While creating your campaign, consider this outcome:
You had a successful Kickstarter campaign, delivered your product, and you broke even, now what?
If you plan on continuing with your product or creating a brand, this is a situation you don’t want to be in. While this may seem like it should be the last installment of this 3 part series, it is important to think about early on. Breaking even means there is no capital left-over to make a second run of products. If personal funds or a loan of some sort are not available, there is a way to safe-guard against this happening, which I will describe below.
In my campaign there was a minimum number of units I would want to order for a run of products to be cost effective. Too few ordered, and the unit price would be very high and reduce profits, making future orders impossible. First you need to find that minimum order. Sometimes a supplier will only sell, say, 500 units as a minimum. Other times they will sell fewer units at an increased price per unit, in which case you need to decide at what volume is the price acceptable.
After you find your minimum unit quantity, you can integrate it into your Kickstarter goal to be sure that if successful, you will be able to stay in business by being able to order a second run of products. Here is a quick way to estimate the increase in your goal beyond your break-even level:
Minimum Units X Unit Cost to You = Total Mfg Cost Ex: 500 X $10 = $5,000
Then find the increase in your goal by dividing Total Mfg Cost by your Profit Margin per Unit (Retail price – Unit Cost to You):
Total Mfg Cost / Profit Margin per Unit = Units to Pay for Minimum Order
Ex: $5,000 / ($15-$10) = 1,000
Multiply this number by your Retail Price to find the increase in Kickstarter goal:
Minimum Units X Retail Price = Increase 1,000 X $15 = $15,000 increase
Increasing your goal may sound counter-intuitive at first, in fact some campaigns actually ask for less than they need so they have a higher chance of being “over-funded” and featured on Kickstarter’s front page. I would rather be prepared for the event of being just barely funded, as I was in my last campaign for the Stow-Away cap holder, so that I will be able to deliver to my backers. Please note that once the campaign has started, you cannot change your goal, so choosing the appropriate goal is very important.
I will soon be posting the last part of this series on how to create a strong Kickstarter project, and I hope this has helped if you are thinking about crafting a campaign!