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Kickstarter Accounting, backers launch perks, Cost of Goods Sold, Profitable Kickstarter, Crowdfunding Fees

$100k Kickstarter: a Bad Business Idea? (Profit, Crowdfunding Tips)

Production costs and fulfillment costs seem to go hand in hand, which is why making a profitable Kickstarter is so hard. Often you are selling something which has not yet realized it’s full cost. This guide is to help you use crowdfunding strategy and basic accounting to design a Kickstarter which actually makes you money, instead of the other direction.

Understanding Cost of Goods Sold

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This is the ultimate number which you will arrive at, once your Kickstarter product is inside peoples hands. But it is also the hardest to calculate up front. Use our simplified Kickstarter cost of goods sold calculator, to make sure that after all is said and done, you walk away with a profit margin, and not a loss.

Kickstarter can cause capital loss, because it has higher unexpected costs. The symptoms of losing money is a common occurrence for first-time business owners, because in the creation and distribution of a new product, there are always common unexpected challenges. This goes way beyond just the fees charged by the platform, or the cost of shipping.

There is a lot that goes on in making a Kickstarter. The marketing cost itself is immense. Keep reading to learn more about why crowdfunding accounting is an important missing step in launching your project.

What turns a Wildly successful Kickstarter into a Bad Business Decision?

From a psychological standpoint, it’s easy to think you’ve done a great job by raising $60,000 for your new business. But depending on who helped you make it, and the way the money was used, you can end up spending even more than you earned just to get the rewards into people’s hands.

In spite of the negative possibilities known, many business people decide to launch a Kickstarter anyway, and they proceed with the Kickstarter video production, and the like. It’s understandable how it slips the minds of most small scale new to the industry crowdfunding projects, because there are so many combined hidden costs.

Kickstarters are business liabilities, unless you manage the production costs from end to end, before deciding on your goal, and how much you have to put toward your marketing cost. By working backward with the typical production fees, you can arrive at an understanding of how much kickstarter you can afford.

Transaction Costs

– [ ] Credit fee
– [ ] Platform fee
– [ ] Office fee

Moving money around is a big deal, and they take a Chunk. For safety , decide that 10% of your revenues will be eaten up on their way into and out of your account. The office fee is your banking costs, your costs for your accounting software, your costs for the support you will need in organizing everyone, and making sure your vendors get paid, and making sure you have things like mailers and a stamps machine.

Visual Content Costs, and Marketing Costs:

Sometimes people think marketing is simply one thing, but actually it is split into two categories, how you make the pitch content, and what you pay to push that pitch content to people. (Or even know the right people to push to).

So for visual content alone, you should expect to hire a cinematographer and kickstarter videographer, or even partner with a crowdfunding launch company. Easily 30% of your Revenues from your kickstarter will be used to pay back the marketing, and it is usually split down the middle in terms of how much. So if you raise $100,000 USD, expect to spend $30,000 on your marketing.

– [ ] $12,000 – All things related to your visual content (Video and Images)
– [ ] $3,000 – All things related to your page writing, your website writing, and your emails and social media posts writing
– [ ] $5,000 – The advertising marketing company will use this to make hundreds of customized ads, and to train the marketing bot for reaching the right people. This is a low conversion time in the marketing, as you are training the system
– [ ] $10,000 – The advertising marketing company will use this budget for your actual campaign. Targeted to the right people at $1,50 per click, this will guarantee that at least 6,500 people see your project. This is important because you will only have a 3% conversation rate. At a 3% conversion rate, you will have sold 195 units, which was your minimum for the successful product.

Key Takeaway: Make sure you price your rewards accordingly, because for a 50% profit on the marketing, (which you will need to break even for your production costs), you will need to raise at least $60,000 . If you need to make 60,000 from only selling 195 units, than the minimum cost of your Kickstarter reward should be $300.

But wait, my product is only $79!!

Well, we hate to say it, but the customer acquisition cost and the cost per acquisition is probably around $80. That’s might get you to sell the product, but you will have no money left even for the fulfillment.

This is why a $300 minimum product fee, is essential, and it’s also why any sane person would demand that they get $100,000 from the campaign, and not just $60,000, because it is only in the domain of 60-100k that campaigns can become profitable.

Pre-Fulfillment Costs

– [ ] Making the packaging that your product will fit into
– [ ] Making the technical user guide
– [ ] Printing the slip in user guide and marketing contents
– [ ] Software fees for getting responses from your backers
– [ ] Costs related to customer customization
– [ ] Fee’s paid out to your affiliates and anyone who helped spread the word about your project

For safety, assume that outside of your manufacturing cost, that 15% of your revenue will be used during the pre-fulfillment stage.

Manufacturing Costs

Getting your retail product out to market is the part that most product developers think of. It is a whole huge part of what it takes to actually come through on your promises. Expect 40% of your revenues to go to fulfilling the manufacturing side of your product.
– [ ] Moulding
– [ ] Assembling
– [ ] Core Pieces
– [ ] Packaging sent to them
– [ ] Paying Vendors
– [ ] Paying Factories
– [ ] Paying Shipping

Fulfillment and Shipping Costs

Getting the final product to your customer is not easy either. Whether you have a drop shipper or do it yourself, shipping is a whole helluva lots more difficult than you think. Without a corporate or freight account, you will be paying retail shipping grates, and some rewards are heavy.

Expect to pay 5% of your revenues – $18 per shipment, or a minimum of $3,000, just for your basic costs.
– [ ] Postage
– [ ] Handling
– [ ] Insurance
– [ ] Tracking

Other Costs

We would set aside another 10% for unrelated fees, everything from what you have to pay your assistant, to the fuel and freight cost from your manufacturer, it helps you have a margin of error, in case you eventually discover what was you actual cost of goods sold.

Bringing It all Together – What Is your Kickstarter Accounting Cost and Your Crowdfunding Profit Margin?

– [ ] Transaction Fees: 10%
– [ ] Visual and Marketing: 30%
– [ ] Pre-Fulfillment: 15%
– [ ] Manufacturing: 40%
– [ ] Shipping: 5%
– [ ] Other Costs: 10%
Total: 110%

Total Profit Margin: -10%.

(Negative 10%.  Umm… I thought we were starting a business?)

Now you see why it is so hard to earn $60,000 for your new project and to keep anything for yourself. That is why we so strongly suggest putting your stretch goal at $100,000 USD, that way you can swing the numbers more in your favor, to even eek out a +10% Profit Margin.

Here are a few things you can to to increase the profit margin of your kickstarter:

– [ ] Increase the per unit reward cost of $400.
– [ ] Don’t use the 10% Other costs and be a smart business person, so that your margin of error become applied to your profit margin
– [ ] Spend less on your video
– [ ] Hit a larger goal by adding +$5000 more dollars to your click ad spend
– [ ] Save 15% by getting your friends to pledge

Let’s take a look at these in depth

Spend Less Money

It all comes down to the final tally. If you look for every opportunity to save on cost, it will turn your kickstarter from a net draw, into a net profit. Let’s look at how.

Increase the Per Unit Reward Price – Your Crowdfunding Promotion Earns More

When you use an upsell, you can still sell your unit for $300, and recoup $100 of bonuses on the backend. Is there any key feature that you can subtract from the main product, only to add-in later, during the survey checkout process, which will inspire 2/3rds of your backers to opt in to more? If not, is there any thing you can add now, as a product feature, which would merit the 25% increase?

Don’t use your emergency fund – Best online fundraising approach

That extra 10% we set aside for your mistakes can be THE THING that gets you to a break even point. No extra snacks. Do not let your agency charge you for extra snacks. Make them write into the contract “nothing besides the snacks names here will be charged, we confirm that nothing in addition the contract amount will be billed to the client.” If they do charge you, don’t pay. Direct them toward your agreement. You do not have to pay for services you didn’t ask for, or things you didn’t know you were getting. The same goes for your manufacturer. Put it all on paper ahead of time. If someone pushes you, aim and shoot. If you agency or manufacturer or anyone else for that matters asks for more than you agreed, they deserve to be rewarded with a “crisis” on their hands. It’s better to be the mean client which gets so upset that the case goest to the agency owner, rather than the pacifying client who agrees to pay more.

Make a Video For Less – Crowd Funding Help

Choosing to go the professional route is a given, if you want your marketing to succeed and stand a chance to air on the public networks. But what most video studios won’t tell you is that they are padding the fees for just about everyone involved. Models $500? How about $250. Equipment $800? How about $400. Editing $4000? Why not $3000. If your favorite video partner is coming in higher than you’d hope, you an write back with your own budget, and show the allocations, and ask – can you do it for this? More than frequently you will get a reply where they are willing to budge on certain, if not all costs.

And if negotiation with boutique video studios is not your favorite thing, then come over and save 50% on your agency fee by working with Start Motion Media. Our full service creative production staff are available for months at time for your project, with out the door costs staring at $7500 (with payment plans), a full 50% below what many of the other highest class video studios charge.

Hit a Larger Kickstarter Project Goal:

There is only one place in your kickstarter accounting case study that has a linear affect on your revenues. This means that of all the places you can decide to add more money, there is only one category where it will have any impact at all. That is in your ads, once the social media advertising machine is trained. So I would say if you can change your $10,000 click ads budget to $15,000, (a 33% increase), that you would also see a 33% increase in the amount of revenue that you receive.

Save 15% (100% of your Ad costs) by getting friends to pledge as backers

This is the one and only way for moving the needle so that your Kickstarter and really any crowdfunding can of itself be profitable. Wouldn’t it be nice to at least make $10,000 back , after you had invested so much in manufacturing your first round product? Some companies don’t care about their Kickstarter being profitable, because it is a loss leader marketing campaign. However. I personally would not want to be liable for having got do a second round of sales just to make up for my first round of sales. The way that (even small) Kickstarter’s make a huge leap into profitability territory is to make sure that you have lots and lots of “unpaid leads” – these are people you bring to your campaign through manual (existing relationship) methods.

The real way to crowdfund (The TOP Kickstarter Strategy)

You will become a profitable campaign if half of the backers were not needing to charge the $80 cost per aquisition. Right away your profits on $300 will jump by approx 30%, which is the needed margin to make it all work. Think of going through your whole phone book and your whole email contacts of everyone in the whole freaking world that you know. Make a list of their emails, and assign Y/N Categories – which of these people do you feel is at least 1/3 (one third) likely to have enough money and interest to buy my product? Once you have your targeted friends list, start marketing to them. But remember marketing to friends is a completely different kind of conversation.

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The way to reach out to a friend and have them actually give you money and feel good about it is the following:

– [ ] Text them “Hi how are you, was thinking of you”
– [ ] If you don’t hear back, follow up in three days; “Hi did you get my last message? Was just checking in I hope you are ok”
– [ ] You will hear back after the second message
– [ ] Acknowledge them for what they shared and then add a first tip about your project; “actually I’ve been working on … and I am about to go into manufacturing!”
– [ ] Wait for their reply
– [ ] Then ask – “I am still working on the page and don’t know if it makes sense, could you review it for me?”
– [ ] They say yes
– [ ] Reply – “OK great I will send you a link when it’s ready”

This way, someone is warm and ready when they receive a product sales page with a price tag on it. And if you include them at pre-launch, they don’t feel rushed, which is a major bonus. Any feedback they give you is pure gold – customer research, but it also serves them to feel an emotional bond to your project. Once the bond and warmth is there, it is only a short step forward, to tell them “We’re live, would. You be a backer?”

This is the only way to get past the huge gulf of asking your friends for money, where both parties still feel good. And the best part is a backer from this marketing method is a full 1/3 more profitable than one you have to use paid ads for. I always recommend that my clients drive the first $30,000 of their kickstarter pledges this way, both for creating more trust and foundation in the project, and also for moving the needle so that their final ut the door cost of goods sold is still allowing for a small profit.

I hope this ultra crowdfunding accounting guide has been helpful, cheers to your success!

From the Author: Michael Zeligs has launched hundreds of successful kickstarters since 2009, and he is the founder and chief operating officer of Start Motion Media, an affordable kickstarter video production company.




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Design your Kickstarter Video, Kickstarter Video Production Company

Know how much should I pay for Kickstarter video?

What you pay and your pricing depends on who does your fundraising video, and the quality of the studio, so that you can get world-class advertising video production at an affordable cost.

Gaining clarity about the visual scope of your project, deciding what video type and which scenes would add the most value to your video. Phone calls where we reference the questions about your project and personal motivations behind it. Ongoing email support and language development as we arrive at interview plan and get to the heart of what the project is. Main points for the interview. Working out defining and scheduling visual elements and resources for production day.


Video Production Day:


Complete Film Day with our awesome Cinematographer plus Assistant. Reference your main points in the interview and on-camera conversation. Filming additional visuals, capturing a sense of place and bringing to life the project. We follow our shot list and capture each visual element as part of 4-5 actions sequences involving people who are enjoying your product, the lifestyle elements, behind the scenes, and other imagery.


Video Editing and Revision:


Comprehensive interview editing and narrative arc sequencing to persuasively describe the project and your campaign call to action. Developing visual sequences and cuts to accompany the interview. Audio mastering, sound design, transitions and title cards. Color correction. Integrating feedback, adjusting the video to meet client goals.


Crowdfunding Campaign Marketing:


Best Practices for running your crowdfunding campaign, approaches for generating community engagement through direct email and social media that showcase your campaign to your followers. Templates to ask for writeups on blogs, and guidelines for email pre-conversation with potential backers. Strategic timelines: When to make certain announcements, and how to leverage “launch days”. Email and phone support during your campaign.

Video & Consulting – Get Pricing

Video Production Frequently Asked Questions:

Definition of Professional Video Production:

Having a solid, experienced director/producer using professional tools and significant time investment to make your video.

Benefits – Reliable quality that conveys your credibility.  No apologies needed.

Best Uses – Crowdfunding campaigns, company profile videos, product pre-sale videos, and fundraising for campaigns.

Do I need video production?

Do you want to increase credibility, build your brand, attract new customers through or crowdfunding?  Do you have an interesting story behind your project?  For these types of tasks, you definitely need a professional or premium level of quality to get a satisfying end result from your video product. And most video companies have only done a couple projects. The thing about video for your project is that you might benefit from working with an agency that specializes in Crowdfunding video advertising, so that you can get the latest research about what is working for this unique Fundraising format.  If you have sufficient resources to hire a video company, and you want a video that is able to compete during your crowdfund fundraising at the highest level, we are a top-drawer studio production for affordable video production rates, and we will tell your story with incomparable style and class.

How much should I pay for video production?

Things to consider:

Time.  The more time that is spent in pre-production planning, scripting, location scouting, shooting, special effects and editing, the better the final product will be.

Talent.  The talent of the people working on the project is really important. When it comes to online video production, as with most things in life, talented and experienced people tend to cost more.

Tools.  You can produce a video with your cell phone.  Or you can use a high-end camera with a professional videographer and experience in post-production for crowdfunding. Sophosticated narrative development and story creation is also key.

A guidepost for budgeting your video production:

  1. For most other production companies, an agency quality storyline, filming, and three minute HD video for website or business project might end up costing $15,000 upfront if you consider the corporate video clients they typically work with, as well as the variables between production companies.

  2. For StartMotionMedia, with our streamlined video production and campaign marketing process, we focus on helping inventors and startup project creators have access to professional video to succeed on their and indiegogo-type crowdfunding intiatives. We have performance-based pricing designed for startup companies who need affordable rates. Because of this, we can offer you a chance to work with our agency at top-level of production quality for significantly lower cost.

    What’s the cost of to get my Video Produced? How much for Campaign Strategy Services?

    Request a Bid to see our current rates and availability.

    I hope this gives you a reasonable idea of where to begin in your budgeting process for how much you’d consider investing in video production and campaign services for your project.

Video Production – Motion Advertising and Fundraising Videos



A process-driven approach for making your project stand out.

Your crowdfunding look and feel is made up from more than just your project title and the video and images you use. Our crowdfunding page brand development can help you create the perfect identity so that your visitors will see what sets your business above the rest. Whether you’ve got all your content already lined up or you are just starting out, we’ll make sure your crowdfunding project shines.



Plan, film, edit, and share.

Take a look at our portfolio >

Your best marketing tool is what you are able to share. We create a complete video plan for how to thoughtfully engage your audience at every point in your video, one that will help you create a loyal following from your viewers. The best part about a professional video? It builds your project’s reputation and will support you to put your best foot forward, not to mention it’s the thing that your users will use to weigh the quality of your project, and what they point to when explaining your project to their friends.



Research and analysis, the path to highest growth.

Our strategy consulting serves as the leadership for your team to market and implement your launch. After hundreds of campaigns, we’ve discovered the reliable process-based tactics of customer acquisition that are specific to crowdfunding. Because of the breadth of our experience, clients gain access to some of the most cutting edge approaches for how to scale their peer-to-peer and advertising outreach and increase the number of backers they can convert.

Know how much should I pay for Kickstarter video? Video & Crowdfunding Consulting – Get Pricing

What people are saying:

“Working with StartMotionMedia was one of the best decisions I’ve ever made! They are true professionals, who know how to make “Kickstarter” videos that work – just have a look at our video and you will know what I mean : youtu.be/ZysUzEBR0lg . They also advised us on strategies and were so experienced on how works, able to adopt the strategies as the environment changed and come up with such great ideas on the fly. If you are looking for someone amazing and results that are extraordinary, look no further!” -Jong S, founder of HOPii -Raised $382,321

“We got prompt responses. StartMotionMEDIA is very informational when it comes to actually kickstarting a project. This process can be very overwhelming and he will sit down and walk you through it. He wants you to succeed and this is obvious.” -Julien S Co-Founder of GreenTraveler – Raised $136,276

“They were outstanding at putting a plan together and then dragged me towards the finish line.Before I met with StartMotionMEDIA I truly had no idea where to even start in creating a -Tracy O –

“StartMotionMEDIA has gone through the process of helping so many clients present their stories–and rally supporters around those stories–that I knew they would help me launch a successful crowdfunding campaign.” – Janel H –

It made me rethink my funnel by building it up first and testing it with customers on the list. I feel far more comfortable with the list so I can turn it on.- Jonathan K – Raised $54,207

“Unique background that combined a technical education from Stanford, we found that very appealing” -Vivek K. -Raised $46,824

Know how much should I pay for Kickstarter video? Video & Consulting – Get Pricing

Know how much should I pay for Kickstarter video? “StartMotionMEDIA created an inspiring crowdfunding plan for our project. Successfully Funded! Their eye for capturing the human spirit made our message so compelling.”

With deep appreciation, Magalie Bonneau-Marcil – Summer of Solutions.


Connect – Engage – Create – Launch



• Clarify your business concept and develop the sales pitch and your story • Case studies of successful projects: Learn how the successful projects did it • Schedule an organized and reliable launch plan, learn key software • Position Your Campaign with Research: Test your project • Organic list building, friends & family outreach strategy • Landing page design


• Connect with influencers, guide for how arrange for some actual PR • Tools & software walkthrough to implement your content strategy • Social media etiquette & communication rules • Expand your influence and reach backers who actually care • Create strategic partnerships & build your reach


• Carefully spec out your film production day • Choose the Right Goal – use my calculator to measure • Make your video even better with locations and actors • Production planning & equipment, step-by-step video process • Video creation: full day of filming with our cinematographer • Audio & video mastering: the professional secret touch


• 10 essential tools to run your campaign and drive engagement • Warm the engine and get verbal confirmations • 6 big methods for driving traffic to your campaign • Develop your fundraising “ask” and get money • Analyze, retarget and unlock new participation • Emails word choice guide to get you even more funding • Systems for managing your backers, how to train evangelists BONUS: Our COMPLETE course of detailed crowdfunding lessons & useful tools

Want a hand in your crowdfunding project? Contact Us

Know how much should I pay for Kickstarter video?

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Heres where we are at right now: Last year, the total amount of money raised through crowdfunding projects exceeded that of venture capital There is more money, going to more projects, through a distributed funding ecosystem, than the whole lot of million dollar checks going out from the accredited investors realm.