You have a dream, and you’re ready to make it a reality. As you’re creating your campaign, you’re faced with the question: “how much funding should I ask for?”
Unfortunately, not every Kickstarter campaign will reach its funding goal.
Far from it. Only a small percentage of Kickstarters reach their goal. What hampers so many projects and keeps them from being backed?
Several factors can affect the outcome of your crowdfunding campaign. Setting the right goal is one of those factors.
So, how much should you aim to raise? Let’s find out!
How Kickstarter’s Funding Goals Work
Let’s start with the fundamentals. How does Kickstarter’s funding model work?
Funding on Kickstarter is based on an all-or-nothing model. This is different than other platforms, like IndieGoGo or GoFundMe.
Take Indiegogo as an example. Imagine your project raised only 90% of the final funding goal. On IndieGoGo, you’ll still get the money you raised, minus the fees and taxes.
It’s the exact opposite with Kickstarter. If you don’t raise enough money to complete the project – you won’t get any funding.
How Often Do Kickstarter Projects Reach Their Funding Goals?
You might be surprised, but people set unrealistic funding goals all the time.
Since it was founded, Kickstarter has received over $4.5 billion from backers. However, only 37.44% of the projects were fully funded and completed.
In other words, approximately 2/3 of all campaigns on Kickstarter failed to reach the necessary amount of money and, consequently, did not receive any money at all.
Let’s look at more cold facts. You shouldn’t expect the crowdfunding crowd to give you a fortune.
Yes, there are rare products that managed to gather millions of dollars. That said, a usual Kickstarter campaign reaches much humbler numbers. According to these statistics, an average successful project raises from $10,000 to $23,000.
The main reason people fail to reach their goals is because they didn’t know how to market their Kickstarter. We cover this extensively in our Kickstarter Training Program.
How to Set an Optimal Kickstarter Funding Goal
Without further ado, let’s look at what you can do to set a goal that you can reach & surpass quickly, so you’ll be “100% funded” within hours or days.
Know Your Minimum
You should know the minimum amount of money you need to make your project a reality.
This is usually the combination of any setup costs (tooling, molding, etc), plus your manufacturer’s minimum order quantity, plus the amount needed to recuperate your Kickstarter costs.
Let’s say you want to raise cash to develop the project from start to finish. This amount of money is your real goal.
Your goal with the campaign is to raise at least your real goal, and ideally a lot more. But your “real goal” is not necessarily the number you want to use on your Kickstarter funding goal.
Ask for a smaller goal to build momentum
Asking for a smaller goal lets you build momentum in a few key ways:
- You hit 100% quickly, which lets backers know they’re actually getting a product. There’s nothing worse than backing a project, only to have it get canceled.
- It lets journalists write about the project, with sentences like “XYZ project was fully funded within 24 hours!”
- It improves your conversion rate across all channels, including Facebook Ads.
Take Fidget Cube, for instance. This project started out with a mere $15,000 funding goal. At the end of the campaign, it raised more than $6,465,000 from over 150,000 backers. This is very, very common. Most successful campaigns don’t set out a high campaign goal.
Other popular examples of exceeding the initial Kickstarter goals include:
- The Coolest Cooler (more than $13 million pledged of $50,000)
- Exploding Kittens card game ($8,7 million pledged of $10,000)
- E-Paper Watch (over $10 million pledged of $100,000)
Set stretch crowdfunding goals
It’s not a good idea to start with a sky high goal. Instead, it makes sense to hit your initial goal quickly, then continue to build tension & excitement by creating stretch goals.
What is a stretch goal? These are extra milestones that the project creator puts out as “targets” to hit. When the project hits those targets, all backers get some kind of bonus or reward.
Projects with smaller funding goals and several stretch goals tend to be more successful. Why?
- Hitting the initial goal early on helps your campaign build momentum.
- Having further stretch goals incentivizes your audience to share your campaign. Everyone wants more bonuses, so they’ll want to share in order to get the next tier of bonus.
- Constantly hitting higher and higher tiers on the stretch goal list also builds momentum, and a sense of continual success.
That said, this strategy has some downsides. If you do a Kickstarter campaign with many stretch goals, you should know that:
- The project itself will become more complex. This can result in delays, and can become challenging to deliver on time. Avoid adding additional physical products (carrying bags, t-shirts, etc). Things like additional colors are easier to add. Don’t make the manufacturing process more complicated than it already needs to be.
- You’ll need to constantly update the campaign. As your stretch goals get filled, you’ll need to update the images on your Kickstarter campaign to match reality. As well as continually send out updates.
- There may be extra costs. Stretch goals often promise extra features, which can cost money to add to the product.
Know Your Margins Before Choosing Your goal
Unfortunately, no crowdfunding platform comes without fees.
You should get out an excel spreadsheet, and carefully chart out all your expenses and include them in your funding goal. Everything costs more than you’d think, and you don’t want to be surprised after the campaign is over.
Make sure to factor these expenses in:
- Platform fees. Kickstarter takes 5% of the funds you raised. Add another 3% for payment processing fees and $0.20 cents for each pledge. In reality, the platform will take about 10% of the total amount of money you got. Use this tool to calculate the fees for your country.
- Fulfillment Costs. You may need more than one shipping location. Unless you’re able to ship directly from China, you may need a warehouse in both the USA and Europe.
- Marketing expenses. Make sure you can pay for your Kickstarter video production, Facebook Ads, etc out of your campaign’s proceeds.
- Refunds. About 5% of your campaign will either refund before you fulfill the product, or they may pledge to your campaign and fail to bill.
Average funds raised by Kickstarter campaigns
How Much Should You charge?
Kickstarter users tend to be less price sensitive. In other words, you can charge more per unit than on other platforms.
We sold a pull-up bar for $65, when you can buy a standard pull-up bar for $25 on Amazon.
Why are users willing to pay more?
- You’re solving a real need, one that hasn’t been solved before.
- Kickstarter backers want to support creators.
- Kickstarter tends to attract techie, affluent people who have more money.
- Kickstarter is not a “budget” platform
- Kickstarter doesn’t have intense competition with identical products. On Amazon, you’ll be next to 20 products just like yours. On Kickstarter, you’re unique.
For all these reasons, you can usually charge a bit more. I’d encourage you to check out all the similar campaigns to yours on Kickstarter, as well as see what other products exist on Amazon. Then, price on the middle to higher end of the range.
Ready? Set? Go!
Setting the right funding goal is vital for a successful campaign. You want to hit your goal quickly, so you build enough momentum to take off. Remember, it’s all-or-nothing on Kickstarter.
To learn how you can build a $100,000+ campaign – check our Kickstarter Course.