Select four or five songs that represent your best material. Showcase the band's strength and diversity. Think of the CD as a mini concert in which the audience is made up of record label executives, booking agents and important concert promoters. Choose songs that will catch and hold their attention. The first 30 seconds of the CD are the most crucial and this is the length of time that you have to make a critical first impression. Emphasize the range and depth of your material.
Practice and home record the songs for the CD. This is a preliminary step that will prepare you for the recording studio. Recording studios cost money, so it is important to be well rehearsed and prepared. Once the songs have been selected, spend extra time rehearsing and work out all of the details for the arrangements. Professional intros and endings are important ingredients. The recording process can be intimidating when you are not used to it. Pre-recording the band at rehearsal helps everyone to become more comfortable with the process. It also will help you to critically listen to the material from a listener's perspective.
Book time at a professional recording studio. Recording studios charge by the hour but it is possible to get deals by buying blocks of time. The price varies, but with a little research you should be able to find a good-quality studio within the $30 to $50 per hour range. It will probably take two full days to record and complete five songs with vocals and solos, and this would be fast. Extra time is needed for the mixing process. Spend time investigating different studios. Ask if you can sit in and listen to a session. Talk to the recording engineer who will be in charge of your recording.
Record the songs for the CD. Be professional and save the partying for later. Determine the song order before going in the studio and stick to it. Don't worry if things seem slow at the beginning. The first few hours involve setting up mics and finding the right recording techniques and developing a feel for the studio. Trust the engineer. Record a couple of songs. Put them on a sample CD and take a lunch break. Listen to the songs over a good sound system and on a cheap boom box. Once the CD is completely recorded it needs to be mastered. This will balance all the volume levels out and ensure that the CD has a professional sound.
Take care of the legal angle. Protect the material on the CD if it is original. Get a copyright for your songs. If you are recording someone else's songs, you are legally obligated to get the permission from the songwriter or publisher.
Make arrangements for printing the CD. It is easy to burn CDs at home but it is important to have a professional quality CD cover. The cover should list all the songs on the CD and have contact information and website of the band. If you are interested in producing a large number of demo CDs, consider having them professionally printed. In addition to including them in a demo packet, they can be sold at gigs for $5.