As a Kickstarter creator, one thing you cannot plan for perfectly in advance is where your future backers live. But if you are shipping a physical product, the amount of money you need to raise (your actual funding goal!) depends on it. The total pledges on a Kickstarter campaign can be very misleading, and I pay much more attention to the total backer count on my projects than on the total pledges on my projects. Let me explain why.
When setting your funding goal, the first factor is the most obvious:
- Manufacturing & Freight: The cost to create the rewards and land them in your warehouse (or garage, back bedroom, etc.).
The minimum number of copies of Lanterns for my manufacturer will cost roughly $6,000 to print and freight from China to me in the United States.
But I cannot simply set my Kickstarter funding goal to $6,000. There are two other important factors:
- Fulfillment: I will have to mail each backer a copy of the game, so I’ll need to raise additional funds to cover that.
- Fees: Kickstarter and Amazon Payments charge a fee of roughly 10% of the pledge levels, so I’ll need to raise additional funds to cover that.
Both of these numbers depend on the location of a backer. I won’t go through all the market research or the algebra I went through to arrive at my pledge levels (that’s a post for another day!). But I made sure to set them so that I would raise the same amount of money to apply to manufacturing and freight from every copy of the game, regardless of its final shipping destination:
(1) USA: For one backer in the United States pledging for one copy of the game:
- I set my pledge level to $24.00.
- Kickstarter and Amazon Payments take $2.40 of that in fees.
- It costs me $6.60 to mail one game to a backer in the United States.
- I raise $15.00 from this pledge.
(2) Europe: For one backer in Western Europe pledging for one copy of the game:
- I set my pledge level to $40.00.
- Kickstarter and Amazon Payments take $4.00 of that in fees. (Yes, they take a cut of shipping charges.)
- It costs me $21.00 to mail one game to a backer in Europe.
- I raise $15.00 from this pledge.
In both cases, I receive $15.00 from each copy of the game to apply towards manufacturing and freight. I need backers to pledge for 400 copies of the game in order to raise the $6,000 I need.
So what does my total project goal need to be? It completely depends on the location of these backers:
- If all 400 backers come from the United States, my goal needs to be $9,600.
- If all 400 backers come from Europe, my goal needs to be $16,000.
That’s quite a big difference!
You might be tempted to set your goal at the highest possible amount — just to be safe. But backer psychology plays an important factor here. Backers are more likely to pledge when your goal feels within reach and when they feel like their pledge can make a difference. This number is simply too unrealistic: it’s hard to imagine a United-States-based project getting 400 backers from Europe and none from any other country! An unrealistically high goal lowers your chances of funding successfully and can even turn away backers who would have backed it with a more reasonable goal.
I chose to set my goal at $10,000. It’s a nice round number that would feel right to potential backers, but it does assume that nearly all the backers would come from the United States. When I launched, I didn’t watch the total pledge amount as much as I watched the backer count. I had the following conversation with multiple people during the first week:
Friend: How much does the campaign have?
Me: It’s at 304.
Friend: 304? Dollars?
Me: No, 304 backers.
Friend: How much money?
Me: I don’t know. Let me check.
People were always quite surprised to hear why I watched backer count more closely!
As it turned out, I reached $10,000 and successfully funded on the afternoon of Day 6. But it was the next evening, when I reached $11,268, that I reached my real goal of 400 backers getting a copy of the game. The total pledges is just too misleading! Even after reaching my goal, I still watch more closely the number of backers — and the number of copies of Lanterns that I get to bring into the world!
Note: Kickstarter employees will tell you not to set your goal for less than what you need. Unfortunately, there simply wasn’t a good way for me to predict how much money in total pledges it would have taken for me to raise $6,000 to apply to manufacturing and freight. Some people are asking for Kickstarter to stop counting shipping charges towards a project’s goal. (The German crowd-funding site “Spiele Offensive” does not count shipping charges towards the goal, so I know it’s possible.) I would welcome that change.