The Growing Costs of Crowdfunding

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If you want to have a successful crowdfunding campaign today, then you need to stick out from the rest of the crowd. Campaign organizers are finding that this is become quite the expensive proposition. Kickstarter averages more than 6,000 active campaigns at any given time. Being the 1 in 6,000 that gets funding from a random visitor means you’ve got to spend money in order to make money.

Here are just a few of the expenses that campaign organizers are facing today just so that the campaign can be considered legitimate enough to get noticed.

1. Product Examples.

There needs to be proof of concept on display in the modern crowdfunding campaign. People need to see that you have a real product or idea and that it works. This may cost a minimum of $1,000 and there is no maximum level to this cost required.

2. Video Marketing.

The days of taking your DSLR camera and spouting off a sales pitch in your home office are gone. Professionally produced videos have the best impact on a crowdfunding campaign and that may be a cost that is upwards of $10k depending on what the video includes.

3. Community Interaction.

Public relations is an integral part of the modern crowdfunding campaign today as well. Many campaigns have a 30 day period before beginning, a 60 day fundraising window, and a 30 day follow-up period where money can be raised. That’s 4 months of PR work at an average of $5,000 per month.

4. Consulting and Marketing.

PPC, Facebook ads, and all of the other marketing options come with a cost, as do the consulting costs from those who have implemented successful strategies in the past. These costs can easily exceed $2k per month.

What is the bottom line? You could be spending upwards of $50k on your crowdfunding campaign before it ever goes live. That’s a major cost for start-ups and small business owners who are looking to crowdfunding as a lifeline. These costs have become necessary, however, and that’s why the cost of crowdfunding may price itself out of its targeted market in the near future.