How We Overfunded Our Kickstarter by $28,000 and Barely Made a Profit
We launched the OpenFrame Kickstarter campaign back in 2013 and received an overwhelming response. We crushed our $40,000 funding goal and by the end of the campaign we raised over $68,000.
We were pumped.
The months and months of work all seemed worth it.
We knew OpenFrame solved a problem for us and it was exciting to hear from so many other people that had the same problem. Our prints, posters and photos that were stuck in tubes or stashed away in closets would finally have a home on the wall.
We couldn’t wait to get the frames manufactured and shipped to our backers, but unfortunately that wasn’t as easy as it sounded. In fact, we ran into more problems than we ever imagined could be possible with such a simple product. We learned a lot of valuable lessons and wanted to share our insight into what we learned from running a “successful” Kickstarter project.
Lesson 1: Making a prototype is not the same as making 1000 of something
We worked closely with a local shop to build out prototypes and to refine the details of how to best construct the frames. We were confident in our final design which functioned and looked great. We knew if we could hit our $40,000 goal we could produce the frames at a reasonable cost, but manufacturing 1000+ frames is a completely different animal than making 10. The shop we were working with just wasn’t equipped to handle that type of volume. (We’re talking pallets of wood and steel, and truckloads worth of sawdust produced from routing out the the back of the frames.) Because of the inconsistency of working with a natural material like wood, we also ran into all sorts of finishing issues with the colored stains. All of these issues slowed our timeline down immensely.
★ Takeaway: Though it’s impossible to plan for every production issue that may arise, be ready to face unknown problems that will pop-up when doing things on a larger scale. When estimating the timeline, double your estimate and then double that again.
What we would do differently: Better study what problems could arise when producing the frames at a large scale and increase our timeline estimates to allow for the inevitable unexpected problems.
Lesson 2: Keep it simple
We thought it would be nice to offer a variety of sizes and stain colors for our Kickstarter campaign to give backers lots of options. The more options the better, right? Wrong. 3 sizes plus 3 finish colors plus a variety of other combo packs turned into a massive headache to track and keep everything organized. Add in international shipping and special requests from individual backers to the equation and it gets even more complicated. Kickstarter does a lot of things well, but they are not set up very well to handle multiple reward tiers and backer requests.
★ Takeaway: Keep your backer reward options simple and streamlined. It’s tempting to add more variables and bonuses but this can overcomplicate things.
What we would do differently: Offer less reward options and limit to one finish color. More options can always be added later. Use Kickstarter as an initial launch platform to prove concept.
Lesson 3: Don’t underestimate shipping
We’ve shipped tens of thousands of Ugmonk products all over the world and consider ourselves somewhat savvy when it comes to shipping. We knew OpenFrame would involve a bit more work, but we drastically underestimated the amount of sweat and labor that it would take to ship everything. Packing and shipping giant pieces of wood is completely different than shipping tshirts. Even with hired help the shipping process took 10x the amount of hours that we estimated. We spent weeks up to our eyeballs in packing tape, cardboard, bubble wrap and shipping labels. Trust us, it’s not as glamorous as it may sound. On top of that, we ran into other issues like boxes being too big to ship internationally and underestimating the cost of shipping materials.
★ Takeaway: Have a well thought out shipping plan in place. Even if your Kickstarter campaign isn’t successful, it’s essential to plan for the absolute best case scenario (like exceeding your goal by 10x). This may involve working with a fulfillment company who is equipped to handle large volume.
What’d we would do differently: Practice packing and shipping a small batch of items to better understand how much time and effort it will actually take. Research fulfillment companies and have those relationships in place if needed.
Lesson 4: Carefully consider packaging
It seemed pretty straightforward, purchase a ton of boxes, tape, and bubble wrap and pack the frames. Nope. We had no idea how fragile the frames were and how much packages get thrown around in transit. In our 5+ years of shipping tshirts we’ve probably had less than 10 damaged packages. That wasn’t the case for OpenFrame. Many of the larger size frames got damaged in transit and we had to ship replacements to the backers. After we realized that we weren’t packing them carefully enough we added corner protectors and increased the padding to ensure safe delivery, but still ran into numerous problems with damages.
★ Takeaway: Carefully think about packaging and plan for your items to get thrown around and dropped.
What we would do differently: Do more research about packaging and seek advice about how to pack items safely. Also do shipping tests like shipping all size frames across the country and back to see what happens in transit.
Lesson 5: Treat your backers well
Your backers are what make your Kickstarter campaign succeed. Treat them as valued customers and take care of them. Even though it cost us thousands of dollars, we shipped replacement OpenFrames to backers who received damaged products. It was hard to watch our net profit number dwindle with all of these extra costs, but we value people over profit. Rather than leaving them in the dark, we tried to communicate with our backers to keep them in the loop with the production delays. Looking back, this is an area that we could have improved on.
★ Takeaway: Treat your backers as you would want to be treated. Too many Kickstarters abandon their backers when things get messy.
What we would do differently: Take the time to communicate with our backers more frequently to keep them in the loop with what was happening even when there wasn’t a lot of progress.
What’s next ?
After all was said and done we made a tiny profit, but when you add in all of our time it was probably a wash. It was an incredibly challenging experience and took more work than we ever imagined. That said, we’ve received great feedback and the campaign proved that OpenFrame really does fill a need.
We hoped to bring OpenFrame back to life but have been unable to solve the manufacturing and logistical problems to make it all feasible. There’s still a slim chance we’ll relaunch OpenFrame if we can get all of our ducks in a row, but more than anything else we learned a lot along the way and hope to apply this knowledge to launching more products in the future.
Learn more about Ugmonk and what we do here: http://ugmonk.com
Originally published at www.ugmonk.com on February 25, 2014.
