The above comments about distributors arn't quite right. A £12.99 CD has a dealer price of about £8. From that you would get about £5. So, the dealer is taking 30% of the price the record shop pays, and the record shop is taking 30% of what the customer pays. Obviously, if you increase the price of your CD, your cut will increase in proportion, but it will always be based around the middleman 30% of 30% thing. This may sound like a small cut of the money, but if you sell 10,000 CDs (not too far fetched, honest) thats £50k. There are some extremely good independent distributors who deal with small labels and can get product stocked in HMV, Virgin, Borders etc. They can also broker deals for in-store ads, listening posts (yes, you have to pay for that) and extra racking etc. Some of this might seem unacceptable (playing into the arms of the 'industry')but if you sell copies through folky channels anyway, you have nothing to lose through pressing extra copies for the chains and trying a short distribution deal out. You would re-coup the cost of pressing quite quickly and gain a lot of exposuse and awareness of your product if nothing else.

One final thing - do not think that bypassing the 'industry' will mean you deal with more honest and fair people. There is at least one folk distributor who will take a far larger cut of the profits in return for sitting on a pile of CDs and not offering them to any shops other than his own. Another folk distributor has been known to give as little as £3 for a £15 CD and then not pay at all on the grounds that the only person authorised to sign cheques was ill, and then hope the artist forgot. They got away with this mainly because the artists they tried it on were too young to stand up for themselves / know any better.

Whatever route you take be carefull.