How to Plan Your Kickstarter – part 2

This blog series is from June of 2012. It will still help you get a handle on on planning your Kickstarter project, but I highly suggest you start with Kickstarter’s own Creator Handbook. They keep it updated, and they do it very well. Once you’re finished with that, this series can give you some insight into budgeting, planning, and producing your project.

But it’s just one perspective. Since I first wrote these posts, there has been a lot of great writing on the experience of using Kickstarter. And there have been amazing projects on Kickstarter to watch and learn from. Go exploring. You’ll find great stuff that will help you. My main piece of advice remains this: budget carefully, both your expenses and your revenue. The more you know in advance about where your money will come from, the less stressful your campaign will be.

I made this spreadsheet (.xlsx) to help budget project expenses and model your revenue. It’s got all the formulas you might need, and some dummy data to help you get started. This series began with Part 1: Budget and continues with Part 3: Backers.

Next up is designing your rewards:

If this is your first Kickstarter, and you’re just beginning to convert your friends and family into supporters of your art, it’s important to remember that the rewards you create will be, hopefully, the beginning of a long-term relationship. You can start to build a sustainable audience of dedicated fans right here.

Having a successful Kickstarter is your short term goal, but maintaining ties to your backers will help you immensely down the road. Luckily, designing your rewards as the first step in a longer relationship will make them more engaging in the first place, and boost your Kicsktarter, too.

Let’s look at these two sets of low-level rewards:

$10 – Download of the album
$15 – Signed CD
—vs.—
$10 – Pre-release download of the album with your name in the digital liner notes
$15 – Signed CD with your name in the liner notes and a handwritten thank you note.

The second set is much better. The improvements don’t cost any money, just a little personal effort. Send your backers the album before you release it to the public. Don’t just sign it, write a thank you note. Most important: put all of your backers’ names on everything. Your backers probably won’t think to themselves “having that thank you note really made it worthwhile for me to back this project”, but in two years they’ll remember that tucked in the jewel case is a personal note just for them. They’ll show their friends their own name on the disc. That’s the kind of connection you want to build.

As you go higher in reward price, it’s harder to say what you should do to personalize. More money being pledged means you should be more creative. That creativity should reflect who you are, and it should build an even stronger connection. Here are two examples:

It’s a cliche to say that “love is worth more than money”. But when you’re an artist raising money on Kickstarter, it’s literally true. Love is worth more money than money. When you connect with people who love your art, you’re saving for retirement. Those people will support you for years, because they care about your art, and they know that you value them as people, not just customers.

You may have noticed I’m not talking about money that much

That’s because it’s less important than building a community around your art. But yes, this is a fundraising campaign. And yes, you still do have to set prices for things. If you’ve looked at my spreadsheet, you’ll know that you need to estimate cost per unit for each reward. Let’s start with what Kickstarter themselves have to say about pricing rewards (this quote is from an older version of the site, live in 2012, called Kickstarter School):

Kickstarter isn’t charity: we champion exchanges that are a mix of commerce and patronage, and the numbers bear this out. To date the most popular pledge amount is $25 and the average pledge is around $70. Small amounts are where it’s at: projects without a reward less than $20 succeed 35% of the time, while projects with a reward less than $20 succeed 54% of the time.

So what works? Offering something of value. Actual value considers more than just sticker price. If it’s a limited edition or a one-of-a-kind experience, there’s a lot of flexibility based on your audience. But if it’s a manufactured good, then it’s a good idea to stay reasonably close to its real-world cost.

There is no magic bullet, and we encourage every project to be as creative and true to itself as possible. Put yourself in your backers’ shoes: would you drop the cash on your rewards? The answer to that question will tell you a lot about your project’s potential.

That’s very good advice. At the bottom end of the reward structure you’re probably going to be offering personalized versions of mass-produced things, or a group experience like a theater ticket. As you go higher up in price the part about your project being “as creative and true to itself as possible” comes into play, and for that there are no rules. I’d recommend hanging out with friends and kicking some ideas around. Doing that on Twitter gave Amanda the donut reward, and talking about my rewards with Victoria Nece led her to suggest my cocktail recipe reward.

Costs per unit: Don’t. Forget. Postage.

Now that we’ve talked about what to offer and how to price it, we have to talk about how much it costs you to make each one. You want to keep costs per unit down, so that you can keep as much of each pledge as you can to spend on that budget you worked out in part 1 of this series.

Mostly, your costs to make something will be pretty low. Burning a CD, printing a t-shirt, etc., tend to be fairly cheap. Be sure to put the graphic designer for the album art and the set-up costs of each t-shirt pattern in the budget from part 1 as well. Those are fixed costs of having the reward on offer in the first place, not costs you pay again every time someone buys a t-shirt.

A lot of the companies that will help you manufacture your rewards, and t-shirt companies in particular, can have very complicated pricing schemes where the cost-per-item goes down if you order more. If you bump into this, don’t worry too much. Just estimate a cost based on something near the high end. You’re trying to budget conservatively, so round up the costs, make the math easier, and make the spreadsheet run properly.

If you’re doing creative work as part of your rewards, for instance painting portraits over video chat, make sure to think about how much time it’ll take you to make all that art. If you price your own creative work too low (for instance, $50), then you could wind up in effect getting underpaid for making dozens of paintings over a year or more. If you’re worried about this happening, raise the price of your own creativity. You’re worth it. I’m sure I’ve heard that somewhere.

And oh yeah, when you’re estimating the cost of making a CD for a backer, remember the postage. You have to buy an envelope with bubble wrap on the inside, and also a stamp. Call it $1 for a stamp and envelope for a thank you note, $2 for a CD, more for something heavy. Add that into your nice, round cost-per-unit number for each reward and plug it into the spreadsheet.

The rewards structure as a whole

Finally, here are a few notes on the rewards structure as a whole:

1. Don’t overwhelm with choice. You know the moment when someone hands you a giant menu, or wine list, with 483 things on it and you just get overwhelmed? It’s hard to make up your mind and you just want to go away and not bother to choose. If you have too many rewards, or if they’re confusing, people will just go away and not bother to back your project.
2. Have a big range of prices. You should have something very cheap, so that everyone can be part of your project. And you should have something very expensive, because even though you probably won’t get any $1,000 pledges you definitely won’t unless you ask. And it never hurts to ask. In between, have a good range of prices, so that everyone can find something worthwhile at whatever price feels comfortable.
3. Standardize your language. A lot of rewards have “and all of the above” or “and all of the $25 rewards” in a lot of the higher priced rewards. It will help your backers to read the list if you can be really consistent with your language, and use CAPITALS, *asterisks*, or other {punctuation] to show the structure of each reward. If it’s not consistent, people will have to read very carefully, and some of them will get annoyed and just go away without bothering to back your project.

In the spreadsheet, I’ve given you the closest thing I can to a rewards structure mad-lib, with prices and a rough description for each. You can start by just filling it in, and then play with the prices, invent wild and personal things, and the prices and costs will go into the spreadsheet’s calculations.

Have fun!

This series began with Part 1: Budget and continues with Part 3: Backers.