In this lecture, we're going to discuss how you select the goal, how much you're trying to raise through your crowdfunding campaign. And we'll also talk about reward levels, which don't apply to every form of crowdfunding. But especially in reward-based crowdfunding like Kickstarter or Indiegogo, is absolutely critical in terms of figuring out what kinds of rewards you're giving people in return for giving you money, so let's talk about that. So we're going to talk about how close people come to reaching their goals and what that can tell us about the amount of money you're looking to raise. We'll talk about how to select a goal as a result. And we'll talk about the reward levels and how those influence your chance of success. So here's the truth of crowdfunding, projects either fail by a large amount or succeed by a little amount, what does that mean? That means that if you fail at your crowdfunding attempt, most likely you're going to raise very little, only a small percent of the amount you were trying to raise. So, you failed miserably. If you succeed, a lot of people have these visions in their head of these viral hits that raise 100 times more than they were looking for, that is incredibly rare. On Kickstarter for example, 50% of projects get 10% or less above their goal, less than 25% of projects raise 35% of their goal. And only 1% of projects raise 10 times of their goal. So if you expect to be a viral hit, don't, you might get lucky, but there is no clear predictor in my data about which projects are going to succeed massively over others, and you actually see these in these charts. This shows you failed projects and how close they came to their goal. And you'll see the data's piled all the way over to the left hand side, which suggests that most projects fail by large amounts. And then you can see the successes and the multiples they raised over their goal on the right hand side, and again, all that data is piled over on the left, showing you that people mostly get close to their goal. So you should expect to either fail by a lot or succeed by a little, what does this mean? You should raise what you need to complete your project. Don't try and game the system by raising less and hoping you get a huge multiple, because you probably won't. So you'll probably raise almost exactly what you asked for, this makes budgeting absolutely critical. When I talk to people in crowdfunding about things that they wished they knew or did differently, budgeting always comes up as a huge issue. So you have to think about the amount that you're raising is not your profit. It's not the money you're taking home in most cases, it's your revenue. And there's going to be some expenses on top. Even if you're raising money for a charitable cause, there's going to be expenses on top. For example, you're typically going to pay between 5 to 8% of the money that you raise back to the platform that you raise it from, either in payment processing or in listing fees. So that amount ranges depending on what platform you're in, but 5 to 8% is a lot of money. And if you're not taking that into account, that comes right off the top. In a lot of cases, you may be responsible for paying taxes on the money that you raise. And you may even pay sales tax on things you're shipping out. So you need to think about these issues in advance, talk to an accountant if you need to. But realize that there's going to be a lot of percentages and fees off the top, even before you do any other budgeting, and it's very hard in a lot of cases to raise more money. I find people tend to take more time to do crowdfunding projects than they expect, but they often don't get access to additional cash until the project is complete, unless they can sell more of a particular object. So you need to figure out these things and do a careful budget, set your goal for the amount of money you need to raise to succeed at whatever you're doing. Let's talk about reward levels for a second. So this is actually a chart for Kickstarter of the most popular reward levels for each particular kind of project. And what you'll see is in most cases, the most popular reward for each project is under $50 in cost. It's different for design and for technology, where people are actually selling products. But generally, you're looking at a range of somewhere between $20 and $50. And Indiegogo has published the results that suggest the same sort of range applies there. So you want to have a reward at the $20 to $50 range, tends to be most popular. Unless you're selling a product in, say, technology, design, or fashion, where you can go a little over 50. In something like Patreon, where you're pledging to support a particular artist, the average pledge is about $6 a month. So these are things to take into account, that you want to have a reward within this sort of range. These are the most popular, but ideally you're also going to create a range of donation levels without a lot of different rewards. So there's a general rule of thumb that I can't prove with the data, that having a reward at around $20 makes sense, because people like that amount and are willing to donate that. If you're doing a lot less than that, $1 to get your name associated with the project is not necessarily a bad idea, and you could go as high as you want. But it's really important to realize that you want to offer more rewards without offering many different kinds of rewards. That's because fulfilling rewards can be expensive. Especially physical rewards because a T-shirt or stickers, because those are things you have to ship and international shipping can be very, very expensive. I got a number of comments in the survey that shipping, especially in Africa was very expensive. But if you're shipping internationally, that can be a big problem. You have to deal with returns, you have to deal with logistics, all of that is very difficult. So physical rewards are very difficult to ship, and you should be very careful not to have too many kinds and mail to too many people, it'll cost you too much. Price it out all in advance, so you know how much it's going to cost you. So where possible, use digital rewards because those are easier to fulfill, send people drawings or pictures, custom backgrounds or wallpapers. Give people the ability to name something in your game or your theater production. Be creative in terms of thinking about these kinds of options. One video game project allowed people to actually pick the name of the villain in the video game if you offered enough money. So these sorts of creative digital rewards are actually much more powerful and easy to fulfill than having lots of physical rewards. Whenever you don't have many different tiers of stickers and plush little stuffed animals and t-shirts and sweatshirts, and you're going to end up having a logistical nightmare. So try and keep rewards simple, multiple different tiers, without making things too complicated. In summary, the most important thing is don't expect your campaign to go viral. There is no easy trick to making things viral. You're going to hope to be one of those 100 times successes, but you're most likely not going to be. You're probably going to raise almost exactly what you want or you're going to fail by a large amount. So aim for a realistic budget and consider all of the costs before setting your goals. Reward ranges are important, it's important to have a variety of rewards available. But you also don't want to make your rewards too complicated or you're going to end up facing a logistical nightmare.
