Like yer style
My calculation:
RRP: £8
Dealer margin: 40%
Retained margin: £4.80
Distributor commissing: £1.50 (but I think most of this is done direct)
Pressing: £1 (could be easily be more like £1.50 -- I'm assuming they buy in Poland)
Net for producer £2.30 X 500 = £1,150
Net for producer £2.30 X 1000 = £2,300
Assume you go direct and the net is £3.80, which = £1,900 to £3,800 for 500 / 1000 units.
As for DVDs, dupe and on body print for 1000 will cost around £2 a unit. For 8000 I reckon this would drop to about £1.60. With a dealer price of between 6 and 8 pounds each and a sell-through of 8,000, retained margin would be between £26,400 and £51,200 assuming they go direct to the shop and they make it themselves. Now, that's more like it, but you can't sell that many a year, not in volumes of 8,000, and you'd probably need to split the take between a number of people. (I presume there's lots of different artists on each... you could pay the performers say £200 a time for rights in perpetuity...)
BTW I can't help thinking that a retail price of £8 puts a pretty stringent limit on the market...
[But you have to account for cashflow especially VAT, on dealer price -- so if you do one 12" a month and sell a thousand of each, every quarter you need ready cashflow of £840 (3 X £4,800 X 17.5% = £840). That cash could be difficult for a small firm to find if the shops don't pay on time.]