How to beat the rewards system

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As someone who has been working in this crowdfunding space for quite some time, I have had the opportunity to have incredible conversations with people who run crowdfunding platforms and people who run campaigns on crowdfunding platforms.

As you can imagine, the information you gain from both sides of the coin, while different, is necessary for a complete understanding of the crowdfunding scene.

Before I decided on exactly what I wanted Do it Now Now to be, and the kind of support we would need to offer our campaigns, I did a lot of research into what it takes to run a successful campaign and what support campaign founders need.

Let’s talk about perks/rewards

Yes! You got the money, congratulations! But now, you have to deal with sending everyone that pledged an amount of money to you, the things you promised you would give them.

If you have raised $23K and you have 380 backers who have each donated between $10 and $1000, you are going to have to gift 380 people a gift corresponding to the amount they donated.

That means, you are going to have to design or purchase the gift and send it to their individual addresses. To some of us, this seems pretty straightforward.

im-sorry-im-confused gifHowever, for people like myself who need to break stuff down, consider this.

What is your donation percentage?

The first thing to consider when deciding which perks you are going provide to your donors, is how much of the donation is going to go to perks.

Most platforms offer a 5% (or more) commission on the amount raised. After that, they add the transaction fees (usually between 3 and 4%). The problem with pledges, is that not everyone has the money in their account when it is time to collect. Factor in the cost of failed pledges.



We suggest you factor in another 2% to cover this. So, before you factor in perks at all, you have just paid out 10% of the amount raised on each donation. So far, on each $100, you are making $90. Not bad.

What is your attraction percentage?

Now, how much money do you want to spend to attract someone to donate to your campaign? This includes any kind of advertising (Facebook, twitter, Instagram etc.) you want to use.

We don’t actually suggest you pay a ridiculous amount for advertising a campaign. Say you spend 50c on each $10 donation, that isn’t too bad. So far, on each $100, you are making $85. Not bad.

What is your perk percentage?

How much do you value your donor, in each donation bracket? Think about this purely monetarily. Your perk percentage reflects how much of the donation you want to spend on the physical or non-physical perks, the shipping of the physical perks, the design costs, etc.

We suggest as an individual campaign, you spend no more than 15% of your raised amount on perks. There are different rules, depending on the type of campaign you are running. If you already have a product you are trying to sell, and you have a RRP, then by all means use your existing merchandise!

You have already paid for it, and if you are making a small mark-up on the cost-price of your merchandise you are doing well. However, if you do not have existing merchandise and you actually need to make some money to create merchandise, this 15% maximum budget is for you.

The 15% includes the physical items, and the packaging and shipping of those items. Note that with the state of most platforms, people expect a lot as a reward.

We suggest you get really creative so that you don’t end up spending 50% of your raised amount on perks (trust me, it happens!). You are now at $70 for every $100. Not bad.

Keep on budget and you will get a good amount back!

the-windMake sure you factor in the quantity of each perk you want to offer. What will your community actually donate? Are you surrounded by $10 givers, or $100 givers? What do you think your $100 will want to receive?

Try talking to your community. If you make them a part of your decision making process, they are much more likely to respond to your campaign.

What is your administration cost?

Think about your opportunity cost. How much time are you going to spend on the post-campaign administration? How much time are you going to spend on marketing and organising your campaign?

Most campaigns take 10 hours a week to run, and most campaigns run for 8 weeks. Post-campaign administration is about 3 hours each workday for a month (approx. 60 hours). Factor in a salary that makes sense for whoever is going to be dealing with this part of your campaign.

You are looking at 140 hours at an average wage of $5/hour; $700. Factor in 3% of your fundraising amount as a guide, if you don’t want to have strict time/cost constraints.

These estimations depend on the number of backers and the type of perks you have —the more personalised the perks, the longer it is going to take to organise properly. It is not impossible to do this well.

There are actually a number of print and ship on demand platforms that you can look up. There are also a number of crowdfunding support companies that handle all of this for you. They usually charge between $3-5 per physical item for shipping and handling post-campaign.

If you plan and budget carefully, and you do as much of the work yourself and try to use as much readily available merchandise as possible you could be at $67 for each $100 donation post-campaign. Not bad at all.

There are benefits to donation/reward based crowdfunding, and there are obvious benefits to no-reward donation based crowdfunding. You need to think about what type of crowdfunding best suits what you are trying to do.

Merchandise based campaigns with ready merchandise should go for Indiegogo or Kickstarter. Cultural campaigns (particularly the UK based ones, should consider Crowdfunder UK), and people who want to raise very small amounts of money to help solve a specific issue, should consider Go Fund Me (their commission is higher, but no need for rewards).

The other option

Do it Now Now is very different from other platforms out there because we have a number of innovations in our donation based models, with the addition of something we like to call our “universal perk system”.

The rewards system of donation based platform is undoubtedly the most confusing and often the most stressful part of the entire crowdfunding process. We decided we would do our best to ease the stress.

We provide all the perks and rewards on our platform. And in some cases, we work with our campaign founders to create “speciality perks” that are specific to their campaigns and resonate with their communities/following. We support charitable initiatives, start-ups, fundraising individuals, and creatives with a project in development.

If you are interested in what we offer over on Do it Now Now with our “universal perk system” and our “admin cover”, feel free to contact me.

About Bayo Adelaja

Bayo Adelaja is the CEO of Do it Now Now, a company that helps members of the Diaspora contribute to the development of local communities in Africa. Feel free to contact Bayo on Twitter or email, or meet her for coffee in central London by booking at her website.

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