more thoroughly, there are a lot of interesting things you can do. It's important to hit different price points. If I'm at a show and I have five dollars, I want it out of my pocket either way - either on a beer or merch and I'd rather buy the merch."

Production costs are an important consideration - and to achieve the right production cost, you might want to start with price point and work backwards, leaving yourself a decent profit margin between sale price and production cost. "I always tell bands they should be making a proper 50 percent retail mark-up on goods. So, for the more cost-effective shirts, you should be paying seven or eight dollars depending on how many units you're doing and marking that up for $15 or more. Getting into the premium stuff like American Apparel, you want to be charging $20 for your shirts," says Black. "Things that go into the cost of goods sold include the quality of the garment, the number of colours, the number of print locations and the quantity." Cost of goods should also include shipping, design costs and taxes.

Be careful about ordering larger quantities than you really need. You might save 50 cents per unit if you order 500... but you may also wind up with 482 thingies piled up in the jam space until the end of time. You may see better turnover through small runs of different things and new designs. Black advises, "If you're a band and you have this fantastic piece of merch that you've paid someone to do, you want to keep it in the 100 unit range per design. The price difference between 100 and 200 isn't that great, ultimately. It's important to keep the per unit cost down, but at the same time don't overextend yourself."

Homemade merchandise is a great option if you have any craftiness to add to your musical talent. Halifax-based singer-songwriter Rebekah Higgs is noted for her whimsical display of hand-knit broaches, silk-screened posters and the ever-popular face cloth "Boo Boo Bunnies." "I think homemade merch has such a personal touch element to it," says Higgs, who also fronts the electro-dance band Ruby Jean and the Thoughtful Bees. "It is more charming and alluring for a fan to buy something you personally made rather than something out of a factory. But for the most part, I just started making merch because I didn't think you could buy personalized chocolates anywhere, and it is a great way to have little creative crafts and projects on the go."

Because the homemade stuff takes time to produce, its value is more in fan-base building than money making. Higgs admits, "I am more interested in people having little RH hearts on their blazers than charging the appropriate cash value for them, so even though each one takes about 15 minutes to knit (then they get washed for the felted look and a hand sewn 'RH') I sell them for only five dollars. It has always been more about covering my costs and having people wear your t-shirt rather than making lots of money."

If you really want to make money from your merchandise, get serious about keeping accounts at your shows. The simplest way is this: start with a cash float of, say, $20. Before every show, count in what you have of each item and write that down as A. At the end of the night, count out what's left as B. Make a note of the number that you gave away as C. A minus B minus C equals the number you sold. Multiply each item by its sell price. Tally that all up, subtract the $20 float you started with, and you should have exactly what's in the cash box. If you don't, you've either screwed up the count, or someone has walked away with a free t-shirt. More likely you bought yourself a beer from the float and didn't remember to note it. Try to remember: a beer float only sounds like a good idea.