Samit Max Patel
Launching a crowdfunding campaign on Kickstarter or Indiegogo may be a great way to help you reach your funding goals. However, there are several things you should know about these two platforms before you decide to use them. Having a grasp of these things will ensure that you approach crowdfunding with a sober mind. You will be able to balance your creative abilities with your financial goals and your business goals. Unfortunately, most people think that starting these crowdfunding campaigns is as easy as setting a goal, launching the campaign, and making bank. Far from that, there are many fees and costs to contend with before you can complete a successful campaign. So, what are the charges for using either of these platforms to fundraise for your project? Let us first rewind a bit and examine how these crowdfunding platforms work. The crowdfunding business model on Kickstarter and Indiegogo use a reward-based crowdfunding system. In this system, the fees applied to the campaign do not go to the backers. They are applied to the raised funds. This means that whatever amount of funds you raise determines how much you will pay in fees. In other words, you only get a fraction of the target figure raised. So, let us dive in at each platform to see the fees that they attract. Kickstarter Being one of the most known platforms for crowdfunding, Kickstarter helps many creators get project funding. So far, it has hosted over a billion dollars in crowdfunding pledges. On Kickstarter, you get an “all-or-nothing” model of raising funds. So, if you don’t hit your fund's campaign goal, you get nothing. The money is given back to the backers even if you missed the target by a measly $5. The project then gets canceled. On the other hand, if you hit the target, you get everything. This means is that you get the total figure of the funds raised (minus the platform fees, of course), even if there was a surplus on the goal. For instance, if your goal was $10,000 and you manage to raise $15,000, you will be given the entire $15,000. Kickstarter Fees Let's talk about the kickstarter fees, The Kickstarter platform charges you 5% of the total raised amount for your project. You pay this fee when collecting the funds. On top of this, the Kickstarter payment processor applies another 3-5% payment-processing fee plus a $0.20 fee per pledge. Pledges under $10 also attract a micro-pledge fee of $0,5. So, in totality, you will end up parting with at least 8% of the total funding amount raised to platform fees, plus payment processing fees on this platform. To illustrate this, suppose you raise $100,000 with your campaign. Out of this, you will apply the 5% platform fee, plus an extra 3% credit card processing fee. The total will come to a whopping $8,000! On top of this, you will apply another $0.20 per pledge. So, in the end, you will receive a figure below $92,000 from a campaign that raised $100,000! Indiegogo Indiegogo has helped raise millions of dollars for crowdfunding campaigns across the globe. It is also a pioneer in reward-based crowdfunding, offering two types of crowdfunding options: Option 1: Fixed Crowdfunding This model is exactly like the Kickstarter one. The campaign has to reach its funding goals, or it gets canceled. If it reaches its goal, the money is released to the campaign owner. If not, the money is refunded back to the backers. Option 2: Flexible Crowdfunding Under this model, which is absent in the Kickstarter platform, the funds get to the campaign owner irrespective of whether they reach their funding goals or not. However, it comes with higher fees. Indiegogo Fees Let me explain you about the Indiegogo fees, If you opt for the fixed crowdfunding option and you reach your funding goal, Indiegogo charges you a 5% fee. If you do not hit the goal, all the funds reverse back to the backers at no charge. On the other hand, if you opt for flexible crowdfunding, you get a 5% fee if the goal is reached. If the goal is missed, you pay a 9% fee but still keep the money raised. Other than these fees, you also pay a 3-5% credit card processing fee and a $0.30 per payment-processing fee. With Indiegogo, you also get charged an extra $25 if you run your campaign and raise your funds in USD but have no US Bank Account. Final Words From the above breakdown, it is clear that there are many costs involved with running a crowdfunding campaign on either Indiegogo or Kickstarter. So, as you plan your campaign, ensure that you set a higher goal than the exact figure you need to run your project successfully. This gives you a chance to get more profits while also covering all expenses easily. For a successful crowdfunding campaign that helps you raise the funds that you need, be sure to set up the right way. Plan and build a proper pre-launch phase that will attract the right backers, ensuring an overall successful campaign. Why Samit Patel Crowdfunding Services At Samitpatel.net, we help you plan, launch and manage your crowdfunding campaign to ensure its success. We have helped many individuals, start-ups, and organizations create highly profitable campaigns that greatly exceed the target goals, helping them grow. We are a certified crowdfunding agency that works with clients worldwide. Our proven high-converting strategies have helped launch 7-figure campaigns to the tune of $43,000,000 to date. Our done-for-you and done-with-you crowdfunding campaign marketing tactics are fully transparent, powered by a proprietary TLFES strategy planning system that ensures exceptional partnerships with our clients, plus great results. Partner with us today and enjoy a worry-free successful fundraising campaign on either Kickstarter or Indiegogo. Let your dreams to create that helpful product come to life. We will help with product validation, crowdfunding, and digital advertising to get you way ahead of your competition. Let us help you become a success. Apply for our services now.
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