Deconstructing Kickstarter: Sell Your Product for $10,000 (or $99)
We amassed 13,695 data points on reward levels and backers from the most successful projects on Kickstarter (those that raised at least $100,000) and dissected them.
One surprising thing we found was the $10,000 pledge level is one of the highest revenue generators, and so was $99, even though a lot of campaigns ignored it. So among your pledge levels, try to include $99, as well as a pledge level for really wealthy (and excited) backers.
Secondly, the top campaigns limited their pledge levels to about 10. So remember to simplify what you offer, and avoid confusing your backers.
Top 10 highest revenue-generating pledge levels
The highest revenue-generating reward levels aren’t always the most popular. Some are the highest priced. The $10,000 level was the 5th-highest revenue generator. Getting this right depends on thinking about your demographics (in this case, wealthy fans) and how to appeal to them. At the $10,000 level, you’re not just selling them a product. Based on our data, you need to rally them around the success of your idea, sell them the experience of meeting you, and reward them with public recognition.
The last two are really a different business altogether. The Fitzroy film project raised almost a quarter of its 72,000 pounds in funding with pledge levels of 1,500 pounds ($2,400) or more, promising major backers a role as producers of the movie and a profile on IMDB. (Even more extreme, TechShop raised 91 percent of all funds for its Menlo Park branch through a $250,000 pledge from Intel on Indiegogo.)
Let's take a look at the pledge levels Kickstarter creators rely on most:
The 10 pledge levels most popular with project creators
What backers choose is something else. Interestingly, backers often choose the $99 reward level even though it doesn’t make the top 10 for project creators.
Anecdotally, we see most backers opting for the minimum price level that will bring them the product being made. Nearly 41,000 Pebble backers chose the $115 reward level, which was the lowest at which they could buy the watch. Project creators should think seriously about that minimum pledge level. Adding peripherals can boost it, and dialing up the most popular pledge levels by a few dollars can have a huge impact on total funds raised.
The 10 most backed pledge levels
Finally, let's look at how many pledge levels you should have. Projects with between 9 and 11 pledge levels belong to an elite group in terms of revenue raised. While it’s hard to draw definite conclusions from this, our hypothesis is that backers, like most people, have a hard time making choices. Decisions cost us time and energy. Our theory is that projects that simplify and reduce the number of pledge levels may be more successful at winning supporters over.
Number of Reward Levels vs Revenue Generated:
A few caveats: It's impossible to measure separately the diverse factors that make a Kickstarter project succeed. Pledge levels are just one piece, and here we are simply presenting choices made by some successful projects in cumulative fashion. So take it with a grain of salt. Salt tastes good.
On the high end, the long tail is massive since Pebble blew their campaign out of the water by raising $10.3 million. As often as possible, we’ve tried to offset such statistical outliers by using medians rather than means for our average numbers. (Thanks, Pebble.)
Our data is based on 841 Kickstarter projects that raised at least $100,000. Click here to see it.
Winners’ Averages
The median number of backers per project is 2,102.
Taken together, the top projects raised 985% of their initial goals.
The median market-validating project raises $171,009.
Successful projects have a median goal of $75,000.
The median reward level is $150.
Click here to learn about Airbrite, a YC 12 company. We make Celery, an easy way for startups to take pre-orders, as well as an order-processing API for developers.
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The Best Way to Price Your Video Game on Kickstarter
On Wednesday, we showed how Kickstarter largely serves as a springboard for crowdfunded video game projects. Now we’re going to take a look at how the most successful projects are structured, with a focus on their pledge levels.
We looked at 121 video game projects that met their goals to raise $100,000 or more. We broke pledge levels into ranges, since pricing across projects varied a great deal.
Those ranges were:
$0-$10
$11-$50
$51-$100
$101-$500
$501-$1000
$1001-$5000
$5000+
The most successful pledge level ranges were $11-$50 and $51-$100, in that order. The first raised about $46,000 per pledge level in the range, and the second raised only slightly less at nearly $43,000. Below $11, the amount raised was trivial. We’ll let the numbers speak for themselves.
Pledge levels between $11 and $500 accounted for 87 percent of all the money raised by Kickstarter video game projects. Those are the backers you want to think about the most, understand the best, and incentivize most effectively. Slightly below $100 is usually the minimum pledge required to get whatever the project is producing.
Notice how pledge levels between $1001 and $5000 are relatively ineffective. Yes, they helped the $100K club raise $2.7 million altogether, but considered singly, they only drew about $9,132 each time they were used. On the other hand, the $5000+ pledges do almost as well as pledges between $501 and $1000. What does that mean exactly? There’s a niche group of backers willing to spend A LOT of money for recognition and access to the creators. It's called conspicuous consumption -- you can read about it here. Like a mirror of America itself, the middle has hollowed out, and only the mass and luxury markets remain.
In the case of Ouya, last year’s largest video game-ish project, these trends were scewed up one pledge level. Ouya got 63,000 backers to pledge a total of $8.5 million last year. Let’s look at the pledges they made. Their most popular level was $99 for a basic Ouya: it attracted 46,125 backers and raised $4.6 million dollars, more than half their total. They also sold a limited edition in the last week of the campaign for $140. It was essentially the same, drew 7,750 backers and landed Ouya a further $1.1 million. Those two pledge levels accounted for two-thirds of Ouya’s funds. There’s something to be said for timing, and scarcity.
In the graph below, the columns are pledge levels starting from $1; the rows are Kickstarter categories; and the cells are the number of projects in each category that used a particular pledge level. Video game projects, like most others, tend to price in $5 increments, with $1 being the obvious exception:
We think that's a mistake, and we'll tell you why next time.
CAVEAT: This should go without saying, but... There are other factors that make Kickstarter projects succeed — pricing is not the only one by any means. Obviously the quality of the promotional material, the experience of the project leaders and the nature of the game itself all contribute a lot, and are probably more important than pledge levels. Other authorities will have more insight on those issues. But we have data. And because pricing is easily quantifiable, you can see trends and make comparisons more easily, which is what we’re trying to do here.
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Click here to learn about Airbrite, a YC 12 company offering an order-processing API for developers. We also make Celery, an easy way for startups to take pre-orders.
