Building Your Crowdfunding Campaign

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Just like designing and routing an RF circuit creating a good crowdfunding campaign is part art, part expertise. But just like in an RF circuit, following some best practices can get you through just fine! The more effort you put in up front, the more successful your product/campaign will be. If you go from idea to campaign in a weekend, it’s probably not going to be a huge success.

At this point, you’ve hopefully decided to give a campaign a go and decided on a platform.

Preparing for Marketing

Before you even get started on your campaign content, you should be thinking about marketing. Ideally, when you start getting your very first prototype PCBs, you should have your marketing game on. You’ll want to make sure you have accounts on all the major social media platforms at least Twitter, Facebook, and Instagram.

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If you’re not working on something top secret, post on Twitter, Facebook and Instagram about what you’re doing regularly. This will provide some history for your product which potential backers can look back through to see the product is real and that you’ve been working on it – it’s not just a spur of the moment creation. If you don’t have some history, then it might look like a product you’ve prototyped one week and launched a campaign for in the next. Even though you won’t immediately have any followers on these platforms, keep at it ‘build it, and they will come’.

Using social media management tools like Buffer and IFTTT to help you plan and automate your posts: spend one morning a week setting up posts for the rest of the week and be hands-off.

On Facebook and Reddit, you will want to join all the relevant groups (or subreddits) that you might want to share your campaign to as soon as possible. Some groups have wait periods before you can post, or take a while to get your membership approved by a moderator. You also don’t want to look like someone who just joined the group to spam your product never spam your campaign! If you can post intelligently in these groups and build a good reputation, then when the time comes to share your campaign, it will receive a much warmer reception.

Setting a Funding Goal

Setting your funding goal can be very complicated. I highly recommend creating a worst case scenario look at your costs. Start a Google Sheets or Excel sheet for figuring costs out. Google Sheets is great for teams it’s like multiplayer Excel.

 

Illustration of woman climbing coins to victory

You can find a sample Google Sheet to use as a starting point for your own calculations here.

First, you need to figure out your retail price for the product. If you do not have to compete against another product, a common way to go is to take your total cost to build (don’t forget labor!) and double it. This gives you about a 40% markup to a distributor/retailer/wholesale price, and then a 40% markup from the distributor price to retail. Even if you don’t intend to distribute your product to retailers or through other online stores, it’s beneficial to plan that into your price up front, so when someone wants to order oodles of your gadget, you can give them a price they can work with.

Now, you need to know the minimum number of units you’re able to produce. If your contract manufacturer requires you to make at least 100 units, and every supplier you use allows you to order parts for 100 units, then this will be your number. Keep in mind, you may need to order reels of parts for their machines, even at 100 units, so figure out exactly how much your total cost to make 100 units will be, including component overages, full reels (or re-reels) of parts, and an allowance for boards that will fail QC testing.

Because you’re building an electronic product, you must go through regulatory certification for it. You will likely want a minimum of FCC (USA), CE (Europe) and ISED (Canada) certification if your product is not an intentional radiator (i.e., doesn’t have any WiFi/Bluetooth/other RF or uses pre-certified RF modules) this may cost you between $1000 and $8000. This is a wide range, but it is going to depend heavily on your product. The more cables that connect to your device, the more complex your product is, the more it will cost to test all modes of operation and all configurations. If you have RF capabilities in your product and are not using a pre-certified module, you can expect to pay from $8000 to $20000+ for certifications. If your product plugs directly into AC power (hint: it shouldn’t unless you have a large budget), you might need to use a contract manufacturer who is approved by each country’s regulatory authority, and look at electrical safety certifications for your product, which can be well over $50,000. These are not optional, and are legal requirements to market and sell your product, even if you only sell 1 unit.

Furthermore, you’re going to need something to put your product in, even if it’s just a simple anti-static bag. If you’re going to use product packaging, you need to know how much this will cost. If your contract manufacturer offers a full box build service, they may be able to point you to a suitable company that can provide quotes for packaging and artwork.

design mockup for product packaging

You’re also going to need to ship the product. This cost is often forgotten when pricing up a crowdfunding campaign. You’ll need boxes or mailing bags (hint: mailing bags are cheap and versatile) plus shipping labels. Buying a label printer like a Dymo 4XL can save a considerable amount of labor. If you’re sending parcels internationally, you’ll also need document pouches for customs invoices to be placed in. Don’t forget to calculate shipping fees, keeping in mind that most platforms prefer you to offer free shipping, which will need to be built into the product price. Typically, the most expensive shipping destination should be considered probably Australia, New Zealand or South Africa. If you receive many orders from these destinations, the cost of shipping can eat into your profit margin substantially.

Finally, don’t forget to budget for office supplies (pens, printers, toner, paper, etc.), test equipment and especially labor. You do not work for free and should be paid for your time accordingly. Estimate all of these costs as appropriate, either per item sold or as a fixed cost.

You should now have a line item for every expense you can think of, either as a fixed cost or a per unit sold amount. Add up all the fixed expenses, then multiply your per unit costs by the minimum order quantity. As a note here, if you need to buy, say, 2000 custom boxes but only need to make 100 units – divide the cost for the 2000 boxes across the 100 unit minimum, this way you won’t find yourself short of cash.

The amount you have come up with is almost how much money you need to raise. Make sure you have your shipping costs factored in, as all platforms consider total funds raised to be the sum of all payments, which includes the shipping cost of the product. If you only account for the payment of the product itself, you’ll find yourself short of funds by the amount paid for shipping if you only meet your goal. Don’t forget the platform takes a percentage, so you’ll want to add an extra 15% to the amount. This is more than the platform fee, but you’ll also get some sales which can’t be charged to the customers’ cards, which will reduce the total amount of funds raised. Then add a further 20% on top of that, for all the expenses you forgot as well as for contingencies.

Basically, your campaign goal should be at least 138% of what you calculate every cost, every hour of labor, and every box shipped will cost you. The more precise you can be, the more likely you are going to be able to make some money out of this venture if you barely meet your funding goal. Don’t make any assumptions that you’ll bust the goal; instead, make sure you can ship every order and pay yourself for your work if you only get the funding goal you set.

Determining Your Timeline

Most crowdfunding projects underestimate the time it will take to deliver the reward. As I’ve mentioned before, the amount of post-campaign overhead in time can be huge. Just dealing with shipping orders and customer service might be 2-3 hours per order. If you have the 100 unit minimum example in the funding goal section, this could be 300hrs you haven’t factored into getting orders out the door. That’s almost eight weeks of work you probably didn’t consider!

timeline image showing busy people and a timer

You probably want to have some “Early Bird” rewards, which are cheaper than the others and will be delivered first as an incentive to drive early backers and gain campaign momentum. These should ship about two weeks after the fastest you can get the product built, certified and tested.

Build a Gantt chart for your project. Assume a worst case scenario for funds getting out to you in about two weeks. It could be as little as a few days, but for timelines, set everything for the worst case scenario to avoid disappointing customers.

Some items to consider:

  • Two weeks for funds to get to your account.
  • Two weeks for contingencies.
  • First article build time.
  • Two to twelve weeks of regulatory approval testing of the first articles.
  • Full production run time.
  • Time for testing each item, if the contract manufacturer isn’t doing this.
  • Time for final assembly and packaging of each item.
  • National holidays (especially if dealing with China).

You may want to get the first items out the door within a few weeks of the campaign’s conclusion, but unless you already have regulatory approval on a locked down product, this is pretty unlikely to happen.

Realistically, if you have a ready-to-go product, your first shipment is likely to be two months post-campaign at the very earliest. If you have 90% of your product finished up and merely need to sort out a few injection molds, test jigs and maybe a bit of firmware, four months would be optimistic.

From your Early Bird orders, you will want to figure out how long it will take to then deliver the rest of the items. If you plan your rewards prudently, you should be able to stagger deliveries if your campaign goes well by limiting the quantity available per reward tier. This way, you can determine how long your first 100 orders will take to be fully shipped. Keep in mind that your delivery date should be when the last shipment goes out the door, not the first! From there, you can work out how long it will take to do the next 1000 units and so on.

Building Your Page Content

The content page is critical to the campaign’s success. Platforms provide only the most basic capabilities for the campaign page, likely for the purposes of ensuring a good experience for the end user, but this doesn’t give you much creativity at first glance. For example, instead of using text headings, consider using images. Using images will let you add some flair to the page so it doesn’t look too dull, or like a wall of text.

Consider this example of titles: the first is a default title and a screenshot from a Kickstarter project I’m working on, while the second is under a minute’s work in Adobe Illustrator utilizing the PCB icon by Oriza Creativa from the Noun Project (free to use). I’m clearly not a graphic designer, but hopefully, this illustrates the idea.

content-building-example

Start your content with the most important points: what the product is, what it does for the user, and why you are making it. Don’t worry about the ‘creation journey’ and such until the end. You need to sell the user on the fact they need to have your product in the first paragraph or two.

I’ve seen quite a few campaigns that put a “Featured In” section right at the top, showing what blogs or news sites have mentioned their campaign. All this does is slow the user down in learning about your campaign and product. It’s a great way to lose a potential customer, especially those who have come from the platform directly and usually won’t waste time trying to figure out what you’re selling. Sharing where your product has been featured is great, and is something to be proud of, but leave it to the end of the page.

After that, have some pictures of your product, ideally with callouts pointing out neat features.

Then you can get into the details of what makes your project so remarkable. Make good use of graphics, gifs, and diagrams here.

Before you get too far into the technical details of your product, make sure you include a comparison chart between your reward tiers to make it easy for people to figure out the differences between them. Having the rewards listed down the side of the page can make it hard to compare them. A simple table with each reward level, it’s price, and check marks for what is included makes it much easier for users to discern which one they want. If you have a multitude of reward tiers or configuration options, you could also make a vertical list containing pictures as shown below. Having a clear comparison of rewards will reduce the number of emails you get during the campaign, and give you something to send to people who are not sure which reward to pledge for. Note that this table will have to be an image, as most platforms won’t let you build an actual table into the content.

table example

Don’t make your page too short; it should have as much effort put in as you expect to raise funds for. If it’s just two paragraphs with a $25,000 goal, nobody will back the project. If you’re struggling to add content, write down headings for the items you want to cover, and then just flesh out each heading. In no time, you’ll have a great page!

Be open with your content. Tell people about challenges for the product, who you’re working with, and what this project means to you. Get them invested in you, your company and your product. Make them feel like they’re an integral part of the project before they’ve clicked Buy.

Creating a Video

For me, this is the hardest part of any project. I’m not a superstar video editor, and I’m not that great in front of a camera. If you’re working on a limited budget, consider putting a call into your local media college or putting a poster up on some wanted boards there. This can be a great way to get students involved, giving you a full cast, producer, editor and film crew on the cheap.

Camera close up creating a video

You want your main video to be under two minutes, but ideally around one minute. It should cover the same items as the first few paragraphs of your content what your product is, why people need it, and what it’s going to do for them. Whilst you don’t need to film your video on a film set, should be somewhere really well lit, with decent acoustics (use a Lav mic) and it should be clean and tidy. The video should be concise, so make sure you work your script out before you film.

If you have lots of really cool things you want to show off, you can usually provide additional videos as part of the campaign page, or the top carousel of media. You can also consider turning them into GIFs and embedding them in the page content.

If you’re not sure what will work well, take a look through recent top projects that are similar in theme to yours, and see what they did for their videos. If their videos are precisely what you’re looking for, you could even reach out to them and ask for a referral to the person/company that made their video.

Setting Rewards/Perks

Keep your rewards as simple as possible. If you have too many reward tiers or different product configurations, it will be too hard for you to manage, and too hard for a potential backer to decide. If you are launching multiple distinct products (such as a full-featured version and a lite version), you may wish to consider two campaigns run one after the other so you can apply what you learn from the first one in the second one.

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You can generally ignore Kickstarter’s and IndieGoGo’s advice on reward pricing as it is typically only relevant to creative endeavors like photography or film. If you’re creating a product, however, its price should be driven by its cost or by market forces rather than by trying to fit it into the suggestions of the platform.

That being said, having a $1-$5 option for people to get updates on the project or a website or Twitter mention can be an easy way to get some snacks/coffee money for when you get to fulfillment! I rarely see the big $5,000-$10,000 option rewards that are usually a dinner with the creator or something similar work unless the dinner outing is with a celebrity or public figure of some sort. It’s fun to dream up, but it might not be worth the time it takes to do so unless you are famous.

I’ve seen many projects offering swag items, namely T-shirts, mugs, stickers and such. Unless you have a company you can hand the fulfillment of these items off to, it’s probably not going to make you enough extra money to make it worth the distraction, customer service, and fulfillment time. Focus on your core product and offer options for one product, or a pack of, and then a premium pack with whatever optional products might go with it that you can outsource/make cheaply.

Early bird options are an exceptional way to get some initial momentum on the project when coupled with well-timed marketing releases by blogs and such. If you can generate a considerable influx of traffic to the project the day it launches, it can help you get a significant percentage of your funding early on. Getting that initial funding percentage is important ‘social proof’. If you reach 40% of your funding goal in the first week, you’re almost guaranteed to reach the full goal given historical campaign statistics. If your standard offerings have a 20% discount off retail, then perhaps you can offer a minimal number of products at 30%-40% off the retail price to build that initial momentum. Don’t allow early bird rewards to add up to more than 30% of your total goal or you might be cutting your margins a bit thin. If you’re expecting a large number of visitors for a major product launch, having two to three stages of early bird can be handy with a 5% price discount difference between each one before getting to full campaign price.

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4 thoughts on “Building Your Crowdfunding Campaign”

  1. The main pain of all these things is certification. And it seems that a lot of crowdfunded projects are made by some illegal way with skipping the cerification step (because price per unit is low, but number of units is not high).

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    1. I agree, many projects are lacking certification hence mentioning it over and over in these guides. Sometimes it is out of ignorance to regulations, others it’s believing they can get away with it. You may be able to fly under the radar for a while, but I’ve known several companies that have had huge fines or other financial losses from lack of certification. It’s just not worth the risk.

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  2. I agree, many projects are lacking certification hence mentioning it over and over in these guides. Sometimes it is out of ignorance to regulations, others it’s believing they can get away with it. You may be able to fly under the radar for a while, but I’ve known several companies that have had huge fines or other financial losses from lack of certification. It’s just not worth the risk.

    Like

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