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Setting Crowdfunding Goals

November 29, 2014

[Editor’s note: This is the latest in a three-part series of articles covering music project fundraising; see previous installments in our August and October 2014 issues.]

One of the most popular ways for musicians to raise money for their projects is crowdfunding. Whether it’s to cover the cost of producing your next album or to make your tour happen, crowdfunding not only generates dollars, but also helps get fans involved in your projects. When run successfully, a crowdfunding campaign can capture your backers’ enthusiasm and help spread the word to other people—which can bring in even more money and build your fanbase.

Planning and sequencing a crowdfunding campaign correctly will help you maximize fundraising. But another component you need to consider is setting the best mix of rewards— ones that encourage backers to pledge the most dollars to your project. Setting the right mix means you’ll get more pledges from more people, encourage your backers to pledge at higher amounts, and help you achieve your goals (and stretch goals) quicker.

Reward “Don’ts” Before considering the reward levels, you will want to keep in mind some pitfalls that can discourage pledging or cause you to lose money—and they aren’t always obvious. Avoid these mistakes:

Don’t offer a reward that costs more in funding donations than the price someone can reasonably pay elsewhere. For example, a digital album reward should never cost more than it costs on iTunes.

Don’t forget to factor in shipping costs! Don’t ever offer a physical reward for less than $25 that requires shipping. Otherwise, the shipping and postage costs will eat your profit. Instead, offer only digital rewards— downloadable MP3s, digital posters—for your lower priced rewards. The key price point where you can offer physical goods as rewards—a CD, a printed poster—is typically around $25-$30. But that reward should fit in a 6"x 10" padded envelope and weigh less than 3 pounds. As reward limits grow, size and postage options can grow, but keep in mind, every dollar paid toward shipping a reward is a dollar that’s not going to your project.

Don’t have large price gaps between rewards. Offer your backers many different pricing options and reward levels to choose from. Each backer is different—some can’t afford to pledge too much while others can afford more. Your goal is to provide options so you can help people find the level they’re most comfortable pledging.

Don’t make top rewards open to many. A $10,000 reward should only be offered to one person, for instance. You want to keep them limited so you introduce scarcity and competition. This encourages pledging.

Setting Reward Levels How do you get people to pledge more than just a $1? What inspires them to pledge higher amounts? The answer is in the types of rewards you offer and the pledge levels you set. Be creative. Offer a lot of special and limited-run rewards at ever-increasing levels—from as low as $1 to as high as $10,000, $25,000, or more.

To get the most out of your pledges, follow these tips:

Set $1 Rewards: Always have a $1 reward! This level hooks the people who are only casually interested in your project. The point is, once they become a backer, crowdfunding platforms allow you to message them, and with each update you send you’ll get more chances to upsell them to a higher reward. If you follow our advice from earlier columns, you’ll be sending messages when you’re close to achieving each goal—not just the first goal, but the stretch goals as well. You might influence a backer to pull in other people to help the project succeed. For a good, low-barrier $1 reward, try offering a single downloadable track.

Set $10 Rewards: A $10 reward is the perfect price point for a downloadable digital album. But don’t just offer the exact same thing that someone can buy at iTunes or other digital stores. Add something extra so it becomes a true reward. For example, an additional song, or a downloadable PDF of your lyric sheet.

Set $25 Rewards: Data shows that the $25 reward is the most common pledge, so offer a variety of rewards at this level to capture this special price point. This is also the first level where you can consider non-digital rewards. But if you do so, make sure to offer at least two $25 rewards: a physical reward that you can mail and a digital reward equivalent that you can dub the “save-the-earth” version. Push the non-physical rewards that you don’t have to ship—they are better for the earth, and better for you!

Setting Rewards Greater than $25: Prepare a graduated set of rewards for levels greater than $25 all the way through $500 or so. For these levels, there’s no end to the type of rewards you can create. Offer previous albums or rarities from your back catalog. Create various packaged rewards—different CD cases, vinyl, USB drives, etc. Offer a souvenir photo book of the “making of” your project. Offer to add funders’ names to a “thank you” page in the liner notes. You can also let fans buy some control. For example, let backers who pledge $100 or more a chance to vote for the album art (from a pre-selection) or create a setlist for a tour stop in their city. Mix and match the rewards to create bundles at various price points. Also, don’t forget to continue to offer digital-only rewards at these successive levels.

Setting the Top Rewards: Always include multiple high-level rewards. Some fans really do donate at these levels; you need to ask. Also, offering high-priced rewards makes the moderate-level rewards—$10, $25, $50—seem more affordable. Personalization options are most appropriate for those who pledge the largest amounts. For example, you can offer backstage access, or a day with the band, house concert, or party. Think big, but don’t over-commit yourself to something you can’t do. Believe it or not, someone might fund your $10,000 or $25,000 reward…it does happen!

Before locking in your rewards, research other successful crowdfunding campaigns to find out what worked for others. And don’t limit yourself to referencing musicians—ideas can come from any type of crowdfunding campaign. Also, sometimes giving clever names to each reward level can get people to commit.

By following these crowdfunding reward tips (and avoiding the common mistakes), you’ll increase the odds of pulling in higher pledge amounts and achieving your project goals.

Randy Chertkow and Jason Feehan are authors of The Indie Band Survival Guide (St. Martin’s Griffin), now in its second edition.

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