💰

Funding goal

It’s important to ask for as little money as possible. Asking for a suspiciously high amount makes backers either think you are only after their money or that you want them to do all the work and you have not done your due diligence to find a cost-effective way to manufacture your product.

Secondly, backers are way less willing to bother putting up the money if they think the project has little chance to reach its funding goal. It becomes a self-fulfilling prophecy, because less people put up their money and it does lead to your project funding harder.

Note that you'll probably have a lot of sunk or prepaid costs yourself as well. Art, prototyping, website, etc..


Ask for the minimum

Factories have a minimum order amount you need to place. Find out what that is and use that for your calculations. The lower the amount you ask for, the higher chance you have of funding. Not just because it's a lower target, but because backers simply won't back, if they see an unreasonably high funding target. It also helps getting funded fast, which is a gift that keeps on giving. Seeing a funded project equals social proof. Also, when people see a funded project they are more likely to back, because it's a sure thing. You lose all that with a higher target.

Calculate the manufacturing cost

Ask many manufacturers for unit prices for making your product. Ask for quotes on both time and money. Pick whichever seems best in terms of reliability and cost.

CRITICAL Calculate the funding goal

Here are the costs that make up your target:

1. Manufacturing

2. Shipping (freight + fulfillment)
Yes, if you charge shipping through KS, the goal includes the shipping cost as well

3. Customs fee
This is usually included in the freight price (check, though!), but if you do manual fulfillment and you are not using freight shipping you need to watch out for this. Depending on your product, the customs fee could be as high as your product’s value.

4. Customs examination
This is the customs examination fee, talked about in the section about Shipping.

5. Profit margin

6. VAT
NOTE: As talked about in the tax section, you need to pay VAT in the EU even if you are not shipping from there.

7. + 5% cushion
For replacements and screw ups.

8. + X% surplus
Talked about in the Manufacturing section, this surplus is for late joiners and people who discover your product after your backers start using it. It makes sense to make more in the first manufacturing run, then having to wait for orders to accumulate for a second run.

The simplest way to calculate your project target is to calculate the full cost of a single item and multiply that with your factory’s minimum order amount:

(manufacturing + shipping + customs fee) * margin * VAT * 1.05 cushion * surplus = unit price

unit price * minimum order amount = project goal

Check the prices of similar projects

It will help you anchor your margin, but don’t let it influence you too much. There are many different people with different spending habits. Other products’ prices are just that. Other products’ prices.

Link copied