How To Choose Good Options For Your Crowdfunding Campaign
Crowdfunding is increasingly becoming the “go to” method for funding start-up products and services or even improving existing ones, especially in the world of 3D Printing. If you aren’t familiar with Crowdfunding, it is simply a method of raising money for a product or service by allowing anyone to contribute in exchange for some sort of preferential treatment if and when the funding goal is met. Some campaigns keep the funds even if the goal is not met and in turn still deliver the rewards, albeit it usually takes a longer time for you to receive those rewards, while other campaigns will return your money if they don’t reach their funding goal. Most campaigns even have a “feel good” option that allows you to support the campaign with a small amount even though you may not receive a reward in return outside of feeling good about it; some even go further by offering to put your name on their website to show that you supported the campaign. If you have a 3D Printing business this is good way to gain exposure for a nominal cost as these options usually cost between $1 and $10 US dollars. Even though by choosing to participate in Crowdfunding you may have to wait up to a few months for the manufacturer/provider to deliver, the benefits are usually worth the wait.
Benefits Of Crowdfunding
Benefits To The Backer (Participant)
- Save Money: Moderate to heavy discount off of the price the product (usually a 3D Printer) or service will be after the campaign has ended.
- Free Stuff: Free gifts with the backing of certain options/tiers of the campaign.
- Special Payment Options: Some campaigns allow you to pay a fraction of the cost of the option chosen in exchange for a price freeze on the product/service as it is listed on the campaign page which would allow you to make your purchase for the discounted price even after the campaign ends. (The money paid for the freeze normally also contributes to the final cost of that option resulting in less to pay later!).
- Exclusive Access and Benefits: Many campaigns give an option to meet the Maker/manufacturer and/or for them to make a special appearance/presentation at your business, nonprofit, school, etc.
- Instant Feedback: Participant can easily see what other people think of the campaign as well as the answers to questions posed about the campaign. Even though the manufacturer/provider usually has their own website, it is quite common for their to be more dialogue and activity on the Crowdfunding page then on their own website.
Benefits To The Host (Business or Service Seeking Funding)
- Raise Money Quickly and Easily: Probably the main reason why Crowdfunding is becoming so popular; The ability to gather funding relatively quickly from many people (depending on the popularity of the campaign of course) eliminating the need and complexity of traditionally submitting proposals to multiple venture capitalists and financial institutions.
- Instant Feedback: Ability to gather feedback about your product or service and being able to make immediate adjustments while it’s being funded rather than gathering funding first, spending that funding for Research and Development, equipment, and other things, and then having to re-budget or make eliminations due to the feedback received after your product or service has launched.
- Flexibility: Ability to keep funds gathered even if your full goal is not met and still gain ground on launching your product or service or option to not contractually obligate yourself to a successful product/service within the allotted time by offering a refund to those who desire it. Here is a big area where traditional funding and Crowdfunding really differ. This doesn’t normally apply when gathering funding from a financial institution outside of possible penalties for late payment on loan installments, but usually when gathering funding from a venture capitalist, you may be under stiff penalties under the contract agreed to if your product/service fails to meet deadline or fails entirely. This can still hold true even if your return all the money borrowed as venture capitalist are interested in a monetary gain on the money lent, not a return of the principal that was given to you.
- Marketing: Your Crowdfunding campaign also instantly doubles as a marketing campaign as the platform/website you use for your campaign will occassionally feature your campaign on their home page or in their newsletters. The larger marketing benefit though is that those who come across your campaign may give you a boost from the power of social media by sharing your campaign on sites like Facebook, Good Plus, LinkedIn, and/or services like Twitter, which is rapidly becoming a favorite method of marketing among both small and large businesses. Also, it is common that many of the people who share your campaign aren’t even Backers of your campaign, so even though they may not have the funds, need, or interest to support by Backing, they help you gain exposure to people who may.
Options Used By Highly Successful Campaigns
Offer an option to donate to the campaign even though the Backer won’t receive anything tangible in return; usually referred to as a feel good option as the person feels good that they supported you. Popular amounts are between $2 and $5. $1 is the usual default minimum backing amount set by the platform and we recommend you leave that option and use the $2 to $5 as a thank you from yourself to the Backer, their name on your site as a Backer, and similar options
Offer branded merchandise such as T-Shirts and hats (doubles as a good marketing tool), mugs, key chains, and so on
- Offering a Price Freeze option has proven very successful as the current world economy prevents many interested individuals and business from possibly backing the full amount of a given option all at once but they are able to complete their purchase at a later time at the discounted Crowdfunded price for a certain amount of time after the campaign ends. Effective options seem to be anywhere from 3 months to a year after the campaign ends, or delivery begins, for the Backer to be able to still get your product or service at the discounted price. We strongly do no recommend charging for this option but to have the amount paid for the freeze contribute to the final price of the product/service as no one wants to feel like their paying a fee to save money later.
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