Kickstarter: Expectations, Best Practices, Risks

edited March 2012 in Directed Promotion
So, Kickstarter gets used a lot for us indie RPG folks. I'm really excited by it generally, and anxious about it with regards to some of the particulars. And today I analyzed all those particulars, and codified some best practices for both creators and consumers in the Kickstarter/IndieGoGo/etc world.

That article is Kickstarter: Managing Expectations and Goals.

It comes hot on the heels of Daniel Solis' blog post The Freelance Market Around Kickstarter Campaigns, also super relevant.

Feel free to link to additional articles/posts, discuss those ones, talk about Kickstarter experiences, toss out your own best practices & potential pitfalls, or post jpegs of winged cats. Whatever you'd like.
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Comments

  • Joe. Thank you. That's fantastic and a gift that I greatly appreciate.

    Although Kickstarter is not presently relevant to me personally, I love creative people making their dreams come true and I know quite a few people who could benefit from this real world knowledge. ::sends out emails with link to Joe's blog::

    At Metatopia last year, the folks at Kickstarter gave this presentation:
    http://www.slideshare.net/Cindy_Kickstarter/kickstarter-presentation-at-metatopia

    Here are Fred's bulletpoints from that presentation:
    http://www.deadlyfredly.com/2011/11/kickstarter-bulletpoints/

    Rock,
    John
  • At some point I hope kickstarter (and other similar programs) give RPGs their own section. Good articles.
  • People investigating Kickstarter may also be interested in Kicking it Forward

    An effort encouraging project starters to pledge 5% of their eventual profits from their project towards funding other peoples Kickstarter projects.
  • Posted By: ValamirPeople investigating Kickstarter may also be interested inKicking it Forward
    That's super cool.
  • In case you don't read all the way through Joe's post, he links to this thing that I wanted to highlight - what (can) happen when you raise too much money.

    In any kind of fundraising/investment, there's two pitfalls (vis a vis the funds part, at least) - not enough money, and too much money. Kickstarter (and not, I will add, IndieGoGo necessarily) elegantly solves the problem of not enough money. But part of planning your campaign should include a framework for what to do with too much money. Joe talks about this in his post, too.

    Really, you should read Joe's post, is what I'm saying.
  • edited March 2012
    The locksmith story is a good one. But it also highlights for me how important it is for backers to understand what being a backer means. (these thoughts are edited up from some conversations I've had about this project that I thought might be relevant to a Kickstarter resources thread)
    Kickstarter is not a store. Its not ebay. Its not Amazon. Its a place where average people can participate in the patronage model of artistic creation that has produced most of the world's art throughout history, but that was previously limited to the rich. If you're going to back a kickstarter project don't treat it like just another online site to buy stuff. Its a whole different model, its a whole different experience, it SHOULD be a whole different set of expectations.

    Think of all the straight up purchases you've ever made in your life. How many of those had issues: double billed credit cards, items that were broken or the wrong size when they arrived, shipping that was delayed or lost entirely, whatever. Those issues happen even on a transaction as simple and straight forward as buying something...transactions that happen millions of times a day and thus have been perfected as much as humanly practical and they STILL have issues. Now realize that a kickstarter project is going to be ALOT messier, a lot less straight forward than that. Many people will be doing this for the first (or second or third time) and will learning as they go. Expect a much higher frequency of bumps in the road...or don't be a backer.

    Granted the poor guy in this project blundered pretty badly but, from some of the comments of the outraged and entitled you'd think he was Barry Madoff ripping people off billions.

    Now if this case turns out to be actual fraud, that's another story. But right now it reads to me more like an overly ambitious project, being unprepared for overshooting his goal by a large margin, lack of communication, and some rookie mistakes in setting up for production. All of which are excellent lessons for future project Kickstarters...but ALSO for future Kickstarter backers.

    While there are quite a few actual professionals taking advantage of access to crowd funding, in it's most raw form...Kickstarter is about passionate artists getting up the courage to try something they've never tried before and never imagined might actually be possible. I think backers ought to go into backing any project with the mindset that some will fly and some will fall and that's part of the journey of being a patron. You're not signing up just to get cool rewards. You're also joining together to support the journey of an artist in pursuit of their dream.

    Hopefully resources like this thread (and various books that have come out) will help reduce the incidence of such disasters. But I think there are also valuable lessons to be learned for backers...and I don't mean of the Caveat Emptor kind...I mean of the embrace the chaos and see the experience of helping someone struggle with their dream as the core reason you're a backer in the first place.


    I worry that with the discovery of Kickstarter by professionals (like the $1mm+ programming projects) that are attracting a new wave of Kickstarter support, that backers will start having inflated standards and forget that the origin of internet crowd sourcing (which distinguishes it from Renaissance flavored patronage) is to provide patronage for the amateurs who very well may not be as polished in their execution. I wonder what steps Kickstarter is taking to help with that.
  • edited March 2012
    Ralph,

    While your thoughts are good thoughts, I do believe that it's okay to treat Kickstarter like just another purchase, with a few caveats (there's risk, there's a waiting period, there are explicit product tiers).

    For example, I bought some chapbooks from the Trench Mouth Medicine Show. They were selling poetry merch in order to raise money for a trip. I didn't care about their trip at all. I just cared about the loot. I paid them money (accepting risk and delay), and they sent me awesome merch. It was very much a simple, straight-up purchase. Their write-up included the line "don't think of this as a "donation" or a "loan" -- think of it as a way to buy books or get some custom writing/artwork."

    Similarly, I backed Modest Medusa after it'd been fully funded. I wanted the book, so I paid $22 for the book. It was very much a simple, straight-up purchase. However, along the way, I had to accept risk and delay. It ended up being several months late, which was all "part of what I signed on for."

    I think it's fine to treat a Kickstarter like "just a regular purchase" IF: you also accept that there is risk and delay involved, the creator is in turn treating it like "just a regular sale," you have flexible expectations, you don't back a project in order to get a birthday present for someone*.

    (*Seriously don't do this. It's a bad idea. There are so many variations, and so often there are delays. The gift might well come months too late, or different than expected.)
    .I mean of the embrace the chaos and see the experience of helping someone struggle with their dream as the core reason you're a backer in the first place.
    This is good advice. I don't think its irreconcilable with what I just said about treating a project like a simple sale... but I do think that responsible backing involves figuring out how those two ideas work together.
  • edited March 2012
    I don't think they would have gotten away with that on Kickstarter. Funding life style is specifically against Kickstarter Guidelines.

    Also...as soon as they referred to it as "buying a book" I believe they were technically obligated to collect any relevant sales tax, are they set up to do that?

    Kickstarter is very clear that you are not buying a product, you are getting a reward for a donation. You are also not engaging in micro venture capital (cause its against the law in America to publicly solicit private investment in non registered companies).

    Indie gogo may be different, but I suspect they're going to wind up getting themselves in trouble if they're allowing projects to refer to buying product and not fulfilling all of their retail obligations.


    But yes, I agree that you can from time to time simply engage in a simple transaction approach...as long as you understand you're not dealing with Zappos or Overstock.com and tailor your expectations accordingly. They are the expectations of engaging with a patronage model, not a retail model, even if you're choosing not to enjoy the "journey" aspects of that particular project at that time.
  • Posted By: ValamirKickstarter is very clear that you are not buying a product, you are getting a reward for a donation.
    Does that really fly with the tax man? Seems paper-thin to me, a true fig-leaf argument if there's any. Sales are sales, even if you're having people communicate what they're buying by how much money they'll pay to you. Most of these Kickstarter projects would be hard-pressed to demonstrate that they did not lead people to expect reimbursement in the form of goods that were being offered. I'd be interested if anybody thinks that they have an informed opinion on this.

    I mean, I haven't studied this scene that much, so I don't know - do the use terms of e.g. Kickstarter specifically try to disallow a commercial relationship between the people who sell and the people who buy there? Should be interesting if somebody took that at face value and argued that they are not, in fact, obligated to provide anybody with the goods and services they paid for via Kickstarter because those monies were not in payment, but just voluntary donations. Were I one of the customers, I'd stand on my rights in the matter - these merchants clearly communicate to me that they will be providing me with services and goods in proportion to my payment. It's the merchant who's dodging sales taxes if they choose to one-sidedly interpret the relationship as a weird mutual donation instead of e.g. book preorder.

    I didn't read Joe's article on the topic yet, so if he answers this question there, all the better. And of course, the above doubts obviously concern only the types of crowdfunded projects that are clearly commercial in the way we usually understand the term. There are many Kickstarter projects where one could, indeed, feasibly argue that they do not involve the sale of goods or services. Any project where the fruits are released for free in digital format, for example, although you could again offer "donation incentives" (goods and services, that is) even if the main product is going to be a free and public good.
  • Posted By: Eero Tuovinen
    I mean, I haven't studied this scene that much, so I don't know - do the use terms of e.g. Kickstarter specifically try to disallow a commercial relationship between the people who sell and the people who buy there?
    The language of both Kickstarter and IndieGoGo both carefully avoid talk of "buying" and "products" and "sales."

    Similarly, lots of of conventions are structured as "nonprofit organizations" where people buy "membership shares" for an annual event, as a method of tax evasion. It seems to work for those conventions, some of which have been doing that for over a decade.
    Posted By: Eero TuovinenI didn't read Joe's article on the topic yet, so if he answers this question there, all the better.
    Nope! Talk of taxes and legal definitions isn't within my sphere of expertise or interest.
  • edited March 2012
    Posted By: ValamirI worry that with the discovery of Kickstarter by professionals (like the $1mm+ programming projects) that are attracting a new wave of Kickstarter support, that backers will start having inflated standards and forget that the origin of internet crowd sourcing (which distinguishes it from Renaissance flavored patronage) is to provide patronage for the amateurs who very well may not be as polished in their execution. I wonder what steps Kickstarter is taking to help with that.
    Well, the origin of Internet crowd funding is Bruce Schneier's Street Performer Protocol paper, which calls for the work to be finished before it's put up for ransom. This was the model used (via Fundable) for the first guys to use crowd funding for RPGs. (Thanks to Greg Stolze for pioneering!) Our standards have deflated somewhat since the early days.

    I think it's perfectly reasonable to talk about the desired standards but let's not diverge into appeals to tradition.
  • Kickstarters TOS is pretty clear about Kickstarter not touching money at any point (Amazon Payments is on the hook for that), and not being responsible for any beef a backer has with a project creator (or vice versa). I imagine that any tax issues would come down to how individual creators handle their taxes. I treat my income from Kickstarter the same as that from IPR, OneBookShelf, etc, for example.

    But, yah, I think we would have to wait for someone to actually take KS to court to find out the law "really" applies.

    Ralph, that's a great point about the "pros", as it were, starting to use crowdfunding. I do like that KS has a separate "small projects" section, which is nice. I think on the one hand, seeing really slick videos and such can motivate a creator to up their game for their own pitch. Also, folks who are already embedded in a network don't necessarily need to sell so hard, big and small (like, i wonder how many people funded Wasteland 2 without reading anything on the page?)

    That said, I love finding weird, unpolished projects that I would have never thought of. So I guess having robust tools to explore whats available at given time will always be necessary.
  • FWIW, in my case I'd never heard of DoubleFine or Wasteland, but all it took was hearing Tim Schafer and Black Isle get name-dropped, and I was IN.
  • Posted By: BryantWell, the origin of Internet crowd funding is Bruce Schneier's Street Performer Protocol paper, which calls for the work to be finished before it's put up for ransom. This was the model used (via Fundable) for the first guys to use crowd funding for RPGs. (Thanks to Greg Stolze for pioneering!) Our standards have deflated somewhat since the early days.

    I think it's perfectly reasonable to talk about the desired standards but let's not diverge into appeals to tradition.
    Speaking as someone who has backed a smattering of projects, I don't feel like it's important that a project be finished before I pay someone money. Having work-in-progress Kickstarters doesn't feel like a "deflated standard" to me.

    What I do want to see, though, is a timeline for completion, and a creator who's willing to engage the audience with updates and discussion until that project is complete. The more unfinished a project is at the point of funding, the more engagement I want to see.

    DoubleFine's model here is pretty cool - they didn't want to commit months of studio development time to the project before they knew if it was financially viable to do so, but they recognized that a full game dev would take many months. Their solution was to include a development forum and a documentary series in the project, so that people were also paying for the opportunity to go into the belly of the beast.
  • edited March 2012
    I cannot speak for the US but in Germany, the relevant question for taxation is whether you operate a business, in particular, whether you intend to make a profit on what you do, or not. If you do, it doesn't matter whether the income you receive is a direct purchase price for goods or services, or something else. It is taxabel income, period.

    Edit: Funny enough, it never would have occurred to me that people could mistake a kickstarter campaign for some sort of altruistic, non-profit endeavour. Maybe that's cause I sold my soul to the devil when I signed up for law school? Well, yeah, you donate, the creator must make sure that you get your perk. Otherwise, he gets to do with the money as he pleases. D'uh.
  • I feel weird that Kickstarter is often used and encouraged here to be used with a ransom model: the project is essentially done and you use KS as a pre-order system, to get cash to print books, or something similar.

    Maybe it's just the name, but it seems like Kickstarter could best be used earlier in project development, a la the video games mentioned. You have an idea, but you can't commit to doing it because of the time and money involved. KS could allow to follow though and actually create it.
  • I haven't done crowdfunding, but I have done grant funding. It's not very fun to be long-term responsible for delivering on a project that you're not interested in anymore. Considering how nine projects in ten end up shelved when you're following your inspiration, an advance-funded project will more often than not turn into actual work and toil.

    Because of the above dynamic it makes perfect sense to me to look for your funding after the work has already been done. This way you know that it's a project you wanted to do, while going the other way around you might end up financially committed to a project that ends up a dud, creatively speaking.

    The other option would be to look for open funding, but I don't know how many Kickstarter funders would be interested if I asked them to pay for me to fuzz around and work on my creative writing for X months, with no promises on results. I guess the open-fund public artist could still promise to produce "at least one book", or whatever their medium is, without having to settle on the topic in advance. Still, pretty shady.

    Of course, doing your project first runs the risk of ending up with something nobody wants to buy. At least with funding in advance you know that you're getting paid on the work.
  • Posted By: Eero TuovinenIt's not very fun to be long-term responsible for delivering on a project that you're not interested in anymore. Considering how nine projects in ten end up shelved when you're following your inspiration, an advance-funded project will more often than not turn into actual work and toil.
    Quoted for truth SO HARD.
  • By the way, is "Playing Sorcerer" out yet? ;-)
  • Posted By: timonkeyI feel weird that Kickstarter is often used and encouraged here to be used with a ransom model: the project is essentially done and you use KS as a pre-order system, to get cash to print books, or something similar.
    Personally, I'm not very good at gauging interest. I thought, "Perfect Unrevised has been in development for four years, and has been played by hundreds of people. I could probably sell through a small traditional print run (1000 copies)." I launched a Kickstarter to raise money and demand for that 1000-copy print run, and fell quite a bit short of the mark. To date, I've only sold about 150 physical copies of the game.

    I thought, "Monsterhearts is a pretty attractive game, and is building on Apocalypse World's buzz. I should probably order at least two hundred copies initially, maybe even 300." I sold over 400 physical copies during IndieGoGo pre-orders alone. Given those numbers, it was way cheaper to do a traditional print run of 1000 copies than to rely on POD printers.

    I'm not good at gauging interest. Kickstarter/IndieGoGo allow me to do that. I use those platforms at the "ransom" stage, but not for their ransom capability - rather, in order to save myself from having a garage full of games that won't sell.
  • Posted By: Frank TBy the way, is "Playing Sorcerer" out yet? ;-)
    Since it got back-of-the-bus'd for The Booth At The End, I can live with the delay. :-)
  • Posted By: McdaldnoI'm not good at gauging interest. Kickstarter/IndieGoGo allow me to do that. I use those platforms at the "ransom" stage, but not for their ransom capability - rather, in order to save myself from having a garage full of games that won't sell.
    This, to me, seems like the main purpose of Kickstarter. It is a risk-transfer machine.
  • Posted By: Wordman
    This, to me, seems like the main purpose of Kickstarter. It is a risk-transfer machine.

    Totally apt, if cynically worded. I think it both reduces and transfers risk (which is why I wrote an article on best practices for reducing risk and managing expectations).

    Wordman, I'd be really excited to hear you talk about your experiencing with gaming grants, especially as the practice relates to and differs from something like Kickstarter.
  • I just finished up my Kickstarter for School Daze, and I took some time yesterday to write up how the experience went for me. In short, it was really good, and taught me some important lessons about goodwill, and project management. I definitely plan on using Kickstarter again.
  • edited March 2012
    Posted By: McdaldnoWordman, I'd be really excited to hear you talk about your experiencing with gaming grants, especially as the practice relates to and differs from something like Kickstarter.
    I'm not sure I have anything to say on the subject that warrants tons of excitement.

    I didn't do any grants in 2011, largely because it seemed like the money was better spent using Kickstarter. Why pick favorites? Why agonize over various pitches when you can just help them all? And, from the designer's point of view, what's the point in having a sole patron when you can have hundreds with less risk? In terms of effort, one grant vs. donating to 100+ kickstarters, it's about the same. Basically, compared to a grant, spending $1000 on Kickstarter is better for me, better for designers, everyone wins.

    I recently analyzed my Kickstarter contributions up through 2011. I certainly spent quite a bit more than I would have on grants. On the other hand, it got me involved in two orders of magnitude more products. (As an aside, I have yet to watch any Kickstarter pitch videos.)

    I dunno. Does that answer your question. Any thing in particular you want to know?
  • I'm really glad this thread is happening.

  • Posted By: Wordman
    I dunno. Does that answer your question. Any thing in particular you want to know?
    As someone who's done extensive project backing (and has a history of dealing in larger game grants), what standards do you hope to see around (A) communication, (B) project outlines, (C) creator credentials, (D) backer involvement, (E) timeliness?
  • Oh, also, a note about Schuyler Towne, the lockpick guy.

    I've met him. He's charming and very smart. He's passionate about what he does and what you do.

    He's also an anarchocapitalist with no business sense.

    When you talk about risk on Kickstarter, that's the kind of risk you run. That's why it's not Amazon or Ebay. He's an amazing person with a philosophy that doesn't match reality. So far, it means his project has run a year over his schedule. He might yet pull through. But I also note that he's moved to Massachusetts from New Hampshire, right into Cambridge, where he can distribute his needs through state infrastructure. So really, you're funding the guy's philosophical shift and getting an artifact of the process.

    Me, I wish I'd been able to back his project so I could have that artifact.

  • Since we've talked about a project with alot of bad choices,

    Here's an example of one that I think had alot of good choices.

    Gunship

    I love the transparency of process. I love how he used his updates as a production journal throwing out possibilities for stretch goals, evaluating responses, and then not being afraid to say...hmmm...that one's not going to work, tabling that, trying something else. Probably the most enjoyable to follow project I've backed. I don't even know that I'll love the game when I get it...but I know I loved being a backer of the project.
  • Posted By: McdaldnoAs someone who's done extensive project backing (and has a history of dealing in larger game grants), what standards do you hope to see around (A) communication, (B) project outlines, (C) creator credentials, (D) backer involvement, (E) timeliness?
    My standards are pretty low :-). My investment in any given project tends to be low (usually, I back at the "electronic-only" level for most projects, as I don't have enough bookshelf space as it is), so there is a bit of a "junk bond" feel to the whole endeavor. That is, when investing in junk bonds, the idea is that you shotgun money into a bunch of them, knowing that most will disappoint, but the payoff when one strikes it rich still makes it profitable in aggregate. Naturally, this isn't what actually happens with kickstarters, but I kind of approach it that way anyway.

    Essentially, I start from the standpoint of viewing the money as being disposable, which removes a lot of the stress and worry (or even contemplation) about many of the things you are asking about. (From a practical standpoint, pledging to a kickstarter involves huge piles of counterparty risk, so if you are investing money you can't live without losing, you are a fool.)

    Generally speaking, I would favor less communication than what I get now. I'm typically backing about a dozen projects at any given time. As a consequence, I tend to get three to six update e-mails each day. The vast majority of these updates are completely useless to me. Unfortunately, I have to read them, because the few that really do matter are crucial (e.g. "here is the link and password to download the finished product").

    I don't care about project outlines at all.

    Creator credentials only come into play in the following way: if I dig the creator's previous work, I'm more likely to back at a higher level.

    I maintained a strict "no interference" policy when doing the gaming grants. I see no reason to change that with Kickstarters. In the cases where a project reward offers the backer a chance to specify something in the project (e.g. "a major NPC will be named after you"), I can't remember a case where I actually followed up and specified something for use. Basically, I look at the thing as "I'm giving you money to produce your vision", not "I want someone else to produce my vision and will pay them to do so".

    My recent analysis illustrated to me that I don't care as much about timeliness as I thought I did. And I didn't think I cared that much about it to begin with. Only real rule here is "if party X hasn't delivered yet, don't invest in a new project by party X until they do". It'll get done eventually. Like I said, in most cases, I'm not investing much per project. The time and effort it would take to strictly monitor a project and get bent out of shape if it looks like they are stiffing the backers will cost me vastly more than the money I'd lose from the investment. (It's like: Google has a massive server farm. Inevitably, machines in this farm die. What does Google do when this happens? Nothing. Because the cost of vigilantly monitoring and repairing dying machines is greater than just buying a new server rack to replace machines assumed to be dead.)
  • Posted By: Joshua A.C. NewmanWhen you talk about risk on Kickstarter, that's the kind of risk you run. That's why it's not Amazon or Ebay..
    Well, technically, it IS Amazon, or more precisely, they get a cut of everything that happens there, since you're required to use their payment system. It's the only thing that really sucks hard about Kickstarter.

    Hey, that's a good question! What provisions should artists make for people who can't or won't give Amazon their credit cards? Is it even worth bothering?
  • One of my recently backed projects was talking about this - they suggested using amazon gift cards, which I think you can get from those big displays at the grocery store? This was for foreign countries where they couldn't use amazon payments but could get gift cards. Wait let me share the link they had to another project that had more discussion of the foreign thing, which is probably applicable.
  • Another good one for the reference library. File into "learning experience" or what Fred Hicks calls "Victim of their own Success"

    http://www.kickstarter.com/projects/starcommand/star-command-sci-fi-meets-gamedev-story-for-ios-an/posts/208395
  • I think the RPG community has really done a great job building up a base of information about how to run a Kickstarter. If you read the kinds of articles that you guys are posting, the pitfalls are clearly outlined, and I know that was a big help to me when Magpie Games was putting together The Play's The Thing. It was great to be able to stand on the shoulders of giants (Daniel Solis!).

    Having been through the process once, I really Mcdaldno that one of the primary purposes of KS should be to gauge the market interest for a product. We thought that TPTT was going to be a fun product, but it got a much bigger response than we ever expected. I poured a lot more time and energy into the game than I initially planned on because we gathered such a large community of support (relative to our expectations).

    I don't think this is just "risk-transfer." I think it's really market testing at a huge scale with minimum financial input. And for a small designer, it's a HUGE resource that I'm really thankful for. And while I know that Jonathan raises some good points about the difficulty of working when you've already been paid, I think that kind of pressure to ship (i.e. people already gave you money!) is hugely positive. I think the ideal situation occurs when:

    1) You know people want your game.
    2) You've build a community of people who want your game and are willing to pay for it.
    3) You've got the money you need to make the game well.
    4) That money puts pressure on you to finish the damn game and ship it already!

    And on that note, I'm going to get back to work on some of the free products we promised as part of the KS drive. :)
  • I'm curious for Kickstarters that are funding a print run of books, how many books do people print? Just enough to satisfy your backers (and maybe a few more), or do you take this as a sign of larger interest and get a bunch more? How many more, percentage wise?
  • Not having done it myself. But I'd say the safe answer is, after covering all other expenses (including the oft missed ones discussed above), however many uses up the rest of your Kickstarter funds (which better be at least enough to cover your backers or you messed up the math).

    Slightly more aggressive would be to add a bit more out of pocket if that would get you to a significant breakpoint in unit cost.
  • Posted By: timonkeyI'm curious for Kickstarters that are funding a print run of books, how many books do people print? Just enough to satisfy your backers (and maybe a few more), or do you take this as a sign of larger interest and get a bunch more? How many more, percentage wise?
    My IndieGoGo campaign sold 346 copies of Monsterhearts. That was enough to make a traditional print run (of 1000 books) more sensible than a POD or small-scale printer (which would let me print in tiny batches). So I bought 1000 copies. That means a third of my print run is sold in advance, which is a pretty cosy situation.

    Book costs are a relatively small part of the overall set of costs that goes into doing a Kickstarter book release (other costs might include: editing, art, layout, swag, shipping from manufacturers, packaging, shipping to customers, ~7% cut to Kickstarter and credit card processors, and more). For example, the cost of manufacturing each book I ship will be less than the cost of shipping it to the buyer.
  • I'm collecting Kickstarter Tips for RPGs in one place. It's a bit of reading, but I think it'll help avoid old mistakes, all the better to make new exciting mistakes.
  • Oh! Here's something that I don't see people mention often (though it's in that Star Command project update that Ralph linked too) - sometimes, the pledges don't go through. For Kickstarter at least, the dashboard tells you which pledges are still awaiting processing, but you don't have any control over the process, you just have to wait for Amazon to sort out the issues with those people. For my Kickstarters, everything has worked out within a week or so for the few pledges that had issues, but it sounds like if you're looking at tens of thousands of dollars, the percentage of "lost" money due to this could be notable.

    I've backed a project (documentary film) where the guy sent out multiple updates asking people to please check their Amazon settings, because enough hadn't processed yet that he wasn't able to start the project yet.

    I guess the only thing you can do is factor that into your overhead from the beginning - like "ok, 5% to Kickstarter/whatever platform, 5% in credit card fees, 5% for deadbeats/mistakes/etc". Something to be aware of, though.
  • Posted By: ndpI guess the only thing you can do is factor that into your overhead from the beginning - like "ok, 5% to Kickstarter/whatever platform, 5% in credit card fees, 5% for deadbeats/mistakes/etc". Something to be aware of, though.
    Yikes!

    IndieGoGo has a different thing going on. There are two payment structures: flexible funding and fixed funding. In flexible funding, you just get the payments the minute they're made. In fixed funding, once the target has been hit, your sum is immediately dispersed to you, and all further payments are sent to you the minute they're made.

    And Paypal doesn't charge a flat rate: it charges twenty-five cents on every transaction, plus a small percentage. What this means: If you raise a thousand dollars in $1 increments, you're only going to get about $700. If you raise a thousand dollars in $100 increments, you're going to get about $920.

    That was the lamest discovery of my IndieGoGo experience. I selected fixed funding, but I hit that initial target in ~28 hours. After that, every transaction got dinged that twenty-five-cent service charge. There is no option to have funds held and dispersed at the very end. Frownie.
  • edited April 2012
    Wait, are you saying that payments made to IndieGoGo before a project's initial target is reached are not subject to the standard PayPal deductions ($.25 + %) per payment? Aren't backers going through PayPal individually at every stage, including early on?
  • Posted By: David BergWait, are you saying that payments made to IndieGoGo before a project's initial target is reached arenotsubject to the standard PayPal deductions ($.25 + %) per payment? Aren't backers going through PayPal individually at every stage, including early on?
    Under their flexible funding model has each payment goes through individually. From what I understand, it's the fixed funding model that works differently.
  • edited April 2012
    Posted By: David BergWait, are you saying that payments made to IndieGoGo before a project's initial target is reached arenotsubject to the standard PayPal deductions ($.25 + %) per payment? Aren't backers going through PayPal individually at every stage, including early on?
    David,

    Here's what I saw on my end, as a project creator with a fixed funding project:

    My target was $2500. "Funds Yet To Be Dispersed" kept tallying up, until it exceeded $2500. I think it actually hit $2800 or so before the first payment got sent my way - lag time? Then IndieGoGo took their cut, and I got a big Paypal payment of around $2400-2700. The standard paypal deduction applied to that ($.25 + %) one payment. So as far as I could tell, on my end, there was a single $.25 taken out of that giant payment, plus their standard % cut. From that point on, each contribution was sent as its own Paypal payment, with the standard paypal deduction applied to every single contribution ($.25 + %).

    Now... it's possible that behind the IndieGoGo curtain, $.25 was taken out of all the "pre-success contributions" before any money was sent to my account. But I don't believe that was the case.
  • Wait, IndieGoGo changes how they pay in the middle of a campaign for fixed funding projects?

    (NOT GOOD)
  • I wouldn't call it not good, I think it's more misunderstood. Holding your funds and reducing transaction fees is actually a good thing.
    --
    TAZ
  • edited April 2012
    @Joe and Jim,

    The payment explanations on the IndieGoGo site explain it exactly as Joe has described. Once you meet your target, each additional pledge is processes by PayPal individually. They do not mention a flat fee, however. They only mention the percentages that PayPal and IndiGoGo take.

    According to their explanation, this is not the case if you use a credit card. If you accept payment through a credit card and a bank account instead of through PayPal, they send everything as one transaction within 5 days of the project's end, although there's a transfer fee of I think $25 for that.

    Edit: The Fees & Pricing page is here.
  • Joe, thanks for elaborating. I still don't understand how that's the case, but I guess this is my ignorance of their backer payment process.

    Johnstone, good to know!
  • @Johnstone

    Yeah but Paypal is the only option for fixed funding, direct card is only available for flexible~ Fixed vs. Flexible
  • edited July 2012
    so here's a kickstarter that I really wanted to see succeed but isn't going to. They're going to go at it again, but first put together a list of 20 things they did wrong and 10 things they did right. Worth a read (in case it isn't obvious the list is written in the style of "do these things if you want to screw up your kickstarter" so the actual advice is to NOT do those things.

    http://www.alphacolony.com/20_ways_to_screw_your_kickstarter/
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