We’ve all seen big tech products which rewards go for around $1,000 and we’ve seen small but practical products that solve everyday problems which rewards go for 20 bucks. And both campaign styles get funded. So what’s easier? To crowdfund for affordable or for expensive products?
To start, there’s a great importance on defining your main unit number and educating your potential backers. And also it’s important to know the benefits and potential weaknesses of both pricing methods.
The Big Question: Affordable or expensive?
Is it easier to raise money for a product with a high price point or a low price point? Which one is better or does it better on crowdfunding? What’s the main difference in the creator’s approach?
The Importance Behind the Number
The amount of money you raise during crowdfunding is made up of two things: the first is the number of units actually sold. To find out the price at which you should set your product you must think about the number of products you want to produce.
The Initial Difference Between a Low Price Point and a High Price Point
This main difference between a low or high price point boils down to the number of units that you are going to need to produce.
A higher price point means fewer backers. A lower price point means many backers.
Importance of Building your Community
You can set your price at whatever you want, but you must take into consideration how many people are going to need to back you at that particular price point. It is of the utmost importance to calculate how many backers you are going to need and start building that community.
Simply put: You’ll need more people for an “affordable” product, and less people for an expensive one.
Example of a Low Price Point
With a goal of $100,000 at $10 per unit – you will need 10,000 backers.
Example of a High Price Point
With a goal of $100,000 at $500 per unit – you will need 200 backers.
Comparing the Two Pricing Options
Low price product means spending more time and effort to get people into your community (because you need a lot more of them). However, they may convert quicker because the cost doesn’t set them back too much.
Whereas, high price product means you don’t have to get as many backers but you may have to work harder because that initial investment is pretty substantial.
No matter what price point you’re at – you need to show the value of your product and clearly explain why people should want to back you.
Importance of Educating Your Audience
The second thing that affects the amount of money you raise on crowdfunding is educating your audience and building that community. This plays a part in explaining the value your product can have on people’s lives and is crucial in getting their money to back you.
The average price point for crowdfunding projects is around $100 dollars. And this can mean different things if your product is more affordable or more expensive than that.
So if your product is as affordable as that, you might have an easier time explaining the value of your product to people BUT you’ll have a lot of competition on the same price point, a lot of products around the same price competing for people’s attention (and money).
If your product is more expensive than that, you might have a harder time convincing people the value they’ll get from your, say, $500 dollar product. BUT you’ll be swimming in a more exclusive competition sea.
As you might have guessed by now, it all depends. It’s not necessarily easier to get fully funded on a more affordable product, and it’s definitely possible to get fully funded on an expensive or high price point product campaign.
Both approaches have their “pros and cons”. And again, it depends more on the Product you’re creating and the Audience you’re building.
You have to also consider the Rewards you’re offering for the different tears. If you’re a bit lost on that, you can check the ultimate reward planner here.
Good luck on your project!
Please share this article on LinkedIn if you liked it – would mean a lot to me. And since you’re already there, check the Facebook group for crowdfunding creators!