Your crowdfunding campaign’s make-or-break moment actually comes the second you click the button to launch. Whether you smash through your original goal and meet with wild success or watch the clock tick down without getting near your funding goal depends largely on the work you do before your campaign is ever launched. If you don’t plan out how to crowdfund, your campaign is doomed to fail.
So what’s involved in planning your crowdfunding campaign?
- Calculate Your Fundraising Goal
- Choose a Crowdfunding Plaform
- Establish a Timeline
- Develop a Marketing Strategy
Identify Your Crowdfunding Goal & Perk Pricing
One of the most important things you need to do before you launch is to decide on what your crowdfunding goal should be. You want to know what your break-even number is, and then you need to decide your goal based on that.
Don’t guess! You don’t want to set your goal too low and then end up not raising enough money to cover your expenses. Likewise, you don’t want to set your goal too high and then not come close to reaching it. Having a funding goal that you know you will cover all of your expenses and won’t be out of reach is important to your campaign’s success.
So how do you go about creating this goal?
- Calculate your fixed costs
These are things like molds & tooling, package design, and travel & trade shows. They’re costs that you will have to pay once, rather than things associated with the production of each unit. For our example, we’ll say our fixed costs are $13,500.
- Calculate your variable costs
These are the components of your product that will have to be paid for each unit that you produce. Think about things like the battery, casing, buttons, gears, packaging, and assembly for each unit (or whatever different components your particular product will need). Break this down as much as you can so you understand how much each piece is going to cost. For our example, we’ll say our variable costs are $10.40 per unit.
- Figure out your average order value
Most likely, you’ll plan to offer different prices on your product at different points during the campaign (think about Early Bird specials and VIP pricing, for instance). Your average order value will generally be about 1.25x your most discounted price. For our example, we’ll say our average order value is $100.
- Calculate your break-even count and funding amount
Subtract the number you got in step 2 from the number you got in step 3 to get your profit per unit:
$100 - $10.40 = $89.60
Now divide the number you got in step 1 by your profit per unit to get your break-even count:
$13,500 / $89.60 = 150.669
This number represents the units you need to sell to break even. In this case, we will need to sell 151 units. With this information, we can now calculate our break-even price by multiplying our break-even count by our price per unit:
151 units x $100 = $15,100
We now know that our funding goal for our sample project here should be $15,100 if we want to break even on the campaign. If we want to make a profit, we can make that goal higher. We can also adjust the price per unit if it makes sense with the product, or seek to lower fixed and variable costs by working with other vendors if possible.
Again, the important thing here is that you should not guess on these numbers. Setting a funding goal isn’t about what you really hope to raise; it’s about making sure you set an amount that will cover your costs and perhaps make a little profit (if that’s your goal).
Plan a Realistic Crowdfunding Budget
Crowdfunding is about raising money, but you’ll have to invest in advertising in order to get those funds. Think about all the ways in which you want to advertise during your pre-launch, your campaign, and your post-launch periods, and plan your budget accordingly. You may have the funds to advertise everywhere that you want, but you might find that you’ll have to be more selective about your advertising channels. It’s all about knowing what your budget is, and again, it’s important not to guess.
Choose the Right Crowdfunding Platform
Kickstarter or Indiegogo? It’s an important question, and there’s no one right answer. Each platform has pros and cons, and creators need to consider a lot of different factors before making the decision. While there are few hard and fast rules, we can provide some guidelines that will help you make your decision.
If you’re launching a game, go with Kickstarter. That’s one of those few hard and fast rules that we mentioned a moment ago. Kickstarter has built an incredible community around launching games, so if that’s what you’re doing, Kickstarter is the way to go.
Similarly, tech and innovation projects have largely moved to Indiegogo. That’s where the community is, so that’s where we recommend launching that type of product.
The two funding models for crowdfunding campaigns are fixed and flexible funding. Fixed funding campaigns will only be successful if you reach your set goal; if you don’t reach that number, the money will be returned to the backers and neither you nor the platform will get any of it. Flexible funding campaigns will collect the money whether you reach your goal or not, and the platform will collect a fee before sending the money to you.
Kickstarter only offers fixed funding, while Indiegogo has both fixed and flexible funding.
Kickstarter is available in 25 countries, while Indiegogo is available in 21. Make sure you check this vital information!
The platforms have slightly different payment processing fee structures, and they each charge a percentage of your overall funds raised. The exact numbers on these change from time to time, so we encourage you to visit the support pages for Kickstarter and Indiegogo to see what the fees are when you’re making your decision.
There are a lot of different marketing tools out there to help you promote your campaign, some of which are native to the platforms and some of which are outside tools. Indiegogo allows you to use Google Analytics, Google AdWords tracking, the Facebook pixel, tracking links, promotional opportunities through the platform, upsells, secret perks/rewards, and limited perks/rewards. Kickstarter only gives you access to Google Analytics, tracking links, promotional opportunities through the platform, and limited perks/rewards.
These differences are very important to understand. Indiegogo offers more ways to track your ads, which can help you target potential backers. Kickstarter, on the other hand, has fewer ways to track ads, but has a larger organic community to draw from. We encourage you to think carefully about what’s important to you from a marketing and advertising perspective before deciding on a platform.
There are differences in the level of creator support, what’s needed before you launch, what you’re able to offer, and how the platforms handle post-campaign life that you’ll want to consider as well.
The bottom line is that there’s no easy answer as to which platform to launch on. It’s the biggest decision you have to make before you launch, and you should give it a lot of thought. Kickstarter may have more brand recognition, but Indiegogo can make up for it with innovative features and an extremely active tech community. It never hurts to reach out to both platforms to see which can do more for you.
Establish a Timeline
A crowdfunding campaign has a lot of moving parts, and you need to keep track of everything in meticulous detail. Your campaign’s start and end dates are the most obvious milestones that should be in your calendar, but there are a lot of other dates that you need to check off as you go, and establishing a timeline before you really dive in will help you set your entire campaign up for success. We’ll lay out some activities that you should be doing in each stage, but you should figure out a timeline for checking these things off before you launch your campaign.
The most important aspect about your timeline is understanding that plans may change. No matter how well you plan out when everything should happen, you don’t have complete control over everything, and delays might pop up. Be upfront with your backers about any changes in plans, and be willing to be flexible as things come up.
Develop a Marketing Strategy
Once you have developed your product or idea, it’s time to sit down and develop your marketing plan. This should be done anywhere from 3-6 months before you launch your campaign. Sure, in some cases a campaign can be more agile and launch faster, but especially for campaigns with a higher monetary goal, you’ll need plenty of time to prepare a plan.
Here are a few key considerations for your marketing strategy:
- Budget: How much are you able to spend on marketing? This will determine which platforms and tactics you can employ to engage your audience, and convert backers.
- Channels and platforms: Which marketing channels and social media platforms will you focus on? It’s difficult to engage on all of them, so you want to make sure you focus on which will be most effective.
- Talent and collaborators: It’s to execute a strategy by yourself. You will need collaborators with the right marketing and creative skills to implement your plan.
- Time and management: Do not underestimate the time it will take to manage your marketing campaign. For many, it becomes a full time job during the primary campaign. You will need to make sure you properly budget for your time and management requirements to avoid disruptions, and mistakes.
Table of Contents
- Introduction: Crowdfunding 101
- Chapter 1: Don’t Overlook The Planning Stage (By Mark Pecota from Launchboom)
- Chapter 2: Marketing & Promoting Your Crowdfunding Campaign (by Easyship)
- Chapter 3: Raising Money For Your Crowdfunding Campaign (by Indiegogo)
- Chapter 4: The Manufacturing Process: Where Should You Start (by Easyship)
- Chapter 5: Establishing a Shipping and Fulfillment Strategy (by Easyship)
- Chapter 6: What Should You Do After A Successful Crowdfunding Campaign? (by BigCommerce)