What should My Kickstarter Funding Goal Be?

Last time I wrote about my pre-launch check list - the things not to forget before hitting the launch button on your Kickstarter campaign.

One of the biggest questions to answer before launching a Kickstarter is what should the funding goal be?

Once you launch, it can’t be changed so this is an important one.

There’s no one right answer to what your funding goal should. Ultimately, it’s a strategic decision.

Default goal

The simplest way to decide on a Kickstarter goal is just the total amount it will cost to make and fulfil the rewards, including Kickstarter fees, dropped pledges, taxes, shipping and everything else. Figuring that out accurately is easier said than done because it depends on exactly how your project might play out. But you can make some estimates about how many backers will pledge for how many rewards, and that’s the safest goal to set. Add an extra 10-20% if you want to be on the safe side.

Appetite for risk

For most people, particularly first-timers, that default goal is not a bad way to determine your funding target.

There are other considerations though, and largely it comes down to why you’re running a Kickstarter campaign in the first place. Is it just a fun side-project? A vanity project? Are you trying to make a bit of money out of it? Is the campaign a loss-leader to build a brand and get customers?

Ask yourself: what risks are you willing to take? Can you afford to set your goal wrong?

There’s an inverse correlation between your funding target and your likelihood of succeeding. That’s pretty intuitive: a lower goal is more achievable than a higher one.

But depending on what your project is about, you probably can’t just set an arbitrary low goal to ensure you reach it. What will your minimum fixed costs be? For example you might have to pay for tooling costs or meet a minimum order quantity (MOQ) with a supplier.

Balance & Motive

As with most things, your decision on your funding goal is one of balance. Set your goal too low and it could leave you in trouble. Set it too high and you may end up disappointed if you don’t reach it.

Let’s consider different scenarios depending on the motivation behind your Kickstarter.

A fun side-project

For a fun side-project the scope of your Kickstarter, and therefore the required funding goal, is likely to be relatively low so you probably have more room for manoeuvre and less chance of setting your goal wildly wrong.

The simplest option is to work out your default goal, as above, and use that.

If you’re happy to cover a slight shortfall in required money to complete the project, consider reducing it a little to increase your chance of hitting it.

A vanity project

More than a fun side-project, you might want to get a successful Kickstarter under your belt for personal reasons. Maybe it’s something you want to add to your CV, or you just want to be able to say that you’ve launched a product.

In this case you may well want to reduce your funding goal significantly below the default goal to make it even more likely that your campaign succeeds.

However, be careful that your goal isn’t suspiciously low or your campaign might not seem credible. Reaching a very low goal may also not be that impressive and negate the point of the project in the first place.

Loss-leader

Lots of people run a Kickstarter campaign to literally kick-start a product or even a company. In this case you might be willing to lose money on the Kickstarter project in order to introduce a new product and get some market traction.

Obviously you need to have money in the first place for this strategy, and setting your funding goal isn’t really the biggest decision in this scenario. The price of your rewards is also an important consideration and your reward price might mean that you end up making little or no margin on each reward.

You may also want to invest in marketing and advertising for your Kickstarter campaign. Increasing your customer acquisition cost by doing that will further reduce your margins.

This is where setting a strategically low goal may be a valid choice. This isn’t about setting a low goal because it’s easier to reach, but setting a low goal so that you reach 100%-funded more quickly and can build upon that early momentum. The theory here is that a strong start is critical. Also, more backers will get on board once they know the project will succeed, and similarly you’re more likely to get interest and shares from bloggers, journalists, etc.

Also remember that Kickstarter isn’t just about raising money; it’s about testing the market. If you’re doing this as a serious attempt to launch a new product there’s no point setting a very low goal and spending a fortune on advertising if that masks the fact that not that many people actually want your product.

Money-maker

If you think crowdfunding is an easy way to make a load of money, you're likely in for a shock.

It’s perfectly possible to make a profit from a Kickstarter campaign though. Similar to the loss-leader strategy above you may want consider setting a funding goal lower than your default goal in order to maximise your final total.

Making a profit may well be the best outcome from a Kickstarter campaign, but it’s, unsurprisingly, the hardest.

Use this one trick

In summary, a lower goal is usually better.

With a lower goal, you’re more likely to reach it, and it could even mean you end up with a bigger final total than if you’d had a higher goal in the first place.

No matter what your motivation for Kickstarter or the scope of your product or your ambition, try this thought experiment:

How would you feel, and what would happen, if you reached 75%, 100%, 200% and 1,000% of your goal?

Really think hard about this question.

For example, if you hit 75% of your goal might be you be disappointed that the goal wasn’t a a bit lower? You could’ve put in a bit of your own money to get the rewards made and been thrilled. Or conversely maybe you’d be relieved to find out that not many people liked your idea and you didn’t waste money making it.

In some ways, reaching exactly 100% can be the worst outcome. Your idea is not that popular, but you’re still obliged to make and fulfil all the rewards. How would you feel if that happened?

Don’t forget the last one - what would happen if your campaign reaches 1,000% of your goal. Or more! That could be absolutely amazing. People love your idea and the increased volumes might bring your unit costs down. But could it be a complete nightmare? Maybe it would be impossible to make thousands of your rewards instead of the planned hundreds? In that case you could limit the quantities of the rewards you offer to ensure you don’t get too many backers.

…

Once you’ve chosen your goal, and would be happy to live with all those possible outcomes, then you’re ready to launch your Kickstarter campaign.

Good luck!