Budgeting for crowdfunding
How to budget your first crowdfunding project in a way that contributes to the sustainability of your business, so you don't have to gamble your financial security by rolling the Kickstarter dice multiple times a year and hoping for continued hits:
- Figure out how much the book costs to make. Add 15%.
- Figure out how much a second print run costs. Add 15%.
- Figure out how much of the next year you want this project to fund for you personally and how much that costs. Add 15%.
- Add 15% to cover anything that might potentially go wrong.
- Don't worry about postage costs. You're going to charge people the actual price of postage, plus the price of your time (I recommend 15% of postage costs), when the project is read to ship. Not before. You are not going to collect this money through Kickstarter.
- Figure out platform fees for Kickstarter, Backerkit, whoever you're using. Figure out payment processing fees for each pledge level. Add 15%.
- Work out how much tax you're going to be liable for and add that to the budget.
- Add 15%.
If you're looking at this number and thinking, "I don't have the audience to pull this off yet," congratulations! Now you have a goal to work towards. Is there a way you can scale this project down to something more realistic? Do that1. If not, think of a smaller project you can do now that's within your means and do that instead. This project will still be waiting for you in 1, 2, 5 years, when you've invested in yourself and grown your business to a point where you can finally support this project.
There are many ways to do this. The most obvious is to cut out extraneous elements. Do you need spot art on every page? Do you need art at all? Do you need to pay someone else to write things or can you write it all yourself? You could also speak to your contributors and work out other modes of remuneration that could lower costs. Are people willing to do work trades? (e.g. I'm currently writing music for someone who in exchange is producing art for me). Can you do revenue share? There are a million and one ways to reduce costs and scope without exploiting people and you should explore them all.↩