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Crowdfunding: Balancing Between the Crowd and the Money
Welcome back to Two Navy Guys and a Novel, the place where you can witness the birth of our military thriller, Weapons of Mass Deception, or WMD, as we like to call it. New to the program? Catch up on previous episodes on our webpage.
Last week we talked about money, as in how much of the green stuff is needed to professionally produce our novel. Admittedly, we have big plans. Based on positive feedback from early readers and our own growing confidence, we’ve decided to go big. To us, “big” means a limited edition hardback, a paperback version, and an e-book, all to be released in May. That bill, about $4000, includes professional editing, multiple cover designs, interior layouts, and some funds for early marketing.
We would love to produce an audiobook edition as well, but that would probably double the upfront spending. (There are revenue-sharing options on Audible, but typically that requires a sales track record on the book, which we don’t have. Yet.) If you are considering producing an audiobook, check out my review of Simon Whistler‘s excellent how-to book: Audiobooks for Indies.
This week’s topic: Crowdfunding
The title of this post says it all: “Kickstarter” is now interchangeable with “crowdfunding,” just like “Google” means “do a web search.” We looked at Indiegogo, but decided to stay with the name brand. (Side note: Indiegogo does have a partial funding option, unlike Kickstarter’s all-or-nothing approach.)
Over the past month, I’ve (David speaking here) looked at a lot of Kickstarter book publishing campaigns to see what makes them successful. I’ve also learned a lot about how the process works, starting with a topic I call: The Math of Kickstarter
When I donate to a Kickstarter campaign I do it for two (conflicting) reasons:
- Altruism – I’m interested in the project and I’d like to see it succeed.
- Greed – What’s in it for me? If I support a project, I’d like to have a token to remind me of my awesomeness.
But how much of my donation actually goes to the project after fees and reward fulfillment? Let’s do at some Kickstarter math using our project, Weapons of Mass Deception, as an example.
Since we’re raising money to publish our book, we’d like to offer a signed paperback as a reward for our supporters. If you peruse Kickstarter publishing campaigns, you’ll see this reward category offered for anywhere from $10 to $40. For our example, we’ll offer a paperback copy of WMD at a $25 reward level, which just happens to be the most popular pledge amount on Kickstarter.
Here’s the Kickstarter Math:
$25 donation
– $2.00: 8% for Kickstarter fees and other charges
– $6.50: Estimated cost to buy the book from CreateSpace, including shipping
– $4.00: Cost to ship the signed book to the supporter + cost of packing material
= $12.50 in “profit” for our project
For this example, I did not take taxes into account, but you can mentally discount another 28% ($3.50) if your project does not have other offsetting costs.
By simple extrapolation, all we need to do is find 320 supporters at $25 each to net $4000 for our project…
If it were only that simple! Not only do you have to calculate the net profit from each reward level, but also estimate how many backers you will get at each level. Needless to say, we could spend a lot of time buried in a spreadsheet and make lots of assumptions, but let’s take a step back and look at the big picture.
Balancing Between The Crowd and The Funding
Lately, I’ve been reading anything I can find about successful crowdfunding campaigns. There’s a fabulous article by Nathaniel Hansen called 7 Things to Consider BEFORE You Launch Your Kickstarter Project, which I highly recommend for anyone thinking about embarking on this funding journey—and it is a long road. Since I’m in the process of creating our own reward structure, one line from Nathaniel's piece caught my eye:
I try not to put anything in the mail for rewards under $50. Not a hard and fast rule, but a good guide.
If you look at my bio, I'm a business guy, and from a business perspective, he’s absolutely right. Even our own example above shows half of a $25 donation is consumed in fulfilling the reward. But there’s a flip side to this argument: If I raise the reward level, how many potential donors (i.e. readers) will I price out of the market?
Nathaniel’s quote got me thinking about the continuum of rewards that’s right for our project. What is our balance between affordability (getting a bigger crowd involved) and “profit” (keeping more of the donated dollars)?
Our Kickstarter Guidelines:
- More Backers is More Better: If we have to choose between having more backers at a lower reward level and more money from a few heavy-hitter donations, we’d choose more backers. In our mind, the WMD Kickstarter campaign is as much about getting the book to as many readers as possible as it is about covering every single expense.
- Our Rewards are for Readers: We discussed giving away stuff like T-shirts and dog tags as part of our campaign and threw the idea out. The WMD campaign is about bringing our book to life in multiple formats—the reward is the book.
- Share the Love: We will create higher reward levels with multiple copies of WMD for bookclubs or for people who want to gift a copy to friends, family, or their local library.
An Unanticipated Kickstarter Benefit
See the three Kickstarter guidelines I listed above? They didn’t just happen, they emerged after looking at the math and having deep discussions about what was important to us as we put Weapons of Mass Deception out into the world. This process has caused me to think of our campaign more like a pre-book launch–and that's a good thing.
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David Bruns is the creator of the sci-fi series The Dream Guild Chronicles, and one half of the Two Navy Guys and a Novel blog series about co-writing the military thriller, Weapons of Mass Deception.