Today, entrepreneurs can raise capital from the public and test their products with an array of audiences through crowdfunding. But, less than half of all campaigns end up reaching their crowdfunding goals; many fail because the money they raise isn’t enough to cover the business’s expenses. Indiegogo campaigns have a 9% success rate, while Kickstarter’s have a 36% success rate.
That’s why it’s essential to set realistic funding goals before you even begin campaigning. The good news is that setting realistic goals isn’t hard to do. Perhaps one of the most important things to factor in is fulfillment because sending orders to your backers at the end of your campaign can eat into your raised funds if you don’t adequately prepare.
Easyship can help you plan realistic goals for fulfillment. You can start by using our online shipping rates and tax and duties calculators to get an idea of how much these will cost you. You can then budget for this when setting goals for your campaign. Plus, our platform integrates with Kickstarter and Indiegogo, so that when you’re ready to ship your campaign, the process is quick and easy with multiple cost-effective solutions and a range of automated rules.
This crowdfunding guide will look specifically at setting your crowdfunding campaign objectives, how to approach these realistically, and how to measure your progress.
Setting Your Crowdfunding Campaign Objectives
Identifying your campaign objectives is important because it will help you set your crowdfunding goals. Today, crowdfunding attracts companies that seek to raise funds and test their products with potential customers. So, of course, knowing whether you want to use crowdfunding as a strategy to raise funds or as part of your overall product development strategy will help you set realistic funding goals.
What is a funding goal?
Your funding goal is essentially what you want to achieve with your crowdfunding campaign. Since crowdfunding can be both a funding and product-testing strategy, before you begin, you’ll need to decide which of these is more important for your business.
If you want to use crowdfunding to raise funds for your business, then you’ll need to focus on setting a high but achievable funding goal. The idea is that if you don’t raise this amount, you won’t be able to develop your product and properly create your business.
However, if you intend to use crowdfunding as a product-testing and market strategy, you can afford to set lower and even more achievable funding goals. That’s because, in this position, you’d probably already have the funds you need to create your products (or might perhaps have already done so) and you want to use crowdfunding to see if there’s really a market for what you’ve created. In this situation, you might want to choose a funding goal that you can reach in the shortest time possible.
Here are a few important questions you should ask yourself to help you identify your crowdfunding goals before you even start planning your campaign:
- What are the costs of creating your products? These might include manufacturing costs, rent, website fees, and salaries, for example.
- What deadline do you want to set for your campaign? Most experts recommend 30-60 days.
- Will you be able to create rewards to incentivize your backers, and what are the costs of creating and sending these to your backers?
- What are the costs of hiring the people you need for your campaign? You may need to hire creative designers and video producers, a campaign consultant, and a PR company, for example, to ensure your campaign’s success.
- How much do you expect to earn if you successfully create your product? Having an idea of what profits you might expect will help you figure out how much you need to raise to make this happen.
Setting reasonable funding goals is essential because if you reach your crowdfunding goals quickly, you’ll enjoy free traffic from Kickstarter's popularity rankings, get useful press coverage, and increase buyers' confidence.
Bear in mind that the average Kickstarter success goal is $5,000 (which is more than the Kickstarter minimum goal), while the average Indiegogo campaign raises about $41, 634, which is the highest average amount of any crowdfunding platform.
How to Set Realistic Goals for Your Campaign
Of course, you don't want to set your crowdfunding goals so low that you end up losing money after your campaign. You also don't want to set your goals so high that even if your campaign attracts a large number of backers, you won’t meet your goals. Before you begin trying to calculate crowdfunding goals, there are a few costs to look at. Here’s a rundown of the most important things to consider when setting crowdfunding goals.
Manufacturing costs include the cost of creating your prototypes and, if applicable, the cost of manufacturing your backers’ rewards. To launch your campaign, you’ll probably already need to have a prototype; you can build the cost of creating this into your crowdfunding goals to help you recoup the costs.
Noah Dentzel, the founder of Nomad Goods - and a successful Indiegogo campaigner - recommends that you calculate the cost of manufacturing your backer rewards then multiply this number by five to estimate the full cost of manufacturing and build in a healthy margin to cover other expenses.
If you’re launching a fixed-funding campaign, you might not be manufacturing your rewards until the campaign ends, so you need to make sure you have raised enough capital to do this. Don’t forget to communicate with your suppliers and producers to get a good idea of production costs and timelines.
Campaign costs include platform fees and marketing costs to cover things like advertising, videography, and photography. To create a good crowdfunding campaign, you’ll want to factor in the cost of hiring a photographer to take good product photos; a video producer to create a compelling crowdfunding video that will drive excitement about your campaign; and a PR company to help you create buzz. You will also need to include advertising costs to cover things like press release distribution or a pay-per-click ad campaign.
Your campaign will also incur fees for using a crowdfunding platform and payment gate. Indiegogo generally takes 5% of the funds you raise in your campaign, and levies a credit card processing fee of 3% + $0.30 per donation.
If you reach your funding goals, Kickstarter will take 5% of your funds as its platform fee, and another 5% as a payment processing fee. However, you won’t have to pay these fees if you don’t reach your crowdfunding goal on Kickstarter.
Make sure to factor all of these costs into your crowdfunding goals so that you raise enough funds to cover the platform’s cuts, otherwise, you may be caught unawares and end up with not enough money to manufacture your product or fulfill your campaign.
Fulfillment and Shipping Costs
Underestimating shipping costs is one of the main reasons why many crowdfunding campaigns ship late (or not at all). Forgetting to plan for fulfillment can lead to a rude awakening when you’re ready to begin shipping rewards to your backers; if you haven’t raised enough funds to cover this, you may end up paying out of pocket for this.
Experienced campaigners recommend that you budget up to 20% of your total crowdfunding funds to fulfillment. When you’re planning your campaign, do some research into the size and weight of the packages you’ll be shipping, and then get estimates of shipping costs from different couriers and an idea of international import taxes and duties.
Easyship has online calculators that can help you get estimates for both shipping rates and import duties. Once you have an idea of these, you can budget this into your crowdfunding goals.
These are the fixed costs that you will incur while executing your project. For example, they might include employee salaries, office rent, and the cost of creating a website. Factoring these fixed expenses into your realistic crowdfunding goals will ensure that you can easily cover these costs.
Ways to Measure Your Progress Towards Your Crowdfunding Goal
Tracking your progress while campaigning will give you some insight into how to kick things up a notch before your project ends. If you happen to be behind on your goals, you’ll be able to make sure adjustments to your fundraising plans and get your campaign back on track. Here are some metrics you can use to assess your progress:
- Conversion rates: This metric allows you to track how many of the visitors to your campaign page take the specific actions you want them to, such as making a donation or sharing the page.
- Traffic source: This is a useful metric because it helps you understand where your backers and page visitors are coming from. For example, if you notice you’re getting more traffic from Facebook instead of organic search, you can then consider doing more paid ads on Facebook.
- Unique visitors: This metric aggregates the activity generated by the same user on your campaign page so that you have a real understanding of how many people are actually visiting your site. For example, if a user visits your campaign page, makes a donation, and shares it with friends, this will all be counted as one user. The metric is useful for calculating a basic conversion percentage.
- Average time on page: This metric helps you understand where on your campaign page potential backers are spending most of their time so that you can figure out exactly what is drawing their attention.
- Exit rate: Knowing where potential backers are exiting your campaign page is useful because you can identify any problematic spots on your page. You can then improve these to maximize user engagement.
Delivering rewards to your backers on time can be challenging. Indiegogo knows this, which is why it has partnered with Easyship as its exclusive shipping and fulfillment provider.
The partnership allows their entrepreneurs to easily find cost-effective shipping solutions to reach backers around the globe. Through our crowdfunding and fulfillment expertise, we have helped some of the most successful campaigns on Indiegogo, including MATE X, Nomad Lane, and Waverly Labs.
Find Crowdfunding Success By Setting Realistic Goals
Setting realistic crowdfunding goals is crucial for building a successful campaign. You need to figure out all your upfront costs before creating your campaign so that you can set goals that raise enough funds to cover all your project’s expenses.
Don’t forget that Easyship can help you set realistic goals by giving you access to our online calculators to estimate rates and taxes. Sign up for a free account now to see how easy it is!
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