Determining the Crowdfunding Campaign Goal
One of the key factors in any crowdfunding campaign is the amount of money your are trying to raise from the crowd to fund your project or business. The first step in this process is to complete an in-depth evaluation of the project from a business, marketing, and strategic planning perspective, and the process of budgeting for the entire project. Once this phase of the process is completed we have the data to make an informed decision.
Now that you have these data points and plans in hand you are in a solid position to determine your funding Target. To determine the total amount needed for your campaign, consider the minimum amount of funds you need to achieve your project goal, plus PayPal account processing fees (approximately 3%) and the portal fees and commission (5-10% of successful campaigns). Then add in any other additional costs required to support your campaign, such as:
- Cost of hiring a consulting and marketing company
- Costs associated with branding your campaign
- Cost of video production and editing
- Exchange rates, if international
- Keep the costs associated with producing or fulfilling the rewards in mind when setting your target funding goal.
- Determine the costs associated with producing and/or shipping rewards or whether a perk or reward is even right for your campaign or not.
- It is standard practice for contribution-based crowdfunding projects/campaigns to offer a reward or perk to their contributors as an enticement to contribute (see Kickstarter or Indiegogo as examples of reward-based campaigns).
- Creating an effective rewards strategy takes time and effort to produce. The best ones are those that give value to your contributors, have direct association with your business or the project, and costs very little for you to provide to each contributor.
- Identifying a tiered reward scheme that makes financial sense is vital to the development of the rewards we try to keep it to 5% of the value of the reward.
These are the two major areas that must be addressed when determining the campaign goal. Make sure you factor in your profit or the amount of working capital needed to make your campaign a success. We will touch on determining the amount of working capital needed and how to budget for it in a later post.