Developing a Pricing Strategy for Your Crowdfunding Campaign

Explore the pivotal challenge of crowdfunding pricing, ensuring profitability and success for your campaign.

Cosma Zhang

July 20, 2023

Crowdfunding presents a tumultuous journey for campaigners, and one of the most significant challenges they encounter is determining the optimal price for their product. To successfully reach their crowdfunding goal, campaigners must allocate funds towards advertising on social media platforms, as well as attending events and seminars to promote their project. Additionally, there are various miscellaneous expenses involved, including salaries, rent, utilities, office supplies, and insurance for the crowdfunding campaign. Pricing is a paramount aspect to consider before launching a crowdfunding campaign, as it directly impacts the potential revenue that can be generated and the number of units that can be sold at that price. The fundamental rule for pricing a product is that it should not only cover the cost of goods sold but also generate a profit. Given the intricate nature of pricing, here is a concise overview of how to appropriately determine the price for your product:

Calculating Your Tentative Cost of Production

At the prototype stage, it is likely that you do not possess a concrete understanding of the actual cost of production. Thus, your best course of action is to calculate a tentative cost of production. Consider the following key cost centers when determining the cost of goods sold:

1. Cost of materials

Raw materials serve as a primary cost center, encompassing both direct materials necessary for manufacturing the product and indirect materials used for further enhancement and accessorizing. For instance, if you are developing an innovative wooden chair that can be transformed into a swing, rocking chair, or bed, the direct material would be wood, while nuts, bolts, polish, and similar components would fall under indirect materials.

2. Labor and machinery

Labor costs represent another significant expense in the production process, encompassing wages and employee benefits. Additionally, if manufacturing involves the utilization of machinery and equipment, their price should be factored into the cost unless outsourcing to a third party.

3. Bulk pricing

When crowdfunding a product, it is common for groups of backers to request discounted prices for bulk orders. While extending a discount, it is crucial to approach these opportunities pragmatically. Increasing sales volume can potentially benefit from economies of scale, leading to reduced per-unit fixed costs. However, it is essential to avoid excessive discounts that may jeopardize the project.

4. Competitive pricing

Crowdfunding often revolves around unique and groundbreaking products that face minimal competition under ideal circumstances. Consequently, the emphasis on competitive pricing is relatively low. However, evaluating the pricing structures of similar products in your category can provide valuable insights when determining the price for your own product. Take the time to explore the pre-order rates of comparable products.

5. Adding a markup

Once you have determined the cost of the product based on the aforementioned components, it is advisable to include a markup. Keep in mind that the calculated price is tentative, and the markup serves as a buffer to accommodate unexpected contingencies that are likely to arise. The remaining revenue, after covering production costs and managing contingencies, can be allocated for future market entry following the crowdfunding campaign.


Pricing plays a vital role in the success of a crowdfunding campaign. It is a complex challenge that requires careful consideration of various cost factors, such as materials, labor, research and development, and bulk pricing opportunities. While competitive pricing may have limited relevance in the crowdfunding space, analyzing the pricing structures of similar products can provide valuable insights. Additionally, adding a markup to the calculated cost helps account for unforeseen contingencies and prepares for post-crowdfunding market entry. By following these guidelines and properly pricing their products, campaigners can increase their chances of reaching their crowdfunding goals and achieving profitability. Remember, a well-priced product not only covers the cost of production but also generates the desired profit.