Kickstarter: Setting it Up – Time and Money

March 11, 2017 at 6:52 am 1 comment

I have run six Kickstarters for my brand Kimchi Kawaii, four which successfully funded beyond the goal, one that didn’t fund and one currently running. I get a lot of questions about running Kickstarters and while I don’t claim to be the foremost guru of crowd funding (I have yet to hit that magic formula where I fully fund in a few hours), I figured I would start a little four part series compiling what I’ve learned through trial and error. Part One gives food for thought when planning your project.

You’ve got your ideal time to run your Kickstarter crowd funding campaign so now it’s time to get set up and put your creation out in the wide world! I said it earlier and will say it again – Kickstarters can be rough rides, but having a successful one can make it all worth it. Hopefully, you can find some tips in the following paragraphs to bring you closer to your goal.

Make sure it adds up

One of the first things you’ll need to do is set your funding goal. Depending on your product, that number can start to look very scary, very fast. You may be tempted to set it just for the amount needed for the product or set it even lower to make it look more obtainable to backers. Resist! It’s better to not fund than to fund and suddenly find your goal isn’t sufficient to fulfill all the backer rewards which you will be legally bound to deliver with a successful campaign.

Kickstarter and their payment processor (currently Stripe), will take out a fee for their services. Expect to give about 10% of your funding to this. 10% may not seem like a huge number, but when you’re looking at a campaign in the thousands, this adds up to a chunk of change pretty quickly.

Funds raised are also considered taxable income by the government. You may plan on just covering taxes on your own later in the year, but if not, make sure you factor this into your number as well.

Make sure to set yourself a little padding for any shipping mishaps which are almost unavoidable – packages go missing, packages turn out more expensive than planned, etc. As I do plush which have about a two month production time that doesn’t include the months of planning and the actual campaign, I’ve actually had postal rates change between when I set my shipping and when I actually ship.

Something I want to point out that I learned the hard way – plan for dropped pledges and include a buffer in your funding goal. Kickstarter bases the success of a campaign off pledges. No money is collected until after the deadline you set and you reach your funding. Every campaign I’ve had has had pledges that failed to collect for whatever reason. Through messaging my backers and phrasing it that I don’t want them to miss out on their rewards (be very careful to not come off as accusatory, a lot are just honest mistakes), I’ve been able to keep failed pledges to a minimum, but there are still some that I can’t get a hold of.

No matter what the reason is for these failed pledges, it still doesn’t change the fact that at your deadline, you had the right number to be considered fully funded. Per Kickstarter’s terms, you are legally bound to deliver what you promised to your paying backers – even if the actual amount collected comes to less than your funding goal.

Here’s an example: You want to create a plush and it costs $8,500 to produce. You factor in the 10% and set your goal at $9,350. You reach full funding by your deadline which is awesome, but 6 large pledges fail to collect, totaling $600. After Kickstarter takes out their fees, you’re left with $7,875. You need to come up with $625 on your own to fill in that hole to order the product promised to your backers. When you’re operating on a tight budget and a timeline, that can be financially devastating.

Under promise, over deliver

When setting your estimated time of arrival to your backers, it’s always better to set the time further out and deliver ahead of schedule. This can also help prevent a mad shipping scramble and cover you for any shipping delays as let’s face it, putting packages in the postal service can be an adventure in itself!

Get ship shape!

There’s really no way to get a 100% accurate shipping cost for your backer packages. Postage rates could increase or if you’re doing an add-on shop in your campaign, package weights can fluctuate. Sometimes, it really does feel like trying to hit a moving target.

Consider buying a postal scale. If you are able to get actual prototypes before launching, you can weigh it with your intended packaging to get pretty close estimates. Kickstarter allows you to set up shipping by location which is pretty handy.

  • Domestic – I pick the state the furthest from me and run my cost based off that. For me, it’s somewhere on the east coast. You can’t set shipping by specific states, but your rates are not going to change much, if any. Be warned, Priority Mail can get a bit pricey though the further your package has to go. I try to keep everything to First Class, but sometimes, it’s just unavoidable (and that’s why you put in some padding on the funding).
  • International – The rates I figure out and list are Canada, Europe (Great Britain, Germany, etc. are all very close in cost) and Everywhere Else. I found that shipping to Australia wasn’t too different from the cost to ship to Asia, so I lump those into this last category on Kickstarter.
Example of backer tier with customs fees disclaimer.

Example of backer tier with customs fees disclaimer.

Make sure to put in your Kickstarter a note about customs fees and taxes being the responsibility of the backer for international packages. Each country can have different policies and fees which are impossible to keep up with. Some packages will get through without any fees at all, but it’s best to put this out there as fair warning to backers. I put it in the main body of my content AND in each tier so the backers can see it when they are making their selection.

Another reason to get a postal scale – everyone at the post office will love you for pre-printing your shipping labels instead of going to the counter and purchasing postage for 100 different weight packages at the counter.

Keep it simple!

Try to keep your tiers simple and straight forward. This will help backers make a decision faster on what level to back. Consider making a quick view chart as an image in the main body of your content. Here is an example of one I did for my Purrista Pawfee 2 campaign:backer-chartIt’s easy for a backer to see all tiers and rewards at a glance and avoid having to scroll up and down a lot, comparing each tier in their boxes as listed on Kickstarter.

Another reason to keep your tiers simple? Your sanity! If you are fulfilling your rewards on your own and have 100+ packages, keeping the tiers simple and limited will mean less chances for mistakes when putting all the packages together.

____

Kickstarters really do require a lot of time and thought to have a chance at success. This post mainly touches on the financial planning of a project. What I’ve put in here is what has worked for me and I know each project will have it’s unique challenges, but hopefully, this can help you get going in the right direction your own.

Next up: Setting Up (Part 2b) – Make it Shine!

 

 

 

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Kickstarters: Kicking it Off

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