How to Pick the Right Incentives for Your Crowdfunding Campaigns

Jul
04

How to Pick the Right Incentives for Your Crowdfunding Campaigns

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Perhaps you’ve tried crowdfunding before, or maybe you’ve heard of it and are just starting to explore the option. Wherever you are in the crowdfunding awareness process, you probably are already aware of how valuable of a tool it can be and that it might be a very feasible avenue for you to get your business or product funded.

That said, the adage “there’s no such thing as a free lunch,” is also true in crowdfunding. In return for that lunch, businesses have offered their backers a range of perks and rewards for contributing to the campaign and pledging their support.

You might see this as counter-intuitive: why raise money for one project, and then spend hundreds or thousands of dollars on fulfilling rewards? First, you don’t have to spend money on fulfilling the rewards, or at the least, you can greatly reduce what they cost. Second, offering your backers rewards gives you a chance to say thank you while also giving the backer something tangible in return for his or her support.

What Are Crowdfunding Perks?

For almost every crowdfunding campaign, the person or organization raising the money has the option to offer rewards at certain contribution levels. For example, the rewards for the film “For the Love of Spock,” a documentary by the late Leonard Nimoy’s son, Adam, offers 23 different reward options starting at $5 and going all the way to $10,000.

What Qualifies as a Perk?

Anything that a crowdfunder gives to a backer in exchange for a donation. This includes tangible (e.g. t-shirts) and intangible (e.g. digital downloads) rewards.

What Are the Right Perks for Your Campaign?

As with any initiative, the first thing you need to understand is your audience. Who is most likely to back your project? Using the same example as above, chances are that lifelong Star Trek fans, movie buffs and Nimoy family members are all likely donors.

Based on the perks the campaign is offering, it appears they are banking pretty heavily on backers being lifelong Star Trek fans. All of the perks involve some kind of Star Trek-related benefit, including archival set photos, cast member autographs and more.

Even if your audience isn’t quite as well-defined, you can still make general assumptions regarding who might donate. At the very least, consider that the people who will back you are like you, your friends or your family. What kind of perks would they like? What would they find value in? Also, don’t hesitate to mine the different crowdfunding sites for other ideas.

Intangible vs. Tangible Perks

Intangible perks offer a lot of benefits. They don’t require shipping and handling or creation fees, and are often delivered to backers via email. Examples of intangible perks include:

  • Digital downloads (e.g. images, script pages, artworks/logo)
  • Mentions on your website in a special “Thank You” section
  • Updates throughout production, behind-the-scenes videos or photos
  • Naming rights to an upcoming character (e.g. book, play, comic book) or having a character named after the backer
  • A phone call or in-person meeting with the backer(s) to offer advice or share a meal

Tangible perks are generally more expensive and require fulfillment. Things like t-shirts, books, products, etc. are all examples of tangible rewards.

It’s important to know that your perks can be subject to government sales tax if the perk is considered fair compensation for the amount of money that was donated. Check out this site for more information on how to handle crowdfunding taxes.

Still Stuck? Consider What You Have to Offer

If none of the scenarios above apply, and you still don’t know what to offer as a perk, consider offering a service. Your marketing expertise or business acumen might be very valuable to other small business owners or entrepreneurs who might donate. An author might be able to offer another author a fresh pair of eyes on his or her story or give plot advice. Check out this article for more information about some of the more unique crowdfunding perks.

How to Structure Your Perk Levels

For the most part, you have total control as to what perks are offered and at what dollar amount. It’s best to think about what different amounts of money will get you. For example, if you’re giving away t-shirts to every $5 backer and above, you could find yourself printing and shipping 100 t-shirts and only have $500 to show for it.

Kickstarter has said that the most popular backer level is $25, so starting at the $5 or $10 level and then going to $25 is a good idea. You should also save your perks for any levels above $25 as the right perk might motivate someone to donate $50 instead of $25.

Also, don’t be afraid to limit some of your more time-consuming or expensive perks. Offering a dinner with backers and those involved in the project might be something a lot of people would take advantage of, but you have to be considerate of people’s time.

Perhaps the best thing about your crowdfunding campaign is that it’s fluid. If you start the campaign with a few perks and find that one or two in particular are very popular, you can make adjustments. It’s also important to remember that some trial and error is to be expected. Every campaign is different because every project is different, and therefore, campaign perks will be different too. However you run it, there may be no time like the present to start.

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