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Reward Levels

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Did you know it took weeks to tweak every last detail when we created the Kickstarter project for The Wardenclyffe Horror? I’m talking every available night and weekend too, not just a few hours here and there. Though in retrospect I think there are still a couple things we could have done better, I feel like the time we spent allowed us to iron out most of the major flaws in our presentation and strategy. On Saturday though, during an interview for the second Kick-a-Thon, we discussed how you need a lot of skill sets to make a successful project; your product requires you to be good at one set of skills to make a product worth supporting, but those same skills are not necessarily the same ones that will allow you to market your work persuasively to your prospective backers.

A couple weeks ago, one of my regular readers asked me how we went about deciding what to set our reward levels when we created our project. This is an interesting question – with many possible answers. As many of you know I do a lot of research on Kickstarters and I don’t think I have yet seen this topic covered in detail anywhere.

Today is as good a day as any though – so why don’t we talk about it right now?

The most important thing to remember when figuring out your reward levels is to know know how much you need for the project to be successful. This is the framework that all the other numbers you will need to gather fit into. Let’s use, oh – I don’t know – a comic book Kickstarter as an example. The point of such a hypothetical project is to create a comic book, so the first step is figuring out how much that will cost. If you are the writer, penciller, inker, or colorist, it will cost a lot less than if you need to hire someone to fill that roll. Remember, your payment is that you have a completed project at the end (and little things like fulfilling your lifelong dreams) that you can do whatever you like with. The point of Kickstarter is not to get you paid, it’s to get your project made.

Let’s say that you are the writer, and you need to hire an art team (I recommend you spend an awful lot of time interviewing for this step) and that that team’s combined page rate is $100. That means to do your 50 page comic book, you are going to have to raise $5000. Then you are going to have to hire a cover artist, buy an ISBN number, and pay for printing. After all that is done – say that comes to $7000 – you will have a comic book, but your backers won’t quite yet. Don’t forget to add in the cost of shipping, and any swag you promised; those tee shirts aren’t free. When all this is said and done, you’ll need to tack on another 10% for Kickstarter and Amazon’s slice of the pie.

A number like $10,000 here wouldn’t surprise me, though if you are doing the art yourself I could easily see $4,000-6,000 being a more appropriate number. Regardless, what do you do with this number? Well, there are several possibilities, all of which require assumptions of one type or another:

  • Look at similar successful projects in the past – this will give you valuable data on which to base assumptions.
  • Figure out how many backers you are likely to have; this will tell you how many people you can expect to be able to spread your project’s costs across.
  • Determine reasonable price points, because prices on Kickstarter are extremely elastic. A small increase in price above people’s expectations could have a dramatic effect on volume. If you cannot produce your product for a reasonable cost, then go back to the drawing board at this point and find a way to reduce costs (if one of those costs was to pay yourself for all your hard work, then I know the first thing I would cut.)
  • Not all tiers will cost the same to produce and fulfill. Try to make the margin on your reward tiers similar; there in no point in having an $50 tier and an $80 tier if the $80 tier has significantly less margin than the $50 one. In this case margin is not profit, but the amount of money that can be applied to global costs like art and coding.

This approximates the efforts we went through prior to launching our own Kickstarter. In the end some of our assumptions were incorrect, and will likely put us slightly in the red in terms of out of pocket costs. I underestimated the average pledge (significantly higher than expected) and the proportion of foreign backers (also significantly higher than expected- apparently Tesla has quite a following in Europe.)  This means that even though we exceeded our goal, we will spend more money than budgeted on shipping. I’m not worried though – I expect that we will find ways to make that money back once our graphic novel is complete and our backers pledges are fulfilled.

Anyone else have any questions or comments on the subject?

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This entry was posted by David Winchester.

19 thoughts on “Reward Levels

  1. “A small increase in price above people’s expectations could have a dramatic effect on volume.” I can’t even stress how important this is for me personally. I have literally passed over comics that I was interested in because the cost was too high for what you’d get. 144 pages of comics divided into three volumes of 48 pages – $45? No thanks, I’ll pass. 120 pages in one volume for $20? Absolutely. Raise that to $25 or $30 and I’m a lot less likely to back it. ESPECIALLY if I think you’re going to retail it for significantly less than my backing level. I’d be very surprised if that three-volume story costs more than $6-8 per volume.

    • For Wardenclyffe we decided on $20 + shipping, though in retrospect I feel like we should have done to lower that target. Once we deliver on that project to all of our wonderful backers, I expect we will try to Kickstarter another, but if we do, I’m going to target the $15 + shipping range.

      Cheaper is definitely better, and value has to be there.

      • Lol. Thank you so much. 🙂

        I had a conversation with frequent poster and real life friend Clint yesterday, about this topic to some degree. I give price wavers to some degree for passionate deserving amateurs and ‘good guy’s as you put it. If you already do this for a living, than you need to offer real value for your prices.

        What is the threshold for you at which a project no longer becomes an impulse buy? $10, $20?

      • I’d say probably $15 for a graphic novel. At $20, I’m looking a little more closely at the cost/value ration. At $25 or $30, you’d better be the next Alan Moore. More than that, I shrug and move on.

        For music, my impulse buys tend to be in the $5-10 for digital downloads.

        For board/card games, it’s probably about $25, though I may go up from that if they add good stuff with stretch goals. I bought into “Guilds of Cadwallon” for $25, but added another $15 for the game board and deluxe box, and then $10 to double the amount of plastic minis. (The minis are definitely worth it, as they can be re-purposed for D&D or other games.)

        I don’t have an impulse level for video games, because I’m automatically reluctant to support them. I HAVE done, but it’s rare. My post-scrutiny comfort level is probably around $15.

      • Cadwallon pushes my buttons as a preorder, not a Kickstarter, and I am fairly certain the boxed set at the end of all the stretch goals closely resembles the product they expected to launch in stores, at approximately that price, so I see no value there.

        I admit the minis made me look twice – they are a weakness. This project annoys me about as much as a certain image comic annoyed you. To each their own though, right?

      • Yeah, it’s pretty much a pre-order thing, but they do specify that the stretch goals are Kickstarter exclusives. That means in addition to the base game @ $25, they’re including 24 minis in four new factions, Guild cards for those factions, and double the amount of Militia, Personality, And Action cards, plus bonus Contract and Guild Backer cards. There may be time for one more stretch goal, if they have one in mind. Throw in the add-ons for the board and the extra figures, and you’ve got a pretty massive incentive to pledge to the KS. Or I do, at any rate.

      • Making exclusive perks for a KS campaign are what its all about, but for them to make two whole different games (as it sounds like real bifurcation is occurring) seems a little un-believable to me. Their position really is, that they are going to commission molds for minis for the KS, and then never use them again? Seems.. shortsighted?

        Are you they haven’t left themselves a little wiggle room to make this content into an expansion pack or something?

      • Well, the exact wording on the project is “For every goal we hit, for Kickstarter backers only, we’ll be adding additional Guild cards and Agent Pawns to your copy of the game for free!”

        They did something similar with “Zombicide”, where they added a bunch of KS-exclusive figures, and I haven’t seen any indication that they’re going to wide-release those. However, it’s not as though that’s legally binding or anything. They certainly COULD sell those as an expansion later on. It’d be dickish, and probably cost them some goodwill, but it could be done.

        I’m not sure what you mean about “two whole different games”, though. It’s one game, just with stretch goals that double the content, allowing for larger games.

      • Two reasons: adding that much content is bound to change the way the game is played, and adding four new guild will alter the way balance, as these games usually give said guild a special power/goals/victory conditions. I admit this second point relays on assumptions, and I could be mistaken: it’s not as if they are adding extra clue players and weapons(interchangeable props,) it sounds like they are adding the equivalent of extra Illuminati or Small World factions.

      • Cosmic Encounter has, last time I checked, something like 17000 different races in the core set alone. Each one has special powers. If adding extra factions makes it “two whole different games”, then Cosmic Encounter is seriously underpriced, as it’s a whole shelf full of games all by itself.

        Yes, adding the new content is bound to change the way the game is played, in that there are new strategies to consider. Also, it enables 4×4 and 5×5 grid setups, as well as more players. I think it’s more like getting an expansion folded into the core game.

      • Fair points, though of course that logic works less well if they don’t offer said expansions after they launch the board game to everyone else. By your own admission, failure to do so would allow for only 1/3 of they play modes. I grant this probably doesn’t make for a whole new game, but it certainly increases the replay value.

        Even this example is better than Queen though – all they are doing is launching project after project they intend to sell already. CoolMiniorNot at least runs a very good campaign, and provides excellent fan service – i’ll give them that.

      • Queen Games is definitely using Kickstarter as a makeshift storefront. Which just means that if I ever do get one of their games, it’ll be off Amazon or some other discount game retailer.

        There’s a video game that just launched, “Dark Storm” that literally says it’s coming out Q1 of 2013 on Steam, doesn’t give any indication that it actually NEEDS money for anything, but wants $10k anyhow. Really, WTF?

      • After a bit of scrutiny, I decided that while I still want the Cadwallon game and extra minis, I can do without the game board. It’s not like setting up a 3×3, 4×4, or 5×5 grid is all that difficult. The extra 24 minis might not fit in the smaller box, but for $15 saved, I can tape them to the box in a ziploc bag.

  2. Pingback: Kickstarter Lesson #8: Reward Levels « stonemaier games

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