Hello Kickstarters,
“I've never seen a
kickstarter product that asked for so much money and actually got it, If I were
to back it I'd like to know why so much money is needed. The reason that
you may not have any success with this product is that people will feel like
they are wasting their time registering/backing your product when it most
likely will not reach it's minimum funding goal.” (Kickstarter’s name withheld)
I received this email
last night and it further confirmed my suspicion that the $100,000 goal is the
primary reason that the IG PAK has not received traction. That is why I am disclosing my budget so people
will understand that there is solid logic and a lot of business acumen behind
the $100,000 goal. Since Kickstarter is
only 2 ½ years old, it isn’t surprising that only 36 projects to date have
received more than $100,000. Fifteen of
those were in the design category (like the IG PAK) and all of them occurred
within the last year. A whopping thirteen in just
the previous 7 months! As the site
matures, I believe that more projects will emerge that require higher funding
limits. This seems to be a natural
evolution – as more people join group funding sites, larger goals will be more
easily reached and therefore accepted! Another
factor that limits pledges, is that many new visitors to the Kickstarter site
don’t realize that Kickstarter is an all or nothing format, ie their credit
cards won’t be processed by Amazon unless the project meets its goal. That
takes away most of the risk of pre-ordering!
Let me interject here for those who think I am too
conservative in some of my estimates: Most businesses that fail do so because
they have not budgeted enough! It is
never the known costs that take a business down – it’s ALWAYs those that were
unplanned or underestimated! Kickstarter
supporters of the IG PAK should be comfortable with a higher project goal because
there is a much higher likelihood of success if the funding limit is reached!
Here is some discussion regarding my budget estimates:
Final Engineering………$10,000 (under contract)
This includes specific engineering of the spring latching
system; determining section modulus of the flex top; grabber stop design;
possible insert designs for different skins, mechanical connections to strap;
and many other details. Also,
engineering decisions must be made to choose from an array of plastic materials
and additives for the best technical fit.
In addition, fabric design considerations - everything from stitching
profiles to the strength of threads and the material properties of the
accessory bag and strap.
Large cavity molds with sliders/sonic welding…$25,000
Costs for injection molds are very high, even in China where
labor costs are low. Large molds are
even more expensive because they are subjected to tons of force per square
inch, requiring thick slabs of high quality aluminum or steel. The IG PAK has a
relatively large footprint. It takes a
lot of time to create these extremely high precision tools. When sliders are required for features that
have ‘undercuts’, the mold prices escalate appreciably. The IG PAK's grabber stops are undercut to receive the iPad. Also, assembly will require sonic welding
which increases the cost. I wish I could
have these made in America but the estimates I received were double or triple
the $25,000 budget created with people familiar with Asian manufacturing …and
many long time US plastic injection companies now have their molds made in
China.
Jigs/set up/training for limited fabric run…….$5000
Since this Kickstarter project is a relatively limited
run (1000 units) the cost of jigs/ set up/ training for bag and strap fabrication
cannot be absorbed by the manufacturer as it would be in continuous, high
through put production. It will require
someone from our team to oversee. More
than likely, it will occur at a wholely different location and time than where
the molds are being built. An acceptable
sample will be created that will be used as a benchmark for future production.
Quality control...$5000
This is a minimal amount of money budgeted for quality
our quality control. Two trips to China
are anticipated by different team members for at least a week at a time. We will try to visit both the plastic
injector/sonic welding factory and the fabric strap and bag manufacturer on
each trip.
Price per item…$32.50
This is a conservative ballpark estimate which includes
all material, labor and machine costs to produce and assemble the following: accessory
pouch with zipper, wide high quality sling, shoulder guard, mechanical
fasteners, strap adjusters, non-slip coating, Smart phone pouch, poly-carbonate
housing, internal spring mechanism, boxing w/filler, shipping to US. Again, the limited Kickstarter run means that
materials cannot be purchased in mass, the fabricators will have to work
through a learning curve, and generally machine rates are at there highest. Future full-production costs should be substantially lower.
Shipping cost within the US is included in non-bulk orders
…….$12.50
Our original intention was to ship the IG PAKs in medium
sized USPS flat rate packages. The cost
is about $11.00 per package plus handling costs. Unfortunately, the IG PAK wants to be a
little longer than the standard box. We
are working on that but feel comfortable that our budget is reasonably close.
The algebraic formula is a logical method for approximating the quantity of IG PAKs required to fund this project. That quantity multiplied by the average unit price of the primary pledges yields an approximate $100,000 goal. Of course, this is an over simplification of the variables truly existing!
That’s all for now! Hope it answers most of your questions regarding the budget.
Thanks for your support!
Best Regards,
Bob Hart
PS I apologize to those who have trouble with tech-speak and equations, that's my MBA and my Bachelor's in Civil Engineering training bubbling up and overflowing the page!
