The ultimate goal of a crowdfunding campaign is to bring in money. However, you must often spend money in order to make money. You will incur several expenses as you develop and run your crowdfunding campaign. Here is a brief look at a few you can expect.
Note: Costs for a crowdfunding campaign vary widely depending on your needs, including the complexity of your product and the complexity of your overall crowdfunding project. The figures listed below are simply estimates.
For campaigns that involve physical products, Kickstarter requires you to provide a demo of a working prototype; Indiegogo does not, but they strongly encourage it, and in our experience backers are more likely to support a project with a working prototype. Either way, you will need to design, develop and manufacture a working prototype. While developing the design might not necessarily be costly, manufacturing one-off prototypes will be. But keep in mind that potential backers will take you more seriously with a prototype than without one.
Costs can vary broadly in this area depending on the complexity of the product you are trying to bring to market; you can expect to pay between tens and hundreds of thousands of dollars, so it is best to contact a product development company for a quote early in your planning process.
Images and Videos
Secondly, you will need to create stunning images and videos of your prototype. Any media you do share must be high-quality. Not only does this give a more accurate representation of your product, but good images will also help convince more backers to invest in your product. Making a video that is convincing and compelling can make your campaign successful, so investing heavily in this area can pay dividends over the course of your campaign.
Expect to pay around $10,000 – $15,000 for high-quality images of your product and your campaign video.
One tool for getting the word out about your campaign is Facebook advertising, which is a great way to quickly reach a large number of people in your target market. However, this form of advertising can run you anywhere from $50-$100 per day, so budget accordingly.
While Facebook advertising can run between $3,000 – $15,000 depending on the length of your campaign, expect to pay more when you add other advertising methods into the mix.
Finally, while not a major part of your total cost, platform costs should also be factored into your campaign goal. Each platform charges a percentage for a processing fee.
Kickstarter’s fee is 5% of total funds raised, plus a payment processing fee between 3% and 5% per pledge, depending on the amount pledged.
Indiegogo has a 5% platform fee, plus a processing fee of 3% + $0.30 per transaction. Funds sent to a bank account outside the US are also charged a $25 International Transfer Fee.
The cost of platform and processing fees will depend on your funding goal, how much you actually raise and your number of backers.
As these numbers indicate, determining the exact, all-in cost for your crowdfunding campaign is difficult – if not impossible. If you plan to work with a crowdfunding marketing agency, be sure to factor in their fees as well. By factoring each of these items into your budgeting strategy, you will have the best chance of developing a budget that works for your campaign.