Crowdfunding costs: How much does it cost to create a professional crowdfunding campaign?

The most important points in brief

• Crowdfunding offers a very powerful way to obtain the necessary funding for your project.
• Keep in mind that the costs of a crowdfunding campaign can vary greatly. They depend on your wishes as well as the project and its complexity.
• However, fundraising is only the beginning of the campaign and represents only a small part of the big picture. You also need to market your project and, if the campaign is successful, you need to have the product manufactured and shipped.

We help you raise successful crowdfunding financing

Although crowdfunding campaigns on websites such as TILT, Indiegogo, or Kickstarter are seen as an opportunity for additional income, everyone knows that a lot of preparatory work is required. If you want to launch a new, great product for consumers, you need to make sure you have a sufficient budget to ensure that you can finance the entire process afterwards.

Keep in mind that the costs of a crowdfunding campaign can vary greatly. They depend on your wishes as well as the project and its complexity. For this reason, there can sometimes be very large differences. The figures and data mentioned here are therefore intended as examples.

Cost: From €25,000

Prototype

Anyone who is even considering supporting a crowdfunding project wants to know what they are getting into. In addition, many of the major platforms now require companies to present a functional prototype. This serves primarily to protect buyers from fraud or other problems that could otherwise arise. However, in order to obtain a functional prototype, you need to consider a few things in advance, such as your knowledge and experience, what equipment you need, etc.

Product design

The first step in bringing your idea to life is to hire a product designer or a company that specializes in this field. They can then create an initial 3D model of your idea and also specify the individual components that are required. You can find the right company for this task by asking around on social media or in relevant groups on Telegram, for example. Crowdfunding groups or sites such as LinkedIn and Quora can also help. Some design companies and product designers even have their own 3D printer. This allows you to see the fruits of your labor immediately and make any necessary changes right away.

The costs: EUR 2,500 – 6,500

Prototype development

It has become quite common for project managers on Kickstarter and similar platforms to launch their campaigns with nothing more than a printed 3D model. Although this is perfectly acceptable, there are several advantages to being able to show actual examples or demo versions of your product. These include:

You show your potential backers that you have already worked on the product and dealt with it.
Photos and videos work much better with a real model than with a simple 3D printout.
You have samples or demos that you can give to the press. They will undoubtedly ask you for examples in some form before reporting on your project.

The costs: EUR 4,000 – 8,000

Photography and images

Good images, a few promising and meaningful photos, and a good video are the most important prerequisites for a successful campaign. Whether it’s crowdfunding or marketing, there’s no way around good images and professional photography. This is especially true for crowdfunding: after all, your buyers have no way of testing the product before purchasing it. The only way to get an impression of your project is through photos and videos.

With a bit of luck, you, a friend, or perhaps one of your employees are skilled at using a camera professionally. In this case, you can take care of the photos and videos yourself and save costs. In most cases, however, you will need to hire a professional photographer. Many project managers simply use a few frames from the videos for their photos. We do not recommend this, as the quality is not particularly good. Print media and blogs usually require a quality of at least 300 dpi. In addition, without a large number of photos and videos, you will quickly find yourself without enough material for blogs and the press.

The OUYA video game console is a perfect example of clear, minimalist, high-quality photos.

You should use the following three types of photos for your campaign:

The OUYA video game console is a perfect example of clear, minimalist, high-quality photos.

You should use the following three types of photos for your campaign:

• Product photos on a white background. These photos allow agencies, media outlets, etc. the greatest degree of flexibility. You can use these photos without any problems. In addition, they show the product without any distractions or distracting elements.
• Exploded drawings showing the product’s interior or technical components. This is only necessary for technically sophisticated projects. This is where backers are interested in more information.
• Lifestyle images that show buyers, the media, and customers how your product can help them in their everyday lives. After all, people are only interested in a product or project for one reason: because it helps them with problems or needs in their everyday lives.

Cost: Between EUR 500 and EUR 2,000

Video

It’s not just photographers who are important. Your team should also include a videographer. It’s particularly useful if the videographer is familiar with startups, products, and crowdfunding. While you can usually take photos yourself, you should always leave videos to the professionals. Don’t be tempted to do this yourself. You need a videographer who can not only create professional videos, but also develop a story for them and edit and modify the footage.

The costs: EUR 500 – 4,000

Trade fairs, exhibitions, etc.

Of course, photos and videos aren’t the only important tools for presenting your project or product. Expos, trade shows, and similar events are also valuable opportunities to present your project to the masses, backers, and the media, and to talk about it. Here you can present videos and images or even your first prototype. You can answer questions and seek contact with people in other ways. You have the opportunity to draw attention to your crowdfunding campaign and collect information and lists, e.g., for a newsletter or for future marketing measures. All of this makes trade shows, expos, etc. an important part of your project. This is an option that you should not neglect under any circumstances. The costs and requirements for participating in such events often vary, but are usually within reasonable limits.

advertisement

Marketing your crowdfunding campaign is one of the most important factors for success. After all, people need to know about your project and your planned crowdfunding campaign. This is the only way to ensure that your project is successful. In our experience, Facebook advertising is ideal for this purpose. It offers numerous options for specifying the exact characteristics and criteria of your target group. You should normally budget for costs of $100 per day. The reason for this is that you will not get very far with free advertising. Paid ads are the recipe for success here. In addition, there may of course be other advertising campaigns, for example on Twitter or Instagram. You need to market your product or idea successfully and well in advance. Otherwise, the success you hope to achieve through crowdfunding will not materialize.

The cost: from EUR 10,000

We help you raise successful crowdfunding financing

Press releases

It’s not just advertising and promotion on social media that’s important. Press releases issued directly by you or your company about your project, its progress, plans, etc. are also important. Your press releases will reach bloggers and the media. In other words, you will reach people who can help you raise awareness of your project or product. In addition, press releases offer a good opportunity to report on any plans you may have, such as a crowdfunding campaign, etc. You should publish these releases on your own website, for example in a blog, but also on well-known third-party websites that have a wide reach. Some examples are PRWeb, PRNewswire, AP Newswire, and Businesswire.

Cost: Between €200 and €500, depending on the platform and the option selected.

Examples of excellent PR and advertising websites include: Jetzt PR and PR-Gateway. However, you should definitely try to gain international recognition for your project. For this reason, global portals such as PR Newswire should not be overlooked.

Hiring a marketing consultant

Hire a marketing expert who is familiar with Kickstarter. It doesn’t matter whether this is your first fundraising campaign or whether you have already been active in this area in the past. A professional agency, such as ours, can also bring additional skills to the table. They often have marketing and PR experts, graphic designers, photographers, etc. All these services are already included in professional marketing and advertising agencies. So you don’t have to hire additional service providers or search for and hire qualified personnel for this work.

It goes without saying that a professional agency often has a large network of media representatives, bloggers, etc. due to its experience and past projects. These are all people who can help you succeed and who you would otherwise probably not be able to reach at all, or at least only with a great deal of effort. This, combined with the fact that a PR agency can take a lot of work—and a lot of worries—off your hands, makes the investment one of the most important tasks of all.

The costs: Depending on the agency and service, starting at €5,000

Rewards, Manufacturing, and Bringing Obligation

Of course, you don’t just have to market your project yourself and draw the attention of backers and the media to your venture. You also have to think about how or with what you want to reward your backers in the end. What levels of support will there be? What benefits will the backer receive? Will they receive the product for free, or will there be different versions available at different prices? Will they perhaps receive shares or access to a specific area? This question is very important and should be thought through thoroughly in advance.

In addition, you need to consider the production aspect of your product. Who will handle production (or development, etc.) for you? What is the minimum number of items you need to put into production? Both developers and manufacturers often have minimum purchase quantities and offer discounts if you order in large quantities. So, on the one hand, there is the question of cost. On the other hand, you also need to know approximately how many backers you want to have. You should also check whether the company is reliable and deal with the issue of shipping and delivery. After all, you are obliged to deliver. If your backers have supported you, then you must deliver the promised product. There should be no delays if possible. Think carefully and calculate thoroughly. You wouldn’t be the first project manager to suddenly face problems or much higher costs because you overlooked something in your planning.

Option 1: Host your campaign on your own website

Many people find it difficult to launch a crowdfunding campaign on Kickstarter, Indiegogo, etc. The reason for this is the fees that such companies charge. In addition to a share of the proceeds from a campaign, there are often administrative and payment fees, etc. So it’s not surprising that the question of hosting a campaign on your own website comes up time and time again.

In general, there is nothing wrong with hosting a project on your own website. For WordPress, for example, there is even a special plugin that makes this possible. But before you make such a decision, you should think carefully! Today, there is no longer just Kickstarter, Indiegogo, and a few other giants. You now have a wide choice between a variety of platforms. Some of them are free, while others are particularly inexpensive. It is definitely worth comparing them. You also need to bear in mind that platforms such as Kickstarter, as well as most other crowdfunding websites, not only have resources but also a certain reach. Marketing experts can help you launch your project and market it successfully on the portal. The popularity of even smaller crowdfunding portals such as Ulule, etc., also attracts many potential backers. Such sites are not only known to backers but also to bloggers and the media.

Nevertheless, thanks to self-hosted crowdfunding, you now have the option of hosting a campaign entirely on your own and keeping 100% of the proceeds for yourself. You don’t have to share with anyone, but you do have to forego many of the advantages and extras that such sites offer. In this case, you only have to bear the costs for the relevant software, unless you develop it yourself.

However, there is still one important question. What happens if your campaign does not reach its goal? Here, too, there are differences between providers. On Kickstarter, for example, backers keep their money. They are only asked to pay once the campaign is over and the goal has been reached. If your Kickstarter campaign does not reach its goal, you will come away empty-handed. Other platforms such as Indiegogo or GoFundMe, however, offer a second option. In addition to this classic version, you have the option of choosing flexible funding. In this case, you will receive the money collected – minus the corresponding fees – even if you do not reach your target. Many of the other providers offer similarly flexible models or even additional options.

WordPress plugins such as Backer allow you to host crowdfunding campaigns on your own website and keep 100% of the profits. However, you lose the advantages and reach of portals such as Kickstarter and similar sites.

WEBSITE DEVELOPMENT

If you have the necessary skills or have a professional web developer on your team, you can also develop your own landing page or website for your project and integrate the fundraising campaign there. No plugins or third-party software required. On the other hand, some CMSs such as WordPress allow you to launch a professional fundraising campaign on your own website with only very basic knowledge. What’s more, WordPress is easy to learn. There is a wealth of information, tutorials, and videos available for free on the internet.

Of course, you can also hire a web developer specifically for your project. They can then develop a professional website for you. However, this will incur high costs. Depending on the scope of the site and the desired features, you can expect to spend up to $3,000 or more. Kickstarter and similar platforms or a WordPress plugin are certainly the cheaper option, especially for smaller campaigns. On the other hand, if it is a large project with ambitious goals in the five or six-figure range, it may be worth hiring a web developer.

The biggest mistake you can make is not hosting your campaign at all and foregoing traffic and SEO. Even if your project is on Kickstarter, Indiegogo, Ulule, or other platforms, you should also market it on your own website. Write about it, link to it, and integrate it into your social networks, blog, newsletter, etc. To do this, it is important to have your own original website that is interesting and attracts the attention of your target audience.

This is precisely where self-hosted crowdfunding has a major advantage. It’s your website. No one can dictate what you do, impose a design on you, or tell you how to structure your campaign. With the help of a creative web developer and a savvy media agency, you can create a creative and interesting website that is not only unique but also specifically tailored to your product. A site that won’t get lost in the crowd of other projects. With the right know-how, you can offset many of the disadvantages of a crowdfunding website. For this approach, you can expect the following costs:

• Domain registration: $10
• Web hosting: approx. $10 per month (cheaper per year, half-year, or quarter)
• Plugins: up to $200 or more
• Website development: up to $3,000

If you already have your own website for your project or company, these costs can be reduced even further. In this case, all you need to do is improve the existing website with a mock-up or create a subdomain for the crowdfunding campaign. This not only saves time, but also reduces costs. Especially if you are not afraid to roll up your sleeves and have a good advertising agency with web developers or can hire one, a self-hosted campaign can be surprisingly practical and inexpensive.

Option 2: Choosing a crowdfunding platform

Kickstarter is the market leader in crowdfunding. The platform attracts more than 35 million visitors every month.

All crowdfunding platforms have their own fees and costs associated with the respective provider. Kickstarter and Indiegogo are the best-known of these websites. Reward-based crowdfunding, in which backers are rewarded for their support, is the best-known form of fundraising. Such platforms do not charge backers any fees. On the contrary—they even get something in return for their support. To cover costs and generate the necessary revenue, portals such as Kickstarter charge fees that the project manager must pay. These are usually due at the end of the campaign and consist of general fees, payment fees, and any other costs. Let’s take a closer look at the costs and fees charged by the various providers.

Bonus: You shouldn’t pay for this

Unfortunately, there are currently several scams on the internet that attempt to take your money and offer supposed services such as improved visibility, etc. in return. You should always keep an eye on Kickstarter and Indiegogo campaigns, as these are usually affected. It is not normal to pay Kickstarter, Indiegogo, or some other providers for the following services:

• Email lists: Buying an email list seems promising to many people. It saves you the tedious work of having to create such lists yourself. Unfortunately, however, such purchased lists are useless in almost all cases. They consist of dead or disqualified email addresses of people who want nothing to do with your project. In addition, sending emails without permission is considered SPAM and is illegal. You risk a lot of trouble and may cause providers to block your email address or automatically send your emails to the spam folder.
• Facebook fans or Twitter followers: While it doesn’t matter to consumers and ordinary users how many followers, fans, friends, etc. you have on Facebook, Twitter, and other social media platforms, unfortunately, this is not the case in marketing. 5,000 fake fans will mess up your entire statistics. Suddenly, you will no longer be able to determine the impact of your marketing campaigns, what works, and what doesn’t! Your engagement rate will simply remain low, and targeted advertising will become very difficult.
• “Guaranteed” GoGo Factor or Kickstarter algorithm boosters: These types of offers are mainly found on Fiverr. They almost always involve a script that does nothing more than simulate traffic. Save your money—these scripts don’t work!
• Google AdWords: Avoid using this for two reasons. People who google a product usually intend to buy that product. They are not interested in crowdfunding. In addition—and this is perhaps even more important—Google explicitly prohibits advertising for fundraising campaigns!

As you can see, launching a well-organized crowdfunding campaign can quickly become very expensive. Fortunately, however, it is possible to plan the costs in advance and you can further reduce them through certain actions and formulas. It is also important to determine what goal the campaign should achieve. How much money do you need to be successful? You can calculate this relatively easily:

• Find out how many items you need to order and what the costs will be. If the minimum order quantity is 5,000 units at a price of 5 euros, then you will need to spend 25,000 euros on production alone.
• Request cost estimates for additional marketing, video production, photos, etc. You will then also need to add these costs to your target. If the costs are €5,000, for example, then €5,000 will be added to the €25,000 mentioned above. You will now need at least €30,000.
• Plan for an additional 10% for fees and costs for platforms, payment providers, etc. For the €30,000 mentioned above, that’s another €3,000. Your campaign should therefore raise at least €33,000. This does not include shipping costs or any profits.

Conclusion and summary

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