So you’ve decided to jump into the world of crowdfunding and I applaud you for it! You have a project that you think is good enough that people will reach into their wallets and take out their own money to support you. If you’ve made it this far, I commend you. (I am totally serious by the way. If you have made it this far, you are in the minority!) The first thing you need to do, before you even start looking at the various sites that help you in your crowdfunding quest, is to look at your project and set a target amount: the amount of money you hope to raise.
The (Not-So-Secret) Goal-Setting Crowdfunding Formula
Set your target for the MINIMUM amount you NEED to complete your project. This is important so let me repeat, the MINIMUM you NEED. I’ll explain why I suggest you do this in just a little minute. Setting your crowdfunding target can be a tricky business, but something that must be done. There are many things to consider: how much you want vs. how much you need, your potential network of backers, the strength of your project, the list goes on.
This is why I say you should set your target for the MINIMUM you NEED: If you set your goal for less than what you need to complete your project and receive only that amount, then you won’t have enough money to finish your project! It’s that simple. You won’t be able to make good on your promises that you set on your crowdfunding platform. On the other hand, if you set your goal for more than what you need, then you run the risk of not reaching that goal and the project not getting off the ground at all. In either case, you, the artist, loses. I’m not saying that you can’t be ambitious. Perhaps, realistic would be a better way of putting it.
Because we are dealing with music, let’s say, hypothetically, it costs $3,000 for studio time and mixing and mastering your new album, but an extra $1,000 for duplication and manufacturing. You could potentially cover the extra $1,000 out of your own pocket, but the studio time is what really matters: it’s what you need. It wouldn’t make sense to set your target at $4,000 if you couldn’t raise $4,000. You might raise $3,500, which could cover studio time, but because your target is higher than that, you don’t get a cent. (This scenario is based on a fixed-funding platform, which we’ll be talking about in next week’s installment)
Getting back to the original scenario, say you set your goal for $2000 and raise that amount. Now you can pay for studio time, but only if you include that extra $1000 that was going towards manufacturing. Now you don’t have any money for manufacturing. In this case, your project is still unfinished, but now you have to disappoint all the people who backed your project because you cannot deliver on your promises. See how in either case, the artist loses?
Given the choice between shooting too low or shooting too high, you should try to shoot high. The psychology of crowdfunding favours the artist. Say there are only 2 days until your campaign finishes and you’re still $1000 short of your target, you can double, triple, or quadruple your efforts to engage your fans for support. You can also engage your existing backers and see if any of them will ramp up their pledge amount. Your existing backers are already emotionally invested in your success and are more likely to want to see you reach your goal.
Setting your target for the minimum you need is a good idea. It makes the goal more achievable, but more importantly, you will be able to deliver on your promises if you reach that goal. If you do raise more, it can go back into paying the site fees and credit card charges. (These charges sneak up on you too…watch out!)
The target amount also depends on whether or not you can go ahead even without the support of your backers. (We will talk about this in more detail in part three)
Do your Research
Setting the target for the amount you actually want can easily become a larger number than is realistic. (You don’t want to set your goal for the maximum you want, right?) Find out the dollar amount that you would need to finish your project to the standard you want it to be. Leave no stone unturned. If you’re recording an album, go and get some quotes for studio time, get quotes for the engineer, the producer, for mixing and mastering, for album artwork, for manufacturing, for studio musicians, for any royalty payments you may need to make. Once again, the list goes on. Try to find the exact cost for what it is you want to do. You may discover the dollar amount is more than you expected or you may find it to be less. Either way, you’re that one step closer to finding the amount of money you need.
If you are recording a new CD from scratch, the costs could easily be astronomical. This is especially true if you wanted to fund absolutely everything through crowdfunding. Coincidentally, this is not something I would recommend.
Don’t Try and Fund Absolutely Everything with your Crowdfunding Page – Here’s Why
It makes sense to fund at least a part of your project yourself. This does three things. Firstly, it brings the amount of money you need down to make the target goal more realistic. Secondly, it shows that you, the artist are fully committed to your project. It’s a lot easier to empathize with someone’s cause if you can see that they are fully invested in it themselves. It’s a great boon for your own credibility. When I was writing this, I came across quite a few videos of people who may have had material ready to record, but had not put up a cent of their own money and were totally relying on funding from backers on their crowdfunding sites. This leaves me feeling a little bit strange. I feel like if they (the artist) aren’t willing to risk anything or invest in themselves, then perhaps the project isn’t worth funding. Interestingly enough, a good portion of these kind of campaigns that I found didn’t reach their goals.
Funding everything through your crowdfunding platform may work for well-established artists or people who have a huge network of supportive fans, but if you look at it from the point of view of somebody who doesn’t know who you are, it will look unprofessional and will be off-putting.
Finally, funding part of your project yourself will actually make it easier for you to gain backers. How? If you know what you can fund yourself, then it’s a hell of a lot easier to tell the story of where the money you raise is going. “I need money to go on tour” becomes, “I’ve put in x-amount of my own money to cover accommodation and food for my tour, but I need x-amount of money to pay for van rental, fuel costs, and a dedicated sound engineer!” Can you see how being specific in this way helps your campaign? Don’t be afraid to be detailed.
Give in Order to Receive!
Crowdfunding sites will require you to create a profile in order to create projects as well as contribute to other projects. Some of these sites also display the number of other projects that you have contributed to. It’s not necessarily a bad thing if you haven’t contributed to any other projects, but it definitely looks good if you have! (Especially to people who don’t know you) It sends the kind of message that you are generous enough to support others which will, in turn, lead to people being generous towards you. I’m not saying you should go all out and contribute your life savings to projects you have no real interest in. Certainly don’t do that! But be aware that this may be a factor in some peoples’ decision in whether or not they back you.
Do Your Research (Again…)
Take stock of your social networks and real-world connections to see exactly how many people you can instantly inform of your campaign and your quest for funding. This will probably have an impact on your target. For example, if you’ve spent years nurturing a solid fan-base and have thousands of ‘likes’ on Facebook or ‘followers’ on Twitter, or many avid readers of your blog, then you could probably afford to set your goal a little higher than someone whose network of fans includes just their parents, friends and pets.
If you want some numbers to work with, according to Kickstarter, the average pledge is $71* and the most common amount pledged is $25. Obviously, not everybody in your social network is going to be pouring money into your project, but some will. Be realistic about how much you believe you can raise.
*Keep in mind that very occasionally, individuals will donate thousands of dollars at a time. This is what brings this average pledge amount up to $71. Don’t expect everyone who donates to your campaign to pledge this much. It’s merely an average.
What’s the Interest Rate?
Ask yourself, “Will people be interested in this project?” and try to answer as honestly as possible. While you may think your next CD or LP will be the bee’s knees, the real question is, will people be willing to help you fund it? This can be a hard question to answer, and you must try to be as honest as possible. This is where it can be helpful to be in a ‘boutique’ market.
Styles of music that are established but not very popular, usually have an audience who is interested in keeping the music alive. Jazz and classical music projects have audiences that are usually very happy to support projects that promote the music, provided they know about the projects. Popular music like rock or hip-hop have a much larger potential fan base, but there is much more competition in these realms and it’s easy to be just another face in the ‘crowd’. (Pun definitely intended…)
Why not Ask?
If you do have a following on any of your social media sites, try posting about the possibility of your new project and ask if there is any interest. If you have a lot of positive response from people in your network, then crowdfunding just may be for you. The more passion you can inject into your fans or friends, the more likely that they will promote your project, which is essential in your crowdfunding campaign!
What to do if you’re a wildly successful crowdfunder! (Or plan to be…)
You never know exactly what’s going to happen when you press that ‘launch’ button. Obviously, you hope you do well and sometimes, it actually happens that way. Some crowdfunding projects have been funded completely within the first couple of days or even hours. Canadian band, Cherry Suede were able to reach their goal of $15,000 before their campaign had even gone live. They had actually prepared for this, and had a series of “Stretch” targets.
Once a project reaches its target, it can be tempting to think, “Well, they’ve already got the amount they needed, what do they need me for now?” In this case, it’s important to have something more to offer if you are more successful than you had originally planned for. Say your target is $5,000 for the manufacture of a new CD. An example of a Stretch goal would be to say that if $8,000 is raised, you can fork over for fancier artwork and packaging or perhaps even a limited vinyl pressing. Of course, this is just an example, and you can be as creative as you like when coming up with these extra milestones.
Above all, try to be as realistic as possible without selling yourself short. Every project is different, and in the end, you are the one that needs to make the final decision about how much you think you can realistically raise. This can be a particularly tricky balancing act.
Join The Conversation
Once again thanks so much for reading. Leave a comment down below and let me know your thoughts or subscribe to the feed.
Have you set a crowdfunding goal before? How did you go about it? Did you do it differently than the way I suggested? Would you do it differently if you were given the opportunity? Let me know about it! If you like the information here, please share it on Facebook or Tweet it on Twitter.
Next week, I’ll be discussing all the different crowdfunding platforms and how you can go about picking the right one for your project. Check back next week for the next installment.
[UPDATE] Part three is up and ready to go and you can read it right here.