The Balancing Act of Reward Levels in Kickstarter
As we have discussed at length these last few weeks, there are so many things that go into making a successful Kickstarter. Though it would hard to be argue persuasively that a minor screw up in one or two areas would be likely to do much more than hinder a project, a major screw up in most of them could sink it. After a lot of research on the subject, it is my belief that no area of a Kickstarter is more sensitive to mistakes and miscalculations than the reward structure set by the project creator.
It is literally the canary in the coal mine, but please don’t take my word for it – let’s explore this issue together.
To start at the beginning, for those who don’t breathlessly follow Kickstarter, the rewards are the incentives that project creators offer backers (that would be you) into tempt them to giving the creators money. The bottom of the ladder usually starts out with $1 for a heartfelt thank you for the like, and depending on the project it goes up from there. For an average project, you might get a trinket at $5, a tee-shirt at $20, and the main event at $40. The idea here is that if you like the project a little you can toss in a few bucks for the hell of it, and if you want whatever widget they are promising, you can help shoulder the cost of the widget itself, and get one in return.
This is a pretty effective system, that often convinces me to spend more than I originally intend. Even in a simple system though, problems arise. I tend to lump these flaws into one of four categories:
- Charging too much for the key rewards.
- Charging too little for key rewards.
- Over complicating the reward structure.
- Offering rewards people don’t want.
Charging too much is an obvious and immediate flaw. Though I can see certain cases where one might charge slightly over market value for a reward simply because they lack economies of scale, or to support development costs, on the whole a good rule of thumb is to charge someone about what they might expect to pay for it if they bought it at their local box store. That means $20-25 for a graphic novel, or $20-40 for a board/video game. Consider this Kickstarter. I like it, and I back it, but it’s reward structure is the main thing holding it back; You don’t get the main reward, a graphic novel (the thing the project is meant to produce) until you spend $40 (a better number might have been $25,) and you don’t get any physical comic books or the full set of PDFs until you spend $25( suggested retail value – $10-$15.) Inflating the cost of every level by signing EVERYTHING is clearly not a winning strategy.
By contrast, some project occasionally fail because they charge too little for a product. This project (which I also back) charge only $5 for its main reward – an ipad/iphone app. Though $5 is a perfectly fair price to charge for an app, they could have charged more, and I would have paid it. Further, they could have ameliorated this issue with some other excellent reward to move me up the chain, but those were largely lack luster. In the end, a backer just has little reason to spend more than $5.
Over complicating the reward structure is a pretty common problem. Though one could easily turn this section into a referendum on stretch goals, I would prefer to save that particular issue for another post, and instead focus on convoluted reward structures. For the easiest example of an unnecessarily complicated reward structure, we return to The Woe is OZ Book Project. Just read down the list and you will see what I am talking about; there is no pattern, and it all seems rather arbitrary. By contrast (because I think this point is easier to explain by showing a good project) check out this or this. Not only do both of these projects have a complicated and extensive reward system, but they lay it out in a logical manner and provide additional clarification in the form of pictures!
This last one fits in to some of my previous examples above and ties in to several of the above examples. Filler is filler, and most of the time, the discerning fans of crowd funding are apt to spot it and skip it. If a project wants to throw in awesome extras for free, that’s fine. If a project wants to throw in well thought out extras because they fit with the theme of the project and the desires of the target audience, that is also great. But knickknacks and cheap extras just to make the reward list longer and expand the profit margin? No thanks.