Justin Colletti at Trust Me I'm a Scientist recently wrote an article about the real cost of making an album. He does this by explaining that after adding everything up, on average it will take $10,000 and about two weeks worth of time to record an album. According to his math, it would take 500 - 2,000 album sales on Bandcamp, 700 - 2,800 on iTunes, or 100,000 - 400,000 streams on Spotify to make back your money.
These seem like high numbers, especially for unknown bands. He recommends that young bands record singles or EPs, or just play live shows until they feel that those sales numbers are attainable goals.
To illustrate his points about recording prices, Colletti tells the story of the recordings of Nirvana's three studio albums.
Their first album, Bleach, was allegedly recorded in 30 hours for $600, or $1,200 in today's dollars. However, this wasn't really true at all. It is true that engineer Jack Endino only charged $20 per hour, which was about the lowest you could get in 1988. But the truth was that the recordings took place over an entire year, and the first 30 hours weren't even the official Bleach recording sessions.
In the end, Endino billed Nirvana for 50 hours, but this wasn't nearly the amount of time he really spent mixing the tracks, which he did on his own time. In the end, Bleach a bit less than $3,000, which is still pretty cheap for an album as successful as it was.
Nevermind had a budget of $65,000. It was recorded in 6 days at first, then overdubs and mixing at a rate of one song per day. When it was done, it ended up taking a full month and costing $130,000.
The label had hoped to sell 500,000 copies of Nevermind, instead it sold 25 million. So in the end, $130,000 might have seemed like a high cost at first, but for an album with that many sales, it turned out to be a pretty modest price.
Nevermind's next album, In Utero, was recorded for $25,000 in two weeks. Producer Steve Albini was also given a $100,000 fee instead of taking royalties, which he thought was the better choice morally. He would have made about $500,000 in royalties, so instead this went to the record label.
Today, less royalties would have been made, but that's because music simply isn't selling as well as it did back then.
In today's world, recording prices haven't changed much, except paying the people involved has generally doubled. But other prices have come down because recorded music isn't making much money anymore. Albums still take weeks to record, but anything can happen. Nirvana's Unplugged is their second most popular album, and it was recorded in just one day.
Be sure to read Colletti's article to get the full story.