How to Create a Crowdfunding Budget

Proper preparation, especially when it comes to budgeting is essential to crowdfunding success.

Skylar Lnn

September 6, 2022

For any team launching a crowdfunding project, one of the most common problems is how to create a project budget. “But wait, isn’t the idea of crowdfunding all about how to raise money?” Of course. But as the old saying goes…” it takes money to make money”. Planning a Kickstarter Project Budget is an essential step in any successful campaign and helps to ensure your project makes that magical leap from idea to reality. Still, creating a project budget can be intimidating, here are some key points to guide you to success.

Start with the basics - A Kickstarter project budget can be built in conjunction with your overall campaign plan which should list each step of the campaign process beginning with pre-campaign preparation, actions and tasks necessary during the active crowdfunding period, and the steps needed to fulfill campaign promises once the funding period is over. Not only can an accurate project budget help ensure you are ready to ship to your backers, but it is necessary to decide how much your funding goal should be.

Pre-Campaign Costs

Product Preparation - If your product is not yet in the prototype stage, what are the costs to create your first, second, and final working prototypes? Once you have a working prototype, what are the development costs to realize the final version?

Brand Development – You may have the greatest product in the world, but have you created a marketable brand as the vehicle to communicate its value? Branding is how you distinguish your product, sell its unique benefits, and craft the perception of your company to the world. Allocate some budget to develop a brand identity including a webpage, logo, mission statement, and trademarks.

Online Footprint – What is the cost to create the basic message of your offer? How much to develop a company webpage or product landing page with a specific crowdfunding offer and email capture?

Media Outreach – Outreach to product reviewers and KOLs takes time and effort, establish the number of hours and cost to do so. Allocate a number of samples for reviewers and calculate the cost.

Advertising & Promotion – Will your campaign be ad-supported? Decide on a percentage of your overall budget to devote to ad platforms, research the cost and multiply by a number of ad campaigns you will run during your campaign. 

Launch Party & Events – An in-person launch party and on-going events during the campaign are an excellent way to earn your first pledges. Parties cost money! Renting a space, food, beverages, and entertainment add up, don’t forget to expense this. 

During the Campaign

Campaign Management – Successful campaigns are not a set-it and forget-it process. One you hit the launch button, allocate a budget for a campaign manager to monitor the process, answer backer questions, post regular campaign updates, work with media, and design promotions. Whether you do this in-house or hire an outside team will determine the cost. 

Email Campaigns – Outreach, updates, and backer acquisition take time and money. How big is your email list? Are you investing in digital tools to help streamline the process? What is the cost in staff hours to perform on-going email campaigns?

Stretch Goals – Did you set stretch goals with additional product features that will increase the product development cost if reached? Don’t forget to account for additional development or manufacturing costs associated with stretch goals. 

Administrative Work – Do you have a staff member keeping track of backer pledges, gathering shipping information, color choices, and add-on information? Are you using third-party software to do so? Add in these often overlooked costs. 

Fees & Taxes – Remember that all crowdfunding platforms take a percentage of the money you raise and there may be fees associated with different services such as credit card processing. Also, in most countries, money raised will be taxed by your local jurisdiction and this cost should be part of your budget. 

Post-Campaign Costs

Tooling & Manufacturing – Work with your manufacturing partner to estimate the costs of tooling and materials needed to begin mass manufacturing. Does your manufacturer require a deposit prior to manufacturing? Has the supply chain for materials been sourced and secured?

Shipping & Logistics – One of the most overlooked costs is packaging, shipping, and logistics. What is the unit cost to get your product from the manufacturer into the hands of your backers? Have you designed and tested the packaging and do you know the cost of 100 pcs of packaging vs 1000 pcs of packaging? What are the current shipping costs and have you budgeted for cost overruns? During the recent pandemic, worldwide shipping rates increased drastically, make sure to account for some unforeseeable costs when calculating shipping and logistics. 

Customer Service – The work doesn’t end once the campaign is over. In reality, the real work has just begun. From the moment funding ends, there will be backers with questions, people who wish to change their pledge, and logistics issues. Make sure you have a customer service plan in place and allocate staff and budget to handle it based on the number of backers you earned. 

After listing out all the required items, it is important to accurately estimate the cost of each. 

If you are new, researching similar product case studies can be helpful, as well as talking to others in your industry, or those who have more crowdfunding experience. Reaching out to your manufacturing and logistics partners is also a great place to start.

Once you have collected this data, use it to calculate your crowdfunding budget. Many new crowdfunding teams find that they underestimate the costs of running a campaign. Luckily, you have done your homework and you won’t be surprised when costs arise. If you find your project budget has exceeded your expectations, now is the time to re-allocate costs, scale back plans, or increase your funding goal to account for the additional costs. 

If things get too complex, it may be a good idea to work with a crowdfunding manager that can help increase the return on marketing costs, suggest areas of improvement, and streamline campaign management. 

Crowdfunding is a great way to launch a project and see your dreams come true. Proper preparation, especially when it comes to budgeting is essential to crowdfunding success. Take your time, get it right, and enjoy the road to your success.