Generally, the royalty rate is based on a percentage of the standard retail selling price. You will get your full royalty rate for each full price CD or tape you sell through normal retail channels. Normal retail channels are usually record stores like Tower Records or Sam Goody. Record companies will pay you a fraction of your royalty rate for sales not through normal retail channels. In fact, most of your CD's will not be sold through normal retail channels.
Record companies try to make the royalty rate paid to artists as attractive as possible.
They may give you a generous royalty rate. However, in addition to the reduced royalty rate on CD's sold outside normal retail channels, there are also many reductions in your royalty rate. I said that the financial terms are often 15 pages or more. Well, your royalty rate is on the first page and the remaining pages are all the reductions. It is impossible to determine how much a band will get for selling a CD without a calculator.