The science of Kickstarter!

I wanted to let those of you who haven’t been following the Kickstarter via other channels know that the Kickstarter has been successfully funded, and went way past the mark to 220% funding! It’s taken me a couple of days to compile the detail of this post, so forgive the delay! Thanks to everyone who has contributed and been in touch! If I haven’t responded to you all yet it’s because I’m in a limited internet zone.

There are currently about £800 worth of failed payments – and those of you whose payments have failed should have received an email from Kickstarter to update your payment info. This often happens because you’ve got a new card, or because your bank thinks the payment is fraudulent, and is usually fixable. I won’t know for a while what the final total is though until all payments are processed/not.

funded

At the moment, assuming every payment goes through, and down to my rough and conservative calculations – I’ll be left with around £7300 after postage, fees, and Kickstarter reward costs.

— DISCLAIMER: Read on only if you’re really interested in the workings of Kickstarter – as this might be a little dull! —-

I tell you this partly to be transparent, but also partly because if any of you are considering a Kickstarter of your own, I think it’s good to share the information, and to manage expectations! You obviously have a higher margin on rewards you can create yourself – the value comes from the effort you put into them, or the cost that your work usually fetches in the “open market”, so it helps if you have prices established by some means.

Of course there are hard costs that are unavoidable…

This is my Kickstarter cost breakdown, and this is after having negotiated deals with some suppliers:

Book production is the highest cost – approx. £60 on average including postage, adding up to a grand total of £1380. This is to produce just 23 copies, but for approx. 7k, 1000 copies could be produced This is where economies of scale come in – if you predict a huge number of backers you can offer books very cheaply at lower tiers which make the reward more attractive, but if you don’t meet the minimum order within the tiers to make this possible this can be dangerous as you’re committed to supplying a product you may not have the funds to deliver.

The next biggest expense is the humble postcard, adding up to approx. £1034.

Mystery gifts will add up to another £520 if I keep them conservative

Prints work on a sliding scale, but the 8”x10” prints will cost at £780, 12” x 16” – £198, 16” x 20” – £150, 20” x 24” – £240.

The nautical charts £45 each including postage.

This takes me to £4392 for reward fulfilment, plus I am leaving in 5% contingency = £4611.60 for all 239 Kickstarter backers.

Then you have the Kickstarter percentage – I’m working on 10% of the overall total to be deducetd before we start = £1324.40

So the £13244 pledge total (if every pledge is processed) ends up at £7308 after fees and rewards.

I hope some of that information may be useful to you if you’re thinking of running a campaign of your own.

If there was something that I wished I knew about the process? Well possibly the nuances of postage. Kickstarter asks you to set your postage costs at each reward level. E.g. you might set £5 for within the UK, or £15 for the states, or “25 for Asia. All well and good. I thought the point of them doing this, was so that the pledge total on the Kickstarter page would accurately reflect the amount raised to alleviate discrepancies and reduce the project creator’s risk when it came to shipping (e.g. if everyone backed you in Japan and you’re based in the UK, it’s going to cost you a hell of a lot more than if everyone who backs you is UK based). However, Kicktsrater actually includes this postage amount in your overall visible total. This has the effect of you hitting your target faster than expected, and on a lower reward count if you have a great number of international backers. This can artificially inflate the balance and should be compensated for when you plan your campaign.

To give a simple example of this in action, if you have 100 rewards at £60 and you’re trying to raise £6000 to print a book, you would think that would be the perfect plan. However, if what you’re looking for after fees is £5400 (this is what you’d get on £6000 at 100%), and you’ve priced, say, the item you’re trying to print at £54 a copy, you’d think the maths was working. Well, if 50 of your 100 backers happen to come from the US, and it is those 50 backers who join your Kickstarter at the start, and you’ve elected to charge a £15 surcharge for shipping, you’d end up with £750 of postage and £3000 worth of backing = £3750 for 50 backers counting towards your total. Meaning it would take just 80 American backers to make you hit your target, but you’d end up being short by £1200, and may put your reward delivery in jeopardy.

Another, more reliable approach, would be to work from the bottom up….

Start with your £54 per copy and the number of rewards you want to offer to reach it. Say, 100. Then work out an accurate postage estimate – for safety’s sake, take the maximum postage for anywhere in the world. Let’s stick with £15 in this case (and don’t forget packing materials!). So our minimum would need to be £54 + £15 = £69. Then take into account the Kickstarter fees of 10%.

To work this out this equation is what you’ll need (remember £69 is 90% of what you need to cover fees also)… so (£69/9)x10 = £76.67 per reward, then multiply that unit cost by the number you need to make your minimum guaranteed £5400 clear, i.e. your 100 units. Instead of £6000, you realise you actually need £7667 including postage to hit your target. Anything over that and you’re safe. I would also add some contingency to this – e.g. 5 or 10%.

This is a simple example as its just one reward, and at one level. This principle can be expanded to other levels, just remember to err on the side of caution. Best not to create items at many levels that require economies of scale to work, or where the reward has a high unit cost associated… basically be cautious!

On a slightly different note, though the Kickstarter ended a few days ago, I have had 5 people contacting me wishing they hadn’t have been too late. Obviously I’m not on Pitcairn yet and there were still rewards available, so if you’re keen and still want a Pitcairn project memento – then do get in touch with me on rhi.adam[@]gmail[dot]com and I’m sure we can sort something out! If i don’t get back in touch straight away it’s because I have no internet!

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s