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Crowdfunding drawbacks

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(http://www.grabsent.com/blog/2014/2/4/crowdfunding-drawbacks) - Crowdfunding campaigns or as we at Grabsent like to call them, another in a long line of marketing strategies that “experts” encourage …

(http://www.grabsent.com/blog/2014/2/4/crowdfunding-drawbacks) - Crowdfunding campaigns or as we at Grabsent like to call them, another in a long line of marketing strategies that “experts” encourage you to do. Let’s be honest worrying about online marketing is the last thing you want to do when designing and building your product. Should I focus more on gathering emails or conversion rates?

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  • 1. Crowdfunding Drawbacks Marketing Strategies Crowdfunding campaigns or as we at Grabsent like to call them, another in a long line of marketing strategies that ―experts‖ encourage you to do. Let’s be honest worrying about online marketing is the last thing you want to do when designing and building your product. Should I focus more on gathering emails or conversion rates? How do I optimize my landing page? WTF is actionable content? How much does AdWords cost... These are just a few of the things one has to be concerned with before ever even considering a social media campaign. Maybe you can skip all these steps and just get a quick prototype out and launch something on Kickstarter or Indiegogo? There’s an idea but here’s some drawbacks one should keep in mind before committing to a startup crowdfunding campaign (the below points come from an article written by Philip Nuestrom for PBS’s Idea Lab ): Grabsent Crowdfunding
  • 2. Crowdfunding Drawbacks Drawbacks and Costs It’s not all milk and honey, though. There are some hidden drawbacks and costs to using Kickstarter. Fees Kickstarter takes a 5 percent cut of your pledges and Amazon will take an additional amount (around 2 percent) on top of that. If your margins are slim, this could be significant. You should think about it like this: I’m paying Kickstarter 5 percent of my pledge goal if we make it. Is the Kickstarter service worth the 5 percent? In particular, you should think about 1) The pre-built platform you get with Kickstarter; 2) the publicity of being on Kickstarter; 3) the ―mold‖ that Kickstarter forces you into and the value of that. Grabsent Crowdfunding
  • 3. Crowdfunding Drawbacks Using Kickstarter #1 is worth it if you don’t have a lot of time or resources to build something yourself. We certainly didn’t. In some cases, #2 is really valuable. Obscure, quirky projects can get amazing press just by being a part of Kickstarter. But if you’re doing something more like a traditional community-based fundraiser you probably won’t get much from #2. For us, the publicity of being on Kickstarter didn’t drive a lot of pledges, but it did give us some valuable exposure. I think everyone can benefit from #3 unless you’re a large organization with a track record of successful fundraisers. In that case you’ve already got methodology, fundraising materials, and probably a big existing donor base. Grabsent Crowdfunding
  • 4. Crowdfunding Drawbacks It’s hard to take Kickstarter fundraising offline We held a couple of offline events during our pledge drive (a bar night and a silent auction). Unfortunately, it’s pretty difficult to move offline funds back onto Kickstarter. You’re not permitted to ―pledge‖ toward your own project, which means you need to find a trustworthy third party to agree to pledge any offline funds. This also means the offline donors won’t be noted on Kickstarter. For local community-based fundraising efforts this can be problematic. Grabsent Crowdfunding
  • 5. Crowdfunding Drawbacks The all-or-nothing system is a bit confusing Unfortunately, the all-or-nothing pledge system can be a bit confusing. Many folks we talked to thought they had already given us money before we hit our funding deadline. Our fundraising period was 90 days — the longest allowed by Kickstarter — and so there were lots of people who’d simply forgotten they’d pledged by the time their cards were charged. Thankfully, Kickstarter is astonishingly good at collecting funds (they pester pledgers with an email every day for a week if their card is declined), and we only saw a few pledges that never came through. Grabsent Crowdfunding
  • 6. Crowdfunding Drawbacks Many successful projects are basically product sales Despite the perception of Kickstarter as a fundraising site, a large number of high profile Kickstarter projects are, at their core, product sales. What do I mean by product sales? Well, all Kickstarter projects have rewards. And unless you get remarkably lucky, you’re going to have some cost associated with acquiring, shipping, and dealing with that reward. For folks in the non-profit world, we’re all very familiar with the standard tax-deductability formula that’s on donation receipts: (Amount contributed) – (Value of goods or services given to donor) = Deductible amount Grabsent Crowdfunding
  • 7. Crowdfunding Drawbacks Donation Amount and Profit Amount This isn’t just some tax mumbo-jumbo — it tells that the donor intended to give at least the deductible amount to the organization or project itself. But this formula doesn’t tell us everything. After all, oftentimes we get goods or services donated to us and then, in turn, give them away. We’re still bringing in money, either way. So the important missing part here is the cost to us of those goods or services, right? (Amount contributed) – (Cost to us of goods or services given to donor) = Our profit The first formula is still useful for differentiating these ―I’m basically selling something‖ Kickstarter projects from ―I’m doing something amazing, help us!‖ projects. So let’s call the first formula the ―Donation amount‖ and the second formula the ―Profit amount.‖ Grabsent Crowdfunding
  • 8. Crowdfunding Drawbacks Affiliate Marketing There it is. If these are problems you DON’T feel like dealing with reach out to us at Grabsent and get started today! It’s free to start and unlike Kickstarter or Indiegogo at Grabsent you don’t pay anything until you sell something and your custom ―Product Page‖ allows you to start marketing, driving traffic, and selling products instantly! Why wait, get started at Grabsent today! Grabsent Crowdfunding

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