Accurate estimation of the funding goal of a crowdfunding project is one of the foremost requirements behind the success of a crowdfunding campaign. In this crowdfunding article, we will discuss how your funding goal affects the overall success of your crowdfunding project and what can be done to avoid the selection of an inaccurate funding goal.
There is a common perception that it is better to have a moderate funding goal because a very high funding target creates a negative impact on the project. However, the truth is that it is even dangerous to have a funding goal that is too low in comparison to your requirements. We have seen many projects fail because the funding goal fixed for the project was not enough to cover all costs for the project. As a result, many crowdfunding projects do not reach their ultimate destination in spite of reaching or exceeding its funding goal. In most instances, this happens because the project owner(s) fail to correctly anticipate the expense of creating and shipping crowdfunding perks to their backers. Therefore, when assessing your crowdfunding campaign budget, always be sure to factor in the reward fulfillment cost.
It has also been observed that many project owners end up requiring more money to execute the project than they initially thought. Therefore, while budgeting for your crowdfunding project, keep things as simple as you can. If you intend to add extra functionality or features, you can do so by including stretch goals to your campaign.
Here are critical factors to consider in determining your crowdfunding campaign’s financial goal:
- The actual project execution cost.
- Cost for creating rewards.
- Shipping costs for your rewards. Shipping supplies like boxes, padded envelopes, tape, and bubble wrap must be taken into account. Be prepared to pay additional shipping charges for your international backers.
- Advertising expenses to promote your crowdfunding campaign.
- Payment processing and crowdfunding platform fees. Please remember that crowdfunding platforms like RocketHub and Indiegogo charge double the amount for campaigns that fail to reach the funding target.
- Finally, include the cost for hiring a consultant to set up and manage your campaign.
Setting a huge funding target has its demerits, too. If your project requires a huge amount of money, you may break up your goal into different funding phases. For example, you may run two different campaigns within a short span of time. There are two primary concerns with having a very high funding goal
- Many potential backers may lose interest thinking that your campaign will not be successful because of such a high funding goal.
- You run the risk of returning empty handed if you opt for a fixed funding campaign that doesn’t meet its crowdfunding goal.
Looking at all these points, it certainly appears that the best approach would be to keep the funding goal within a manageable range and create subsequent stretch goals if you require a higher amount of fund. At CrowdfundBuzz, we help crowdfunding project owners with surefire strategies to jump start their venture. To find out more about building and managing a successful crowdfunding project, please contact us today.