Kickstarter White Paper Part 1

This is Part 1 of two parts of our Kickstarter White Paper. You can view the intro here and Part 2 here.

Recognizing Your Value Proposition

Kickstarter is a value proposition. You are offering people, your “backers,” a product or service in exchange for their support. In the majority of cases on Kickstarter, you are essentially offering people the opportunity to “pre-order” your product before you actually produce it. Backers of Kickstarter projects are not loaning or “donating” money to you, they are buying a product from you and therefore they expect to receive value for their money.

That being said, some people will in some cases actually want to give you money. This is a beautiful thing. We recommend you take it. But understand this is the minority position and not something you should expect or rely upon.

Acknowledging Your Backers

Your Kickstarter backers are special. They are the first people to support you. These customers are recognizing the inherent goodness of your project and joining in early, before the product is even out, to ensure your success. You will want to treat your backers as if they are special and extra-smart (because they are) and make sure that they feel your appreciation of them. Offering discounts on your products in the Kickstarter itself and having limited edition rewards just for the Kickstarter are some of the ways that you can show your appreciation of their early support.

Setting Your Goal and Planning Rewards

Right at the start you will want to figure out the exact value of your rewards in order to create your tiers and the monetary goal you are setting for the project.

The basic question is: How much will it cost you to make the product?

You should start your Kickstarter with solid quotes for the actual cost what you need and the cost of production for all of the rewards you will be offering. While it is fun to think of all the gewgaws and trinkets that you can put your logo on, you need to make sure it is affordable to produce those stickers and temporary tattoos. Doom had some amazing initial ideas for rewards that we quickly realized were completely cost prohibitive and would have actually put us in debt to produce.

As an example of this planning process, t-shirts are a common reward (and great marketing for your brand, every person who gets a t-shirt will become a walking ad for you, especially if you have a great logo.) You should have quotes on how much it will cost to print the t-shirts in all their colors and sizes (will your printer charge you more for an XXXL or XXS) at various price breaks. Find a printer that can create the kind of t-shirt you want and make sure you check specifics with them to make sure the art you want to use is feasible.

The point here is to do your research. You don’t need to have all the production lined up and ready to go – though that would of course be ideal – but you do need to have some solid numbers of exactly what you need to raise to make a successful product. For example, for Doom we needed an absolute minimum of $35,000 to produce the base game. Therefore, that was the number we chose as our goal. After reaching that goal, every additional dollar we earned meant that we could make a better, higher-quality product with extras we had previously dropped due to cost. At a certain point we could even afford to offer new cool rewards to our backers because we had gone so far past our production needs. But we had to know what those extras cost as well and whether they made sense to produce or were just fantasies arising from our high-spirits in reaching our goal.

Other Factors in Setting Your Kickstarter Goal

Kickstarter will take 5% of the total you raise. Amazon will take between 3 and 5% for credit card processing. You will of course have to pay taxes on the money, which will vary depending on the state and what kind of business you have. And of course it would be nice to make a profit (though we must wonder how many “successfully funded” Kickstarters actually end up in the red.)

Shipping

Consider your shipping costs and how you are going to handle getting your finished products out to people. Will you be personally shipping out the rewards to every backer? Will your fulfillment center do that, and at what cost?

In designing your tiers and final goal, calculate your shipping costs and decide whether to charge for shipping. This can be decided in part by the scope of your project. If you are running a small local business, you might offer to personally deliver the product to those in your area and charge everyone else shipping. If you are working on an international level, it is common practice to NOT charge shipping for USA backers. Depending on how much it will cost you, it may also be a good idea to offer free shipping to Canada as well.

Generally, people do not like being charged for shipping. It is a low-level kind of seething anger that people feel at being charged shipping. This is not a feeling you may wish to cultivate in your backers.  Due to practices by Amazon and Ebay – Ebay recommends to its sellers that they increase the price of their products so that they can offer free shipping to customers and Amazon offers free 2nd day shipping to it’s Prime members – people expect to get shipping for free and may become quietly outraged when you do not meet their expectations.

If you do decide to charge for shipping, make sure you make a point of mentioning that somewhere in your kickstarter. Doom, and other projects, mentions it in the tiers by saying, “For international shipping add $25.” Doom did not charge international shipping for tiers over $200.

When to Start and End Your Kickstarter

When you end your Kickstarter is even more important than when you start it. Make sure you end strong. People love to be the last person to donate, to put that final piece in the puzzle and get you to that ultimate goal.

The last day of Doom saw the 3rd highest number of pledges of entire campaign, HOWEVER we did make the big mistake of ending the Kickstarter at 4am in the morning, Pacific time, and that cost us a lot of money. Even then, Doom still made about 3k in the last 6 hours of the Kickstarter, only a thousand dollars less than the daily average of pledges for the entire month. Amanda Palmer had the right idea when she ended her Kickstarter at midnight on the East Coast. There was a giant countdown party and people were donating right up to the very last second of her Kickstarter. She made 100k the last day of her Kickstarter, the majority of it in the last few hours.

Choose a time of the day (and 12am Eastern time is pretty ideal) when people can be sitting at their computers watching the end of your Kickstarter. Not all of us can or would want to throw a block party in NYC and strip naked on livestream, but make the end exciting. Add some ultimate stretch goals, do one last intense PR push, get those final people who might still be on the fence all the way in. Incentivize those who are already committed to be still more committed. You are never going to have a better moment to upsell than this one, so make it count.

The start time of your Kickstarter, and the period of time it will cover are also important. Weekends will be slow; therefore Friday, Saturday and Sunday are not advisable. People travel on the weekends, and during holidays and that means they will not be in front of the computer looking at your Kickstarter. Similarly, the start of the week and early mornings when people are getting back to their desks and seeing what is happening on the internet in their absence are key times. Send out your updates early in the week to most profitably catch peoples’ attentions. Early Friday could be okay, but remember that by noon most people are going to be thinking about the weekend and considering skipping out of work early. Also factor in the holidays that will happen during your Kickstarter. Memorial Day weekend was an extremely slow point for Doom.

Structuring Your Tiers

In structuring your reward tiers, be as clear, concise and brief as possible. You can elaborate on what the rewards are and how they are entirely made of win in the main body of the page, or even in an FAQ, so simply listing them out in tiers themselves makes a better presentation. At the same time, however, be alert to keep from being dry and repetitive.

One good way to think of the tiers is that each one is a SKU, so you need to be clear about what distinguishes it from the next. Why would a backer want to pick that particular level? How is it interesting and unique? Don’t be boring.

Stacking

Many Kickstarters stack their rewards. Personally, we’re not fans. We find them to be cumbersome and do not think they are clear or efficient. We think it leads to confusion and undue effort in trying to sort out exactly what your backer is getting in a particular tier, and your backer may not even want the rewards offered in all the previous tiers. Besides, it’s expensive. Moreover, upselling becomes more difficult if everyone is already getting everything there is with every “choice.”

We prefer tiers that specifically tell the backer what they are getting. Listing out all the cool things you are offering adds to the excitement of backing at that particular tier level. We think that NOT stacking tiers gets everyone to be more discerning about what they want and are going to get. Stacking also limits the potential of being creative with themed tiers to make things more interesting.

Additional note: You can’t add any kind of formatting to the tiers (bold, underline, italicize etc.) so it is good to have your own set format for how you are going to list the rewards and to stick to that for every tier. Make sure you use the same descriptor words for the rewards, in our tiers we accidentally went back and forth between “figures” and “figurines” which didn’t look stellar.

Low Level Tiers

We believe that a large number of low tier levels is not worthwhile. Sure you might want to have one or two – for people who want to donate to the project itself but aren’t interested in owning your main product – but don’t clutter up your reward tiers with a bunch of small, diffuse rewards that distract your backers before they get to the really meaty tiers.

Never forget, you are the one on the hook for fulfilling every reward you offer. So think carefully before promising everyone a personally delivered singing telegram.

Sweet Spot

Ideally, what amount do you want the majority of backers to pledge? Kickstarter says that the average pledge is $70, but the common pledge is $25. Figure out the level you most want people to pledge, then pick the higher target or targets that hope you to reach through stretch goals and additional rewards. For example, in Doom, the product that we wanted people to buy was $75 and that is indeed where most went (600 backers at $75 with roughly 150 at the $50 and $100 levels respectively.) Our stretch goals, however, were for backers who had pledged $100, which meant that people were constantly moving up tiers throughout the Kickstarter as they realized the $100 tier was becoming a better and better value proposition for them. Our final stretch goal, however, was for people who had pledged at $200 (as well as a smaller reward for the $100 level) and because the $200 level had previously sold out, we offered a special $205 level just so that people could get the new stretch goal reward.

Production Date

Kickstarter asks for an Estimated Delivery date of when you will be shipping rewards out to your backers. Not much to say here, just that you’ll want to add this into your calculations when considering fulfillment of when exactly you can expect to be sending out rewards. Obviously you want to get things to people in a timely fashion but be aware of the actual production schedule. For example, printing almost anything from a CD to a book can take several months.

In some cases, peoples’ Kickstarter projects begin and end with their campaign. In other cases, as with Doom, the campaign is only the first part of an ongoing production cycle. Therefore, we want to make sure that our product is available commercially before the holidays. There are many other variables of course….

Changing Tiers

Once someone has backed a reward tier, you can no longer change it. You can change a reward level ONLY IF NOBODY has backed it yet. And yes, you may want to change your tiers mid-Kickstarter. If no one is pledging at a low level after a significant amount of time, you want to figure out why and change/or get rid of that level. Obviously higher tiers may never get backers and sometimes those should be left as aspirational targets, but more commonly they should be changed if they are not providing value. A large list of dead/inactive tiers is a sign that your project is not doing well and perception is always critical.

Adding Tiers

Try to keep your Kickstarter as simple and elegant as possible. Having more tiers is not better. You can, however, add new tiers at any point during the Kickstarter. (If you are worried about them looking too similar, you can put the new tiers in at +1 or +5 so $101 or $105.) We believe it is better to start with a smaller level number of tiers and add to them, than to start with too many and not have people bite. Adding tiers makes it look like you are responding to your backers’ requests for more levels (especially if you are!) Paying attention to comments is crucial and we were fortunate with Doom to have well-spoken backers who gave us very helpful feedback. This lets you more easily upsell people once they are supporting the project, and it means that you don’t have a lot of empty tiers at the beginning.

Limiting Rewards

We suggest you limit some, if not all, of your higher level rewards. It makes them look more exclusive and desirable. If a tier sells out, that looks good and you look successful. There is likely a natural limit to how many of those rewards are even available anyway; with Doom we had a limited amount of original art and that determined the limits for those particular tiers.

Remember that you can later add more tiers if you do sell out of your limited rewards. Further, your new tier could be a dead ringer just sold out. We think this looks a little gauche but it had been very effective in some campaigns. Creating limited rewards can be a useful and simple tool for upselling. For example, Doom sold out of the $200 tier fairly quickly which meant that people who were interested in a similar set of rewards had to move up to $250 to get those rewards.

The reverse of this, is do not limit tiers that should not actually be limited. Just because it’s a higher monetary amount does not mean it needs to be a limited rewards. Limited rewards are things that are exclusive and can’t be replicated easily; setting all of your rewards at limits of 200 just looks silly.

Thanking Backers

Thanking backers is a common reward and often offered for $1. Backers are promised that their name will be listed on the website or in the finished product. Our thoughts differ from that paradigm in that we believe it would be better to save the reward of “your name in the credits” or “a special thanks to” for a high tier. (Doom started offering thanks at $200.) This way you are genuinely thanking the most helpful people and it is more meaningful since you are not diminishing the thanks by offering it to everyone at a buck.

Stretch Goals

Stretch goals can be an extremely fun and dynamic aspect of Kickstarter. Once your initial production goal has been met, you get to add stretch goals with cool extra rewards if the project funding reaches your newly stated goal. Ideally, you should plan to have stretch goals in any Kickstarter because your basic goal should be the only the production costs of the game (and ideally a small profit). Should your backers find your project worthy, your stretch goals will allow their further support to add delicious frosting to the cake they already love.

Stretch goals are used to upsell existing tiers as well. Most stretch goals are only offered to people backing the project at or above a certain tier. For example, Doom offered stretch goals at $100. That meant that a lot of people moved up from $50 and $75 to the $100 tier because they would get more rewards there.

Example of a successful Kickstarter with great stretch goals here. They also have lovely banners for each stretch goal, making them appear clever, professional, and desirable.

Stretch goals should be actual stretches to pull the backers forward. With Doom we set the first two stretch goals too low as we already had the momentum to easily reach the “stretch” amount with or without a new goal (we met the 1st stretch goal at almost the same time we announced it).

Kickstarter Video

The Movie is Key

The movie is a key piece of your Kickstarter. It is the first thing people will see when looking at your page. There are lots of articles around about how to create the perfect Kickstarter movie. We just have two important points to make about the movie.

1) Keep it short, under 3 minutes. There’s a reason pop songs are three minutes long and your Kickstarter pitch needs to be similar in both brevity and entertainment. We think you’ll be surprised at how much information you can convey in such a seemingly short period of time.

2) The first image in the movie is the image that will appear on your Kickstarter and will be your branding image. So make it a good one. We changed ours half way through when we realized this and it made a world of difference.

Part 2 continued here.

If you missed the intro, you can find it here.

About these ads

5 thoughts on “Kickstarter White Paper Part 1

  1. Thank you for all this great information. The points on when to schedule a campaign are something I wouldn’t have considered.

    As much as I’d love to just donate money to every campaign that I think sounds fun (or that is being run by people I know), so far I’ve only put down money when the reward is something I tangibly want. One game campaign only got money when they offered a physical book in addition to a PDF.

    Part of what helped me to finally spend on Doom was your regular updates. The internet is full of noise. If I’d just heard about it once I would have thought, “That looks pretty,” and then forgotten about it. Regular updates kept reminding me of the project. Having people sharing in my circles on Facebook kept reminding me of the project. I have a hard time imagining someone who doesn’t have a lot of online connections running a successful campaign. A great project can’t speak for itself.

  2. Terrific info. I’m thinking about my book and what I can offer for stretch goals. Obviously for local people I can offer sessions or classes, but long distance is tougher. Laminated charts?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s