The Price Is Right
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Last October, a woman named Spike launched a Kickstarter project to fund a comic called Poorcraft. It wasn’t all that different from other comic projects that launched at the time, but this one found enormous success, finishing 227% funded. Why?
There are many factors, but one in particular stands out: how Spike priced her rewards. Spike set the price of a signed comic book at just $10, a reasonable amount for the nearly 500 backers who opted for it. Spike found the majority of her support from lower tiers: 83% of her $13,600 came from pledges at $50 or less.
A key factor in a project’s potential success is how its rewards are priced. The PBS-style fundraiser would have us believe that tote bags should cost $100 and Ken Burns DVD sets $400. There’s an assumption that the act of sponsorship carries a tax: “Because of your generosity, items are marked at four times the sticker price.”
But Kickstarter isn’t charity: we champion exchanges that are a mix of commerce and patronage, and the numbers bear this out. To date the median pledge is $25. Small amounts are where it’s at: 83% of successfully funded projects have a reward priced at less than $20. It’s not about hunting whales, it’s about amassing support.
What works? Offering something of value. For $10 a backer should get something (a product, an experience, access, etc) in exchange. What doesn’t work? Charging a premium. Projects without a reward less than $20 succeed 35% of the time, while projects with a reward less than $20 succeed 54% of the time.
That’s not to say Kickstarter projects must mirror a retail experience. There are infinite possibilities to do something creative and outrageous at all kinds of price points. But it’s important to consider the actual value of what you are offering.
Actual value considers more than just sticker price. If it’s a limited edition or a one-of-a-kind experience (writing a song for someone, etc) there’s a lot of flexibility based on your audience. But if it’s a manufactured good (DVD, CD, book), then it’s a good idea to stay reasonably close to its real-world cost.
Every Kickstarter project is an economy sculpted by its project creator. They set the prices and the rewards. But the larger market has a voice, too. Things like what an item might cost in a retail setting, what potential backers see as a fair or fun exchange, and even how other projects might price items. Creators ignore these forces at their own risk.
There is no magic bullet, and we encourage every project to be as creative and true to itself as possible. But there are lessons to be learned. Offer rewards of real value and be fair with your pricing. Put yourself in your backers’ shoes: would you drop the cash on your rewards? The answer to that question will tell you a lot about your project’s potential.