So you’re thinking about starting a crowdfunding campaign – congratulations! I’m not going to lie, it’ll be a tough experience, but incredibly rewarding in the end. A crowdfunding campaign not only brings in money, it also builds a brand, allows you to engage with your audience, and can even develop into a business. Taking the steps to make sure you have a crowdfunding budget will help your campaign run as smoothly as possible.
Putting your campaign on Kickstarter or Indiegogo isn’t enough- it’s up to you to make sure people are seeing your campaign! There are thousands of campaigns on Kickstarter and Indiegogo and great marketing is a sure way to get your campaign to stand out from the crowd.
Great promotional material is a must for a successful campaign and you need to have room for it in your crowdfunding budget.
I always like to think of it as a tension between money and time. The less time you have the more money I’d recommend to spend and vice versa. Remember that even the smallest tools like those that scrape emails from Facebook Groups require some sort of upfront investment.
Alternatively, you can also choose to work with an agency to help with your crowdfunding project. There are agencies that do everything from just the crowdfunding video to those that provide end-to-end service from market research to fulfillment.
In terms of cost, most marketing companies charge between 15-20% of funds raised with some sort of upfront flat fee. Be wary of marketing agencies that promise you millions of backers or instant success.
2. Project Video & Photos
People want to see your products in action, and high quality videos and photos are the best way to highlight how your product works and why people need them! By working smart and planning your shoots, you can make a video and capture photos that work for all the platforms that you’re working with.
For those on a tight crowdfunding budget, you could try making the video yourself. Because videos can make or break a campaign, if you’re unsure of what to do and where to start I’d recommend leaving it to the pros.
Thinking of skipping the video all together? Bad move. The video is always the first thing people check out, and photos are close behind. Also, according to Kickstarter, campaigns with videos are much more successful than those without (50% vs 30% without).
They’re a great way to show off your products, and tell your story. High quality images are also a great way to show off your products! If you have a decent camera and some editing experience; go for it! If not, hiring a professional photographer can really make a difference in the way your products are presented.
3. Referral Programs
Referral programs are a great way to get as many eyes as possible on your campaign.
If you’re not familiar with referral programs, they allow people to earn something (cash, a tiered prize, etc.) for spreading the word about your campaign. The reason referral programs are so successful lies in the assumption that like-minded people tend to mingle. I
f a backer loves your porcupine-inspired tea mug, there’s a high chance that someone in their social circle probably would like it too. This is great news because it allows you to tap into networks that you wouldn’t have access to otherwise!
There are two different phases you can implement a referral program, once during the lead generation phase and another time during the crowdfunding campaign itself.
If you’re interested in diving deeper into referral programs, I go into it in detail in another post here.
4. Funding Goal
It may seem straightforward- how much do you need to raise to pay for your project? But, there are fees, taxes and unforeseen costs to consider. You want to give yourself some buffer room, while keeping the goal reasonable so it’s possible to achieve.
Write down everything you can think of that you’ll be paying for, add it up and then add some wiggle room. There will always be costs and fees that you didn’t anticipate when you figured out your crowdfunding budget. Or things could go wrong and you’ll need some extra cash to cover expenses.
One of the best things you can do for yourself and your project is to research other similar projects that have launched. Compare what you think you’ll need to raise with what other similar projects needed to raise. Are you on the right track?
Also, raising more than your target doesn’t mean you have money to spare. More backers = more pre-sales = more manufacturing costs = more postage, etc. Just go ahead and look at what happened with the COOLEST Cooler fiasco on Kickstarter.
If you need $10,000 to fund your project, don’t set your funding goal to $10,000. Add that buffer room in and give yourself some space to breathe.
5. Crowdfunding Platform Fees
The platform you use to bring your project to life is going to cost you. Remember that fees can add up and knowing exactly what these fees are will help you create a budget for your project.
- Platform fee: 5% of all funds raised
- Payment Processing fee: 3-5%, plus 20 cents per pledge
- Fees differ depending on which country you’re starting the campaign from
- Platform fee: 5% of all funds raised
- Payment processing fee: 3-5%
- Campaigns with bank accounts outside the US will be charged a one-time $25 transfer fee.
- Fees differ based on funding type
6. Pledge Management
Depending on the volume of backers, you may consider using a Pledge Manager tool to help manage your orders at the end of the campaign. If your campaign reward structure is especially complex with multiple add-ons at different pricing, I’d recommend signing up with one before the end of the campaign. This can mean the difference between a month of all-nighters and sound sleep.
Pledge managers often have tiered pricing, depending on what you’re looking to get out of the service. The pricing itself will vary but some will take a percentage of funds raised through the campaign and through the survey, and others will charge a per backer rate plus a percentage of funds raised through the survey.
The most well-known and trusted Pledge manager is BackerKit. They work with you to create campaign-specific surveys and provide user-friendly information downloads for your logistics and fulfillment team.
Most project Creators miss this part, but Crowdfunding money is considered income and has to be accounted for in your personal or business taxes.
The amount you owe is going to vary depending on a number of factors in your campaign, and where you live. Each country has its own set of rules and regulations. You’re able to deduct certain expenses related to the production of your products, but this also varies per country.
The key thing here is to save as many receipts and copies of everything you’re purchasing and sending out.
Have a designated space to keep all your necessary items in one place.
Check out Kickstarter’s tax page for more info.
There’s a ton of options out there for manufacturing, but it doesn’t mean that they’re all great. Choosing a manufacturer is a big step and choosing the wrong one could tank your entire project.
Talk to friends, family, acquaintances, industry contacts- anyone who has experience with manufacturers.
Once you’ve found some and have done your own research on them, reach out for quotes. Explain your product and send photos so they clearly understand what they’ll be working with. Costs are going to vary depending on your products, and cheaper isn’t always better.
This is a huge expense and one of the most important in your crowdfunding budget; people want to get their stuff! It’s the #1 issue projects run up against even if everything else has gone without a hitch. This often underestimated cost can cause problems if you’re not fully prepared.
I always recommend to charge for shipping during your campaign rather than in the post campaign survey. Including your shipping costs in the reward levels ensures there’s no unwanted surprises later on.
Work out the exact details of how much each product will cost to ship to each country you want to ship to.
Most shipping companies charge based on the weight of the package. It’s great that you want to make your product available worldwide, but keep shipping charge in mind when determining where you want to ship to. Maybe the $250 shipping charge will offset the net gain of using the product priced at $89.
You also need to accommodate customs fees that may add up for international shipping, so do your research and make sure you’re covering yourself for the extra hassle and expenses. If that’s not something you’re covering, let backers know they’ll be responsible for these additional costs so they’re not surprised when the time comes.
Some great shipping companies I’d recommend are
Both of these companies specialize in crowdfunding and e-commerce shipping so they know what they’re talking about!
As much as you plan until you can’t plan anymore, life happens. Things get messy and stuff gets lost. Always give yourself some wiggle room in case those ‘oh shit’ moments happen. And they will- but that’s ok!
Nobody said your crowdfunding budget has to be perfect but keeping organized, and anticipating as many costs as possible will put you on the right path to fulfilling orders, keeping backers happy and rocking your awesome campaign.
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