How much does it cost to run a crowdfunding campaign?
Budgeting out your campaign costs
While crowdfunding campaigns on Kickstarter and Indiegogo are ways to bring in money. If you want to be the next big crowdfunding success story, you’ll have to budget for the following things to make sure you can afford the entire process:
Getting your campaign ready and getting a prototype
Anyone who is going to support a crowdfunding project wants to know what they’re getting into.
This has become critical as Kickstarter has implemented rules requiring project owners to demonstrate a functioning prototype in order to protect their backers from a scam.
You’ll need to consider how to make a working prototype.
Product Design
Your first step, unless you’re especially skilled in 3D rendering or a master in a niche field, is to find and hire a product design company to create a 3D rendering and specifications for the parts you’ll need.
Once you’ve found you’d like to work with reach out to them and start a dialogue.
Budget: $3,000 — $7,500
Prototype Manufacturing
It’s more and more common for products to launch on Kickstarter or Indiegogo with just 3D printed models for reference, but having a set of samples from a builder will give you a few advantages:
- It shows backers you’ve already made strides in bringing the product to life
- It photographs better than the typically rough 3D printed models
- You have samples to share with press when they ask to test it before writing about it
Budget: $5,000 — $10,000
Photography and Video
Having quality photos and video are the best measures of success for a crowdfunding campaign’s message. Since your backers don’t have a way to try your products before purchasing them, one of the only ways for them to experience your product is through these mediums.
Photos
Getting quality photos is essential to success. if you have a camera or a friend with one, then get your hands on and it starts taking as many photos of your product as you can, because without photos you’ll run out of assets to share with bloggers and on social media. The more photos you have the better off you are.
You’ll want to get the following three types of photos:
- Product shots on white because they are most flexible type of photo
- Give a designer the greatest flexibility to put your photo on different backgrounds
- Show off your product’s detail
- Teardowns: This applies to technical products, but your backers will want to see the interior and the exterior
- Lifestyle: Potential backers focus on what the problem in their lives is and how your product is going to solve them
- Put your product in situations backer’s will find it helpful in, and show with your photos how your product works
Related: Using images to increase conversion
Expect to pay: $500–2,500 for a professional photographer
Video
Unless you have a killer in-house video team, you’re going to want to hire a solid videographer. Photos are something you could do yourself, but don’t try to skate by on a webcam video or with smartphone product shots.
You want to hire someone who knows how to craft a narrative, explain a problem your target market has, and sell your product as the solution. A good videographer is also a great storyteller, and that’s what you’re ultimately paying for.
Expect to pay: $2,000-$10,000+, depending on where you live and how complicated your final script is.
Expos, Trade Shows, and Pounding the Pavement
Factor in the potential benefits of trotting your prototype out in front of your intended consumer at a trade show in your vertical. The Consumer Electronics Showcase (CES) in Las Vegas is the best in terms of technology showcasing.
But there is a lot to consider
- Travel prices
- booth space rental
- developed display
- other costs you’ll incur like food, lodging, and a information funnel
This is going to be expensive to attend and the conversion rate from an in-person event to a crowdfunding backer is very low for the money.
While they’re a great way to make industry contacts and meet bloggers, this shouldn’t be a financial priority if you’re not working with a sufficient amount of capital.
Expect to pay: varies too much.
Advertising
Facebook is the most effective way to targeted backers and communicate with them before and during the launch of your Kickstarter or Indiegogo crowdfunding campaign.
Consider that 20% of your funding goal will be set aside for advertising spending.
You’ll need to pay for eyeballs on Facebook once your crowdfunding campaign is live to ensure those backers see the content you want them to see.
$100-$500 per day is a sufficient budget to run in the month leading up to the campaign.
You should aim for the the same ad spend during your crowdfunding campaign. You’ll also have to do a lot of testing to figure out which ads are successful and which are failures.
So, expect to pay (for a 30 day campaign with a 30 day ramp-up — 60 days in total): $3,000-$10,000
Press Release Distribution
It’s important to get your message in front of bloggers and writers, and the best ways to hit a number of them at once is with a press release.
You don’t want to spam them, but getting a release to bloggers is a good way to get more eyeballs on your launch.
For the purposes of pricing it out, we recommend you avoid low budget distribution sites and try for the reputable sources journalists and bloggers subscribe and read:
Expect to pay: $300+ depending on the platform and options.
Paying the Platform
Every platform charges you a certain fee for launching a project on.
Prepare to pay the following fees following a successful crowdfunding campaign:
Kickstarter
- Platform Fee: 5% of total funds raised
- Payment Processor Fee (Stripe): 3% of total funds raised, plus $0.20 per pledge
Indiegogo Fixed Funding Campaign
- Platform Fee: 4% of total funds raised
- Payment Processor Fee (PayPal): 3–5% of total funds raised
Indiegogo Flexible Funding Campaign
- Platform Fee: 4% of total funds raised if successful, 9% if unsuccessful
- Payment Processor Fee (PayPal): 3–5% of total funds raised
Related: Kickstarter or Indiegogo, what’s the difference?
Rewards, Manufacturing, and Delivery
While finding a manufacturer, you should know about how many units are needed to fulfill a minimum quantity.
After you’ve run a successful crowdfunding campaign, you’ll also need to pay for packaging design, shipping, and returns.
Don’t forget to factor shipping into your reward price so you can figure out your total budget.
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So, we’ve just laid it out and running a crowdfunding campaign can be very expensive.
But, you can adapt this formula to figure out what your goal should be in order to cover your expenses for getting your crowdfunding campaign running. We’ve included a handy checklist below
- Manufacturing Costs (minimum order per unit)
- Video production, photography cost
- Marketing/Advertising Costs
- Platform fees
