Our Kickstarter for Home by Dark is over. The rewards have been shipped, books are in people's hands, and games are being played! It's been an exhausting last few months for more reasons than just the Kickstarter, but I think our first product release can be considered a success.
Thanks to every one of you that backed, pre-ordered, and purchased our game. It wouldn't be in your hands right now if it wasn't for that support.
Now that it's done, I thought that some of you might be interested in a postmortem on the Kickstarter and release. Maybe this info will help you plan your upcoming first crowdfunding project. I went in with as much planning as I could and the knowledge that there would eventually be unknowns I hadn't prepared for. I'm going to break this into 3 articles: preparation, the Kickstarter itself, and production. This one will focus on the first aspect: Preparation. Here are the things I knew, the things I thought I knew, and the things I just flat out didn't know.
Let me give you a little scope for this project. As those of you who have a copy of Home by Dark already know, this game came from a spike of inspiration and a desire to run a story game at PAX West. The game came into being at some point in early August. I had written the bulk of it by the beginning of September and the Kickstarter started in mid-October. This was, to say the least, a very quick process.
I began preparing the Kickstarter at the beginning of September after PAX West finished. I had been given a handful of advice from friends that had run successful Kickstarters before:
- A Kickstarter shouldn't go longer than 30 days. Anything longer and interest in your project will probably wane.
- A Kickstarter should start at either the middle or the end of the month. This is when most people will get paid. Middle is best, since that's when most people have expendable income. Rent eats up a lot of free income.
- Don't start a Kickstarter between November and January. That's when the holiday season eats everyone's cash. Don't do it.
- It is helpful to write up a spreadsheet with costs vs desired revenue to figure out how much you'll need to break even.
- Have no more than 5-7 pledge tiers.
- The cost of a pledge tier should be no more than 20-30% of the price. That makes calculating your breakeven price easier and you're more likely to be accurate.
- Always add a buffer to your estimates to handle unknown expenses.
- Create a video for the Kickstarter. Even if it isn't a fancy production, a video guarantees more interest in the product.
- Always buffer your completion date. Whatever you think your completion date will be, add at least another month. Maybe two.
- Your 25$-30$ tier will be your most popular. Assume most will back that tier.
- Post-Kickstarter preorders will add about 10% to your total earned during the Kickstarter. Pledge management services like BackerKit are great for getting those preorders.
- If you're going to use a pledge system, let them know before your Kickstarter is done. You usually will get a discount on the price of using them.
- Don't have an early bird tier (I broke that rule).
I'm sure there were more, but those were the ones that stuck in my head and rang true at the end. Some were even more conservative suggestions than I realized.
I spent about 4 weeks preparing the Kickstarter. I meticulously pored over my math. I had it all perfectly prepared. Well, as perfectly as I *thought*.
Costs and Goals
Here's how I calculated my goal:
First, I determined what I needed from this Kickstarter. My intent wasn't to make a profit with this Kickstarter. I just wanted to break even. The book was written and I was sure I could do the layout myself. I needed art. I wanted illustrations that would match the feel of the book. I also wanted to get some diagram art for the book as well. After I did some art planning and spoke to our awesome art contributors, Maxx and Dani, I ended up with my initial number: $1375.
That will only work if everything works perfectly though.
So I added a 20% buffer:
$1400 (already rounding up to pad the buffer) x 1.2 = $1680
It looks like I'm shooting for about $1700 of profit from the Kickstarter.
Now let's add item cost to this. I assumed about 1/3 of my revenue will be spent on creating the tier rewards. For those that aren't mathematically inclined, you can always add 1/3 to a number by multiplying it by 1.5 (it may seem crazy, but trust me... it adds up):
$1680 x 1.5 = $2520
We now have the total needed to be raised, but don't forget that Kickstarter needs to make money somehow. As such, I tacked on another 10% for Kickstarter to take. This is a little more than needed, but I want to make sure I can fulfill this first Kickstarter. That is the *most* important thing.
$2520 x 1.1 = $2772
After a little rounding, you have the final cost calculation: $2750
Now that I've figured out my goal, I also have an important piece of information already figured out: My average assumed cost percentage per tier is 33%. Anything under that is good. Anything over that should have a good reason to do so.
One thing I neglected to add in that I should have: shipping. You'll notice that, when pledging, shipping is added on top of the price of the tier. Why would you then need to add more to the goal? That extra shipping cost is added to your pledge towards the goal. Here's a really simple example: Let's say you have a goal of $50 and you planned to use all of that money to complete your project. If only one person pledged in the campaign and it was at the $40 tier and it cost $10 shipping, then you've now reached your $50 goal and successfully funded! Unfortunately, you now only have $40 when you needed $50 for your goal. No bueno. I'll definitely add about 10%-20% for shipping. Thankfully, we almost doubled our goal so this wasn't too much of a concern.
If you want the direct math, you could have just multiplied what you needed by 1.98. I did find that I missed a cost in shipping, which came out of that buffer. I think next time, I may use 2.05 or 2.1 as my multiplier.
Here's how I calculated my costs:
Each item had 2 costs associated with it: the internal cost and the source shipping. The internal cost was how much it cost the company to create the product. The source shipping was how much it cost to get it to the distributor (this was my first math miscalculation, I'll go into that later). I also took note of how much each item would weigh. This was needed later when I determined shipping costs.
Here are the costs of a few of the items from the Kickstarter:
|Internal Cost||Source Shipping|
|$0.00 (Digitally created)||$0.00 (Digitally shipped)|
|Book||$4.40* (this turned out to be wrong)||$0.00 (shipped directly, so it costs me nothing)|
|Autographed Book||$4.40* (wrong also)||$7.50* (wrong again)|
|* - I'll go into how these were wrong in a future post.|
Now we have some items, but how did I figure out the cost of a tier? Each tier had a handful of things that needed to be calculated:
- Total Weight: How much does all of the stuff in that tier weigh? You'll need to know this to determine shipping costs.
- Total Shipping: This is a total of all the Source Shipping costs for a tier. This doesn't count shipping to the customer.
- Internal Cost: This is a total of all of the Internal Costs for a tier. This is the cost to make everything you need for the tier.
- Fulfillment Cost: We decided to use Fulfillrite for shipping things we couldn't directly send to the backers. Each shipment has a base cost, which is the fee they charge to pack the box, including the box itself. This isn't the shipping fee, it's just to get it ready to ship.
- Total Cost: This is the combined total of Total Shipping + Internal Cost + Fulfillment Cost. This is the grand total a pledge costs to create.
- Pledge: This is how much the pledge will be set to for the tier.
- Cost Percentage: This is the Total Cost divided by the Pledge. This should ideally be less than 30%, but realistically you'll have a few that creep towards 50%.
- Approximate Revenue: This is how much you expect to earn per pledge for the tier. My formula for this was (Pledge x 0.9) - Total Cost. Since Kickstarter takes approximately 10%, we get to keep 90% of the pledge, which is where the 0.9 comes from.
Here's the thing: if your most popular tier is below the 30% mark, it means you can allow some of your more extravagant tiers to be above the 30% mark. My $30 tier (which was what I expected to be my most popular tier) had a cost percentage of just under 15%, which allowed some of the higher tiers to cost 44%. My highest cost tier, Scrap and Art, cost me 57.74% of the pledge. I kept it because it felt like a great bundle for the game. I was able to do so because my most popular tier was so low and would make up for that cost.
But What Does It Mean?
After all of that cost breakdown, it really comes down to 2 rules of thumb:
- Your goal should be twice the amount you actually need for your project.
- Your tiers should, on average, only cost 30% or less than the tier pricing on Kickstarter.
These aren't universal to every Kickstarter project, but it should keep you comfortable in terms of what you're looking for in your goal. You can prove it with the math above!
Based on the suggestions I received, I knew I had to do a video. There was a problem: content. Specifically, VISUAL content. Where would I get it from? The whole point of this Kickstarter was to get money for art.
I decided to create a tone reel. It'd have stock images to convey the feeling of the game and draw in interest. I tried to find images that evoked the sense of mystery, danger, and adventure that captured the feel of Home by Dark.
I spent about a week hunting for free stock images (NOTE: Not all stock images are free. Make sure you have the rights to use them.) and free music clips, along with writing up a simple script. I had a goal to make the video about two minutes long or a little less. Any longer and people will lose interest and skip onto the next Kickstarter. Any less and it'll imply a lack of effort.
The next thing to figure out were stretch goals. Since this was my first Kickstarter and no one really knew me or Protagonist Industries, I wanted to make sure the goals helped grow awareness of the game AND the company. From that, I decided to create two types of goals: classic Stretch Goals and Social Goals.
I decided to create social goals that will help get awareness of the company out there. The best way I could think of were to tie the goals to social media. I didn't want to make them too complex, so I stuck to criteria based on the numbers of following people: Followers on Twitter, Likes on Facebook, and Backers on Kickstarter. There was another goal based on percentage funded. In hindsight, it was sort of redundant to the number of backers.
I also added a few more creative goals based on creating artwork and playsets. Unfortunately, I was overly ambitious on those two ideas. Neither one had a nibble, but I don't think people were fully aware of what the game would be like. It's hard to create fan art based on an idea that you haven't experienced yet.
Stretch goals were based on a simple number initially. We'd add a new goal every time we got a multiple of our goal. The first goal was twice our goal, the next one would have been three times of our goal, etc.
Stretch and Social Rewards
These goals are primarily to motivate new people to back the game and to incentivize your backers to recruit more backers. It's also a great way to accidentally create a successful Kickstarter that fails. Let's use this Kickstarter as an example:
We're assuming that $1400 is earned if we achieve our goal of $2750. The other $1350 is the cost of the Kickstarter (paying Kickstarter, the reward items, and shipping). That means if we earn another $2750, we're only getting $1400. Congratulations! That's your profit!
If you unlock a stretch goal at that point (which would be $5500), then you only have $1400 available for that goal for EVERYONE that's backed it. If you add a new $10 thing for every backer as a stretch goal and you have 200 backers at that point, you've now spent $2000 (plus shipping!) for that new stretch goal. You've now gone from a successful Kickstarter to a successful Kickstarter that you owe $600 (plus shipping!) to fulfill. Woof.
It gets worse. If you now have a stretch goal for the third multiplier ($8250) that costs $10 and is met by 100 backers, here's your new math:
Total profit: $4200
First stretch goal cost: 300 backers x $10 = $3000 (plus shipping!)
Second stretch goal cost: 300 backers x $10 = $3000 (plus shipping!)
You're now at a cost of $6000, which means you're $1800 in the hole. It just keeps getting worse!
When figuring out stretch goals, look at how much a stretch goal costs to make and ship. Then determine how many people will get that reward if the goal is met.
I wanted to make sure I broke even at the very least, so the first tier on both my social and stretch goals were cheap. This would help pad my goals to make sure I could meet them.
The first stretch goal was to create a playset per month for a year. This has two benefits: more content for the game (that helps make it more valuable) and it only costs my time. There is a cost associated with my time, but it's one I would pay anyway if I made more content.
The first social goal was to give every backer that backed at the PDF reward tier or higher a copy of the game's rough draft. It's already written, so it costs me little to offer it. However, it has value to the backers since they can start playing immediately.
The second goal for both social and stretch goals had a cost associated, but this approach allowed me to ensure I had a buffer to afford some stretch goals down the road if we had gotten to them.
In short, always remember that you have to pay for the pledge AND stretch goals for each backer. Always keep that in mind.
Analytics Are Your Friend
One small, but very important aspect in your preparation is that of your analytics. For those of you who haven't dealt with analytics before, they are used to find meaningful patterns in data. In this case, it's to discover patterns of people showing interest in your Kickstarter project.
When setting up your Kickstarter, you'll notice this on the project setup page:
This refers to Google Analytics, which is a free analytics site. Inside of Google Analytics, you'll need to create an Account (we named ours "Kickstarter") and a Property inside of that account (we named ours "Home by Dark Kickstarter"). Once that's complete, the property will have a Tracking ID that'll follow this pattern: "UA-XXXXXXXX-X". Enter that tracking ID into your Kickstarter account.
Once you've entered that ID and saved, you can now start tracking information about who has reached your Kickstarter page! You'll get information like "what pages do people visit," "when do they visit," "where do they visit from," and much more.
Not All URLs are Created Equal
Now that you have your analytics set up, you can now set up campaign URLs. If you're using Google Analytics, I recommend using Google's Campaign URL Builder. In order to create a very simple campaign, add the URL that you're tracking and a source of the campaign but you can add more, such as a campaign name and campaign medium.
Every time you create a new approach to marketing your Kickstarter, create a separate campaign URL. Everytime someone clicks on that URL, it'll be tracked as part of that campaign in analytics. It's a good idea to save them in a spreadsheet or similar to file in order to refer to them later. Here's a list of the launch campaigns we did for Home by Dark:
You'll notice that we announced on our newsletter, blog, Twitter, and Facebook. Which one was the most impactful? Well, according to our analytics...
Twitter. Without a doubt. Numbers don't lie. Out of 160 clicks from Twitter, Home by Dark's Kickstarter got $700. Meanwhile, it only earned $111 from Facebook. That instantly showed me that Twitter is much more responsive to my game than Facebook. That information guided a lot of my future efforts during the Kickstarter month and beyond! Analytics are so useful!
Notice that my newsletter didn't net a single backer during the Kickstarter. That was also useful information.
Oh, and you'll notice that I also make a Work source. What's that? Those were my co-workers at my day job. I sent an email out at work letting them know about my Kickstarter. What this also taught me was that my friends at work are incredibly supportive!
And with all of that preparation, it was time to launch the Kickstarter! I'll go over what was involved with that in a future post!
If you have any questions about the process, leave a comment below! I'll do my best to answer them and add any missing details to this post. If you wish to add any tips from your own Kickstarters, leave them below as well! I'd love to hear them and I'm sure others would love them as well!
I hope this was helpful to all of you future Kickstarters!
Until the next post, keep gaming!