Kickstarter and maths..

jamesbil

Hoping one of you geniuses can help here..

I am considering launching a product on Kickstarter and just need a little guidance on setthing the correct goal amount.

The item will cost me €50 to make.
I will have 4 reward levels for the same item;

Super early bird, 5 units at €60
Early Bird 10 units at €70
15 units at €80
80 units at €90

Shipping per unit will be €10 extra.
The goal amount also includes shipping charges.
Kickstarter fees are 10% max.

Only the amount of items ordered will be made.
What is the minimum goal I need to set to break even?

"Your funding goal should be the minimum amount of funds you need to complete your project and make and ship any rewards."

Thanks

salamanca22

I helped manage a kickstarter campaign a couple of years ago. It was a heartbreaking experience.

First of all I hope you already have a fan base for your product, otherwise you are not going anywhere without spending thousands on advertising.

Secondly managing a kickstarter campaign is like a job on it's own, you need to spend hours answering questions and updating your campaign.

The way it worked for us was we got about 40% of the total funding on day 1 and 40% on the last day, the 2 months in between where the last 20% trickling in. Then you have the people who order the largest package available and at the last minute decide to cancel their pledge, this happened multiple times. Nothing you can do about that.

If you are looking at starting a business with your product it might be a good idea to get a small business loan instead if you can or a grant.

KenjiOdo

If you sell out cheapest first..
5 Super Early Birds @ €60
10 Early Birds @ €70

€1000

15 x 50 = €750
15 x 10 = €150
€900

+ 10% of €1000 = €100

so.. 15 units is break even point

jimmii

KenjiOdo wrote: »

If you sell out cheapest first..
5 Super Early Birds @ €60
10 Early Birds @ €70

€1000

15 x 50 = €750
15 x 10 = €150
€900

+ 10% of €1000 = €100

so.. 15 units is break even point

+1 to this.

You lose €30 on selling the first 5 at €60 and make €30 selling the 10 units at €70 to break even that is assuming the Kickstarter fees are exactly 10%.

jamesbil

jimmii wrote: »

+1 to this.

You lose €30 on selling the first 5 at €60 and make €30 selling the 10 units at €70 to break even that is assuming the Kickstarter fees are exactly 10%.

Thanks lads, you make it look so easy. I think I was suffering from a case of looking at it too long and confusing myself

KenjiOdo

Each unit is costing you €66

€50 - to make
€10 p&p
10% of €60 = €6

if you sell 0 of the super early birds and some of the others you will have already made a profit..

Axwell

Looks like you have the numbers bit sorted with the guys advice.
Outside of the numbers and pricing a content strategy is going to be one of the most important thing you do. You need to spread updates over the duration of the campaign with new content.

This draws in new people who will fund it and also pushes those on the fence over the line. Too many campaigns blow all their content on the push for the first few days and get up to 40% funded in this time as Salamanca said. Then have nothing to post about for the rest of the campaign and end up constantly posting repetitive fb messages and tweets saying what percentage they are at and how many days left in the campaign.

You need to drip feed content to people - I don't know what your product is but as an example if it was a video game you would post updates as some concept art, a video maybe of some animation from the game, some 3d models etc. It gives people a better idea of the project and they feel more part of the development.

ironclaw

I'd echo Axwell, when I look I'm looking for a finished product, not renderings. I see Kickstarter as a means to finish a product, not to start from scratch as very few people can properly cost a product from inception to a front door. I also want a short shipment time (Less than 6 months) Any campaign I've backed that's been longer than that has either folded or been a wayyy over the delivery time. Keep people update would be my last piece of advice from a consumer perspective.

Graham

ironclaw wrote: »

I'd echo Axwell, when I look I'm looking for a finished product, not renderings.

I think they changed the rules to prohibit renderings for physical products. At the very minimum a working prototype is expected.

ironclaw

Graham wrote: »

I think they changed the rules to prohibit renderings for physical products. At the very minimum a working prototype is expected.

You're right they did. I was speaking with my customer hat on however and I feel many would be the same.

jamesbil

Thanks for all the advice guys, gotta love boards..

The launch wont go ahead until there is a working prototype ready to go into production and all cost numbers have been well and truly crunched. Suppliers of raw materials will also be in place.

Product will be made as soon as project is ended, assuming success. Hope to start to ship within the month after.

I have been favoriting projects on kickstarter for a while now and one certainly gets a good idea of what makes a success.
Some crazy ones out there looking for 20k+ and all they have is a video or pic and a huge long story!

I'm hoping my one is easier to achieve.
One well made product with a couple of options, small goal, reasonable rewards.
Currently looking in to an extra product for €5 or €10 rewards.

jamesbil

KenjiOdo wrote: »

If you sell out cheapest first..
5 Super Early Birds @ €60
10 Early Birds @ €70

€1000

15 x 50 = €750
15 x 10 = €150
€900

+ 10% of €1000 = €100

so.. 15 units is break even point

Ok, an expense I should have added in to this is photography/media. Approx €500.
How should I budget for this in the goal?
Should I add it as a campaign expense along with the kickstarter fee?
Or divide it out over the 115 units? Though this would assume selling all?
I may try to negotiate with the photographer, percent of total or price per unit. What do you think?

jimmii

jamesbil wrote: »

Ok, an expense I should have added in to this is photography/media. Approx €500.
How should I budget for this in the goal?
Should I add it as a campaign expense along with the kickstarter fee?
Or divide it out over the 115 units? Though this would assume selling all?
I may try to negotiate with the photographer, percent of total or price per unit. What do you think?

You would need to set your target at €3640 to break even then (that would give you a marginal profit).

You break even from the first two levels ignoring the 500. Then make €180 profit from the €80 level and €336 from 16 units at the €90 level.

jamesbil

Looks like I really need to get the photography fees right down..

jimmii

jamesbil wrote: »

Looks like I really need to get the photography fees right down..

Its amazing how big a difference seemingly small costs like that make to profitability. Why exactly is the photography so expensive is the product very small?

ironclaw

jimmii wrote: »

Its amazing how big a difference seemingly small costs like that make to profitability. Why exactly is the photography so expensive is the product very small?

I think the problem is everyone is a photographer now. The cost of entry plummeted in the mid 2000s and everyone with a DSLR was marketing themselves. The expense is the skill and expertise, and the time someone is willing to give to get it 'right'. I used do a good deal of DJing but the same thing happened, cost of entry plummeted and everyone and their mother was a DJ. Was impossible to charge what was actually needed to cover costs and put on a decent show.

jamesbil

It does seem alot alright for what is only probably a days work, 10-12 pics a couple of gif's and a 2 min video.
I know you pay for skill and experience too but I know top notch carpenters with a van full of gear charging about a fifth of that..

jimmii

jamesbil wrote: »

It does seem alot alright for what is only probably a days work, 10-12 pics a couple of gif's and a 2 min video.
I know you pay for skill and experience too but I know top notch carpenters with a van full of gear charging about a fifth of that..

It is important to have it looking well too. A poorly presented video is going to say a lot about how you go about things.

What is your aim with this project? Do you want to just run this Kickstarter and be done with it or is the aim to have this product being stocked in shops and selling on a larger scale? If its the later then professional images and video is a must. Realistically how likely do you think you are to hitting the target at €3440? If this is a long term project that you genuinely believe in and have good reason to do so then €3440 should be a walk in the park.