KickstarterForum.org

Okay, Kickstarter takes 5% of what I earn. Now I'm racking my brains trying to account for the most money they can take from me. Is there a formula for this????

Here's my problem:

Say I need $1,000. So with that, I'll need $50 more, so $1,050 is my set goal. But wait. If I need $1,050, now Kickstarter takes 5% of *that*. So I'll now need $1,052.50. But now Kickstarter takes 5% of that, which makes my goal $1,105.13. But then Kickstarter takes 5% of that.... See what I'm getting at? My goal will always be higher. How do I calculate my total funding goal?

I'm trying to account for what reward tier will net me the least money after I send my rewards out. So if I make the least money off the $10 tier (maybe $2), I'll need 500 backers at $10, which makes my total backing $5,000, so Kickstarter gets $250 and so I have to set my goal at 250 more. But then I get into the same problem as above.

Now I'm racking my brains. I've been at this for an hour with an Excel spreadsheet trying every single formula and taking into account everything just trying to come up with a funding goal. I'm calling on you economics majors to know if there is a threshold where the total funding goal meets the sum of the money I need plus KS's take.

Any ideas??? How do you guys figure this out??? Or do you guess? This is my second crowdfunding campaign, and I just winged it the first time in terms of my goal and I came up lucky. But this time around, I want to go in with a confident, concrete number.

Please help.

You will get 95% of whatever you raise. So a goal of $1052.63 will get you that. If you raise more, you are still receiving over your goal. If you raise $1060 then you get $1007, for example. The formula - take the amount you want to earn and divide by 0.95.

Personally I put in an extra 15% to account for all potential fees and contingency, So if I actually want $1000 then I'd set my goal so that's 85% of what I raise. Making the goal $1176.

Yeah, I knew about the 5%, but I was trying to figure out how to account for what would be my most costly reward tier (like if everyone gave $20, how many backers would that take, and then how much money would I make off that, etc. etc.) and then calculate what I would actually make, but it was made harder accounting for the 5%.

But I'll take your advice and tack on 15%. Thanks!

Does anyone else know a formula to use or is 15% a good rule of thumb?

Hrm. Maybe an easier question for now is to disregard Kickstarter's take in terms of dollar amounts and just focus on how to calculate what your maximum overhead cost would be. How do you guys determine that?

Yes, it simply sounds like you need a more robust budget. In my budget in Excel I have a line for each reward. It's actual costs, it's postage and packaging costs, and my profit margin. I also estimate how many people I think will pledge at that level. I estimate the spending habits of my usual customers - how many might purchase at $10 or $20 and how many might go for the higher level. To be fair I had my first successful project to use for estimates.

However, my higher level rewards actualy have a very low additional cost. For example, my $500 reward actually only has about a $5 additional cost to me (other than time) over the $100 level. And the $100 level has about an extra $5 cost over the $25 level. (though I work in GBP rather than dollars, of course) So I'd rather more high end backers than low end backers, but my budget is based on more low end to be safe.

I do have formulas but it is actually a couple of Excel sheets of costings, pricing, profit margins, buyer number estimates, my goal income for my time, and adding the thing I am actually trying to raise additional funds for beyond the reward products. (in my case, funds for my art gallery) So not one simple answer or formula really - it's more like an overall business plan with budget and sales projections. You can find sample things like that online for new small businesses if it would help.

Tina.

Does anyone know how Kickstarter's share competes with other crowd funding sites like Indieagogo?

As tina-m said, make sure you take into account your worst case scenario, Depending on how you've setup your rewards, this will probably be:

You *just* make your goal, and everyone has gone for the "basic" reward which costs you the most to make (relatively) at the lowest backing price.

So say each item costs you $10 (including postage and packaging). And you want to make at least 100. You need $1000.

So $1000 / 0.95 = 1052 before kickstarter fee
So $1052 / 0.95 = 1108 before 5% credit card fee (I know this is max, but best be safe)

And you probably want some wiggle room, so adding about 15% gives you $1250
That means you'll need to set your basic price to 12.50 to make sure you cover your costs.

If a lot of people actually end up chosing your higher priced rewards, well you'll just be better off. But best plan for the worst case to make sure you dont end up losing money

@Complimentary

Indiegogo takes 4% but that goes up to 9% for unsuccessful projects (in the flexible funding mode)
Basically they all have pros and cons but are roughly the same. I would suggest you pick the platform with the largest / most active community in the area you are looking to launch