I agree with everything that's been said here (except that there are some areas that I have no experience with, such as on-line marketing, so I can't comment on that).

I agree that your most successful sales will probably be at your own gigs. We (my wife and I – She's the musician in the family; I'm just the co-investor.) have found other methods disappointing. There are a few local record stores that have sold a few CD's on consignment, but so few that it was hardly worth the effort. Likewise, a few local Irish gift shops have sold our CD's, one gift shop at a historical site, etc.

The bright side is the gigs. The CD's will help you get gigs, and the gigs will help you sell CD's. Even some gigs that you might turn down because the pay is too low or nonexistent—like coffeehouses—might be worthwhile for the opportunity to sell CD's. It sometimes happens that the band makes more money in CD sales than they get paid outright for performing.

The downside is you have to keep looking for new venues. My wife had a regular gig at a coffeehouse once a month for a couple of years. CD sales were great at first but tapered off to practically nothing. I figure the market got saturated. They had regular fans who kept coming back to hear them again and again, but no matter how much they like you, most of them won't buy more than one copy of your CD. They ended up quitting that gig, although the manager would have been happy to have them keep coming back.

(There's a lot of benefit, especially to a beginner, in having a regular gig like this, even if it's low-paying. I figure that playing at a familiar venue over and over, to an audience many of whom are repeat customers, is a great way to learn to feel relaxed in front of an audience. It helps you develop your "stage presence." But to keep selling CD's you've got to keep exposing yourself to new audiences. If you feel under pressure to make back your original investment, you may find it necessary to give up comfortable gigs like this.)

Keep in mind the MARGINAL cost of your CD's. Say you have ordered a thousand CD's. Find out from the manufacturer what it will cost if you come back later and order ANOTHER batch of a thousand. (This should be cheaper than your first thousand, and at any rate, it won't include your studio costs, the cost of original artwork, etc.) Divide by 1000 to get your MARGINAL COST per CD. Let's say it's $1.50. (I don't know if this is realistic.) That means $1.50 is what it costs you to GIVE AWAY a CD. With that in mind, it's a lot easier to be generous with promotional copies, than if you think they're worth $15.00 (or whatever your selling price is). The moral is, it doesn't pay to be stingy with promotional copies. If giving away a CD will help you land a $500 gig, you shouldn't even hesitate.

Another nice thing you can do with CD's is to swap them with other musicians. It's a cheap way to add to your collection.