14 Sep Kickstarter Fees and Additional Costs You Need to Know When Launching a Crowdfunding Campaign
Do you know? Kickstarter Fees are calculated and deducted from the funds you actually raise (not the goal you set). Crowdfunding platforms like Kickstarter or Indiegogo are often seen as an easy way to bring in money for your project. Fact is, even a crowdfunding campaign can become a costly mistake if you’re not smart about the total expense incurred in running your campaign.
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Most entrepreneurs pledge a goal that does not take into consideration their overall expense and end up going in the minus. What are some of the costs that you need to watch out for?
Let’s break it down.
- Kickstarter Fees and Payment Processing
Kickstarter applies a 5% fee to the funds collected for creators. Their payment partner Stripe charges 3 to 5% of payment processing fees. There’s an additional $0.20 fee for every pledge. In total, you have 8% of platform expenses.
So, say you’ve got $10,000 pledged.
You pay 5% of 10,000 = $500
3% +0.20 cents of processing fees = $300
Total = $800 of $10,000
Now, moving on to additional costs.
- Crowdfunding Taxes
Funds generated from crowdfunding are seen as taxable income. Depending on where you live and the different tax laws that apply, you’ll need to figure out the taxable amount for your goal. You may even be required to pay sales tax from the amount you receive. Be sure to bring in your accountant and figure out the amount you may need to pay. You can do this before you launch your campaign (based on your goal) just to get an early estimate.
- Campaign Design Fees
Crowdfunding campaigns require the set up of page design. The cost of that ranges from $500 – $5,000 depending on whether you’re hiring an individual freelancer or an agency.
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Additional costs may incur if you’re also planning to invest in social media advertisement, influencer marketing, PR, networking or conferences.
Your costs could shoot up significantly, so make sure that you have enough budget to spend on these activities and that the ROI is at least 2X times of what you’ve spent.
- Professional Photography
Photography is, of course, a necessity. Most people overlook photography assuming that they can take pictures with their phones, apply some filters and the job would be done.
If you truly want results though, you will need to have professional photography done, especially if you’re using crowdfunding to fund a product.
Photography could cost you anywhere from $300 – $3,000 again depending on who you hire for the services.
- Videography & Video editing
Videos are a fundamental part of your campaign. Whether it’s on your main campaign page, your social media or your website, you’ll need the help of videos to talk about your product.
You’ll need a videographer who will be professionally recording and editing your video. You could hire people locally or you could hire them online.
Video recording and editing costs run from $300 to $10,000 depending on the type, intensity, duration and type of service hired.
Running a crowdfunding campaign is expensive and could bleed you dry if you don’t carefully plan your expenses. You’ll need to factor in all these expenses and pledge them as part of your goal.
, it’s not just the Kickstarter fees that you have to look into. It’s also all the additional costs that you will face during the execution of your campaign.
Got any questions regarding Kickstarter fees and other costs? Call us or drop us an email!