ARTICLE: Simple Kickstarter Arithmetic

A Breakdown of the Costs of Crowdfunding

:: by Josh Folan :: 3/22/15 ::

Kickstarter is incredible, right?  I just put my widget on there with a video of myself and few friends pouring our hearts out about how important said widget is to us, and WHAZAAM – we are rockin’ and rollin’.  Sure, we have to send them their rewards, but that’ll only cost a few bucks.  Basically, this money is MINE!  It’s ALL MINE!!!

Incorrect.

It’s going to cost you more money than you think to fulfill the rewards, unless you want to completely discredit yourself in the crowdfunding community, not to mention your own circles, by not fulfilling them earnestly.  Some (maybe even many) of your backer’s payments will not be able to be processed for one reason (expired credit card on file with the payment processor they never use otherwise, they actually don’t have the money, etc.) or another.  The Kickstarter and payment processing fees, while clearly stated up front, will still be depressing to watch as they chip away at your funding.  And lastly, Kickstarter proceeds are classified as taxable income – so if you can’t show expenses matching your take, you’ll owe Uncle Sam.

I’d like to offer up a transparent run through a recent campaign I conducted for a narrative feature shooting in NYC in May, catch 22: based on the unwritten story by seanie sugrue, so if you haven’t ever experienced it firsthand, you can vicariously live out the aforementioned depression of watching your funding dwindle throughout the process.c

• The Take: The little Kickstarter line graph cruised above 100% (all the way to 132%!!!) and we are funded!  Yay!!!  Poppin’ bottle with models, and shit.  TOTAL $ LEFT FOR MY MOVIE: $13,247
• The Deadbeats: A week goes by as Amazon Payments (thank whoever your higher power is that Kickstarter ditched Amazon for Stripe on the payment processing front – they were awful) struggles to collect the money from everyone.  What’s this?  Some of them aren’t going through?!?  Arrrgghhh.  TOTAL $ LEFT FOR MY MOVIE: $12,595
• The Skim: Kickstarter takes 5%, Stripe (and formerly Amazon) take 3-5% depending on a number of variables they are probably making up out of thin air.  TOTAL $ LEFT FOR MY MOVIE: $11,664
• The Fork-Over: I guess we have to actually procure the rewards we promised.  And pay to facilitate all this stuff getting signed by the people it need be signed by.  And packaging to ship them in.  And pay the postage for them to get to the backer.  Son of a bitch, this is way more expensive-er than I thought it would be.  TOTAL $ LEFT FOR MY MOVIE: $11,204 (And we still have roughly $750 in costs remaining here)

So $11,204 left, with another $750 or so still needing to be spent.  Not as rosy as it seemed at the outset, eh?  $2800 is no drop in the bucket for a small film production, upwards of 20% of the funding amount, and if you don’t plan accordingly you will be bummin’ when these costs come due.  The idea here is by no means an attempt to discourage you from crowdfunding.  I’m merely trying, as always, to paint a more realistic picture of what the process will be like for those that have yet to take the ride.  So budget your campaign responsibly and expect some frustration even if you are fortunate enough to hit your funding goal.