Last Tuesday I had a lot of fun participating on the radio show Aspects of Writing with James Kelly. The topic of conversation turned to crowdfunding for writing projects. However, I thought it might also be good to write out some of what I’ve learned from using Kickstarter. If you’re crowdfunding your project, please keep these points in mind as you prepare your campaign.
Preparing For Your Crowdfunding Campaign
- Understand the specifics of your site. There are many possible crowdfunding sites available. It’s important to research the sites and choose one that fits your project and your temperament. What kinds of projects does the site specialize in? What fees do you have to pay, and how are they charged? Will you get any funds pledged even if you fail to meet your goal, or is payment “all or nothing”? Make sure you understand and are comfortable with how the site works.
- Choose an adequate target amount. It’s important to do the research and come up with a realistic estimate of the smallest amount you’ll need to complete your project. Once you have that number, however, you’ll need to increase it. Account for the site’s fees, payment processor fees, unfilled pledges, and taxes — federal income taxes, state income taxes, local income taxes, and self employment taxes can eat up 35% or more of what you get. As a rule of thumb your crowdfunding pledge target should probably be about double the amount necessary to succeed at your project.
- Choose your reward tiers wisely. When choosing your rewards make sure that your return on investment is reasonable. Take into account not only the cost to actually create and produce the rewards, but also the costs to ship and deliver them. In addition, make sure that you account for any time you’ll have to devote to sorting, packing, and mailing the rewards. Each tier should deliver at least 50% more money than it costs (including your time and effort); overall, your tiers should average at least double those costs. In general any reward should be a direct product or result of your project. If it’s not something you would have done anyway (or easy to add-on), don’t offer it. The extra work will most likely not be worth it.
- Choose your reward tiers wisely, part II. Although it’s important to offer the product of your project in your reward tiers, those will not be the most rewarding and attractive tiers. Instead those will be the tiers where you offer the things that backers wouldn’t normally be able to get — access. Offer the backers the chance to influence the direction of the project in minor ways. For example, one of the reward tiers for the First Semester Physics Survival Guide was the ability for a backer to insert their name into one of the example problems.
- Build an audience. One thing all the crowdfunding sites have in common is that they do not do much to promote your project. To a very great extent the marketing and advertising of your project is all up to you. If you already have a following on social media (Twitter, Facebook, Google+, and the like) then you may be ready to promote your crowdfunding campaign. If you do not have this audience, however, you’ll need to build it. Start this process at least sixty to ninety days before you launch your campaign.
- Do your best to make your project “viral-friendly”. The power of crowdfunding doesn’t come from the site you choose; instead, in comes from “friends of friends”. In other words, if your friends share your project with their friends (and hopefully back it in the process), it’s possible that their friends will share it as well (and hopefully back it as they do so). If this process continues you’ll have many more backers than you ever could have anticipated. This process is called “going viral”, and it’s the best way to get big money. Convincing others to share your project with their friends is how crowdfunding works best.
- Big success is not necessarily your friend. This is the “embarrassment of riches” problem. Friends of friends do their work, your project goes viral, and you end up getting five times as much money as you asked for. This is the ideal situation, right? Not really. With those big bucks comes backers, many of whom may not understand how crowdfunding works. Sending out 50 copies of your project can be done by hand; sending out 5,000 requires a lot more work. With great funding comes great responsibility and a lot more work. Have a contingency plan for how you’ll deal with the issues of reward generation and delivery even in the case of great success.
During and After the Crowdfunding Campaign
- Keep open the lines of communication. Backers and potential backers want to know what you’re up to. You’re asking for (and hopefully receiving) their money; the least you can do is keep them apprised of how things are going. It’s important to share updates during the crowdfunding campaign; it’s even more important to share updates after your campaign succeeds. If things are going badly it can feel daunting to report in, but that’s when it is most important to do so. Backers who don’t get regular reports can get… ugly.
- Don’t Panic. You’ve done the work, and started your campaign; there’s a definite temptation to check your progress every five minutes. Doing this will only drive you crazy, especially considering how long it will take for some pledges to come in. Don’t worry about it, at least not at first. For the first half of your campaign I suggest that you only check your progress once a day (twice at most). Later on, when you’re closer to your deadline, you can allow yourself a bit more leeway.
With proper preparation crowdfunding is a great way to raise money to accomplish your goals. If you have experience with crowdfunding a project, please feel free to share other important points and suggestions in the comments below!