A producer is the one responsible in the whole musical direction of the album.
His biggest asset is his creativity.
Match a producer with an interior designer.
When u decide to have a new look for your house, u approach the interior designer.
The designer comes up with the design, talks to u to find out what u have in mind, and gives his views/expertise.
He may not be physically painting the place of moving things in etc, but he is in charge of engaging the people he needs.
He is paid on a one time fee.
When a band or their manager decides its time to make a new album, they look for a producer.
(Take note: its not just the band deciding which producer they want, the producer is also selective about the band he works with, cos his reputation is in the line, he doesnt want to risk picking up a crap band)
The producer's baby is the album, cos his name will be on it.
If the album is crap, the producer and everyone on it gets a bad egg.
Most producers were/are either engineers/musicians/singers etc.
You need that musical talent behind it, you may not be technically savy, but thats where engineers come in. But you need a musical ear for it. And also be up to date with what is acheiveable with technology. You've got to be excellent with people too.
You can be extremely talented as a producer, but everyone hates you, you are as good as nothing.
And once u get good, and your reputation soars, MAN, you can charge whatever you want!
My good friend Erich Bulling, producer for Earth Wind Fire, The Jacksons, Donna Summers, Frank Sinatra (you get the idea, he's a legend) said one thing to my question "So how much does a producer charge?", he said "As much as he wants to!"
There was a comment about producers taking a percentage of album/song sales/royalty.
You can either pay the producer in a one off fee (from $1000 per song for amatuer ones to $150,000 per album for the pros) or the producer can ask for points off the album (means a percentage).
That would be an excellent indication of the producer's confidence on the album and the band, cos he knows it will be good.