For product creators big and small looking to bring something unique to market, there isn’t a better way to launch than with crowdfunding. And if you’ve ever heard of the concept of crowdfunding, you’ve likely also heard of its biggest platform: Kickstarter.
While there are other crowdfunding platforms, such as Indiegogo, Fundable, and Patreon, none are as widely used as Kickstarter. But before you jump onto their platform for your next product launch, you need to know if the platform is right for you. To help you determine if this platform is your best option, we’ll give you an in-depth look at the pros and cons of Kickstarter. This will help you make an informed decision so that you can have the most effective crowdfunding campaign possible.
Key Takeaways
- Have a complete understanding of the pros and cons of Kickstarter
- Recognize if Kickstarter is the right platform for your product launch
- Learn how to turn crowdfunding failures into future success
Contents
Understanding Kickstarter
To better understand this platform, let’s first zoom out and answer the question: “What is Kickstarter and what is its role in the crowdfunding space?”
Kickstarter, like its closest competitor Indiegogo, is a website that was created to give entrepreneurs and creative professionals a place to raise funds from a global community who pledge money for products that they want to support. Product launches are inherently risky because they require a large investment of time and capital to create inventory without being able to generate revenue until they actually sell the product.
Platforms like Kickstarter, however, help to mitigate that risk by reversing that premise. Instead of selling physical inventory to buyers, crowdfunding lets you generate revenue before needing to pay for your first manufacturing run. Let’s look at how Kickstarter makes that happen.
How Kickstarter works
To run a crowdfunding campaign on Kickstarter, you really only need one thing: a prototype! With just a working prototype of your product, Kickstarter lets you build an entire crowdfunding campaign to start collecting pre-orders from backers.
Creators do this by setting up a campaign page on Kickstarter, complete with project details, a campaign video, and incentives to entice people to pledge. Users can browse live campaigns, with the homepage ranking projects by popularity. Those with high engagement while they are live are given an organic boost by Kickstarter’s algorithm so that more active users learn about them. It’s an extremely community-driven platform with a high potential for revenue gain thanks to its user base.
Who uses Kickstarter
No Kickstarter campaign could be successful without the support of backers. This community is key, and understanding who they are helps you tap into them more effectively.
Kickstarter gets tens of millions of unique visitors a month. On average, that’s more than the next largest, Indiegogo. But more than being a vast pool of potential backers, Kickstarters largely belong to a category of online customer that’s perfectly aligned with crowdfunding. These people fall into the “innovators” and “early adopters” categories.
This graph shows the well-known “product adoption curve” and characterizes the different groups of people who adopt new technology, ideas, or products. Crowdfunding backers fall into the first two categories, as they are more inclined to seek out new products before the mass market catches on. In essence, those who use Kickstarter are people who want to be the first to buy new stuff, and typically expect a reward for doing so – such as getting a discount.
There’s no doubt that having access to “early adopters” is a major benefit of this platform. Next, we’ll explore even more pros of using Kickstarter.
Pros of using Kickstarter
Besides sheer name brand recognition, there are many reasons to launch on Kickstarter. To get a better idea of if this platform is right for your product launch, it’s important to understand all of its pros and if they complement your goals.
Access to funding
The most obvious pro of Kickstarter — and of crowdfunding in general — is how a successful campaign gives you access to funding. Each campaign is initially set with a funding goal, and if that goal is met by the deadline, the creator receives the funds and the backers get the products they paid for.
The true beauty in Kickstarter’s system lies in the fact that you can accomplish all of this funding with nothing more than a working prototype. If done well, you can far exceed your funding goal by the end of your crowdfunding campaign. With that capital, you’d be able to place a larger-volume order with your manufacturer, which usually decreases the cost per unit and increases your margin.
Market validation
Traditional product launches require big financial investments in order to design and manufacture inventory before a single dollar is made. Furthermore, it isn’t until creators have inventory to sell that they start to even use funds for marketing. In this model, it’s extremely difficult to know if there’s demand for your product before you start your product launch.
Kickstarter, however, flips this by allowing you to validate demand for your product before overinvesting in inventory. Kickstarter backers know that they shouldn’t expect to receive their product until months after a campaign finishes. This built-in trust from the community is what gives you the opportunity to answer important market validation questions like:
- Can I acquire a customer profitably?
- What product positioning is most effective?
- Which audiences respond best to my product?
Being able to gather data on how your product performs in the market lets you move into the post-campaign phase more confidently, and gives you a sense of whether you can successfully transition to e-commerce.
Community building
The community you build on Kickstarter can give your startup some serious momentum. This is done by careful nurturing and setting up an ecosystem where they can engage with not just each other, but with you and your team. We recommend giving your audience some different forums for communication, like a Facebook group or Discord server. From there, it’s up to you to help grow the engagement. Here are some strategies you can use:
- Share updates and seek feedback: A lot goes into a crowdfunding campaign, and you should always share your progress with your community. Looking for feedback also creates a collaborative atmosphere, so feel free to share previews of your campaign page or video to see if anybody in your community wants to share their ideas with you.
- Send announcements: Planned launch date, new add-ons for the campaign, an announcement for new product colors — these are all valid pieces of information you’ll want to announce to your audience.
- Product education: If someone has joined your community, it means there’s a decent chance they will show up on launch day to back your product. Give them more reason to do so by sharing exclusive video walkthroughs of how your product works, or what features it has.
- Promotions: Don’t forget to promote anything and everything. Let backers know when you’re going live, how much you raise after the first day, or even if you have any Kickstarter cross-promotions you want to spotlight.
Treat your community like a long-term asset. As you continue to build and engage, backers become more connected to your product and want to bring others into the community to help grow the brand even more.
Marketing and exposure
Having initial success on a Kickstarter campaign has the potential to create a big PR splash. High-visibility PR accomplishes two things. First, it creates credibility. Potential backers love to see when a product gets noteworthy exposure. This gets conveyed through things like logo clouds and testimonials from top media outlets.
Second, good PR is a huge boost to marketing. Big media placement can attract a significant amount of new eyeballs to your product, in turn driving even more revenue. This kind of traffic comes in bursts and it can create spikes in traffic and backing on your campaign page. And because Kickstarter is such a well-known name in crowdfunding, certain audiences will feel your product launch has a lot of credibility.
Cons of using Kickstarter
Even though Kickstarter has many reasons to love it, there are still some cons to the platform that are important to understand. Here are the four biggest cons of running a crowdfunding campaign on Kickstarter.
All-or-nothing funding model
Kickstarter uses an all-or-nothing funding model for its campaigns. This means that if the creator-set funding goal isn’t met by the end of the campaign, Kickstarter doesn’t charge the backers and the creator gets none of the funds.
This measure has been in place since the platform launched in 2009, and was implemented to help minimize risk to all parties involved. Unfortunately, that means that if you as a creator dedicate a sizable investment into your campaign and do not succeed, you cannot gain any revenue as consolation.
Kickstarter does not allow any pauses mid-campaign, so this is not an option if you feel your product launch might not meet the set funding goal. However, it is still common practice for creators to cancel and relaunch at a later date. Creators who take this route would want to follow our best practices for ensuring their relaunched campaign was a success.
Fees and costs
Product creators also need to be aware of the various fees Kickstarter will deduct from a crowdfunding campaign held on the platform. Kickstarter fees manifest in two forms: overall deduction and payment processing.
When a project is successfully funded, Kickstarter charges creators a 5% fee to be collected from the final amount raised. Keep in mind, though, that this 5% fee will not be charged in the event that a campaign does not reach its funding goal.
The second type of fee is for payment processing. Kickstarter uses Stripe to process payments, meaning creators will have to pay anywhere from 3 to 5% to receive their payments. Pledges under $10 get a micropledge fee of 5% + $0.05 per pledge. These are the main fees associated with every successful Kickstarter campaign.
Time and effort
It would be a lie to suggest that crowdfunding is easy; and even though Kickstarter is designed to make the mechanics of crowdfunding stress-free, running a campaign from start to finish requires a lot of time and effort.
This is one of the easiest forms of doubt to creep in before deciding to attempt crowdfunding. Ideas like “I don’t have time to launch my product,” or “I don’t have the right marketing experience to do it” are valid concerns, but we prefer to encourage creators to overcome these limiting beliefs.
When it comes to doubts about having enough time, here’s what we suggest:
- Commit 100% to making your launch happen.
- Create a detailed plan for every phase of the process, so you’re never surprised.
- Schedule some time everyday to work on your campaign.
No crowdfunding campaign can succeed without giving immense time and effort, but if you approach it with LaunchBoom’s guidance and strategies, it won’t take as much time as you think.
Potential for failure
Yes, crowdfunding is statistically more risky than not. Yes, your campaign might fail. Fear of failure is very understandable and is high on the list of anybody’s disadvantages of Kickstarter and crowdfunding.
At the end of the day, you have to ask yourself: Would you rather launch and fail, or never launch at all and regret it? If you have a dream of launching your product, you’ll feel no choice but to tackle this limiting belief head on. Just remember, the pros of crowdfunding’s product launching power far outweigh the possibility of failure. Even if you launch the traditional way, you might fail — and be in a much worse financial situation as a result than you would with crowdfunding.
Case studies and examples
There are few things more empowering than seeing how other creators were able to beat the odds and succeed, or fail at their first campaign only to take the lessons they learned and turn them into a redemption story. Let’s look at two such campaigns that were able to navigate the various pros and cons of Kickstarter and crowdfunding.
The PACK Rack: Success story
The best Kickstarter stories are those where someone is able to turn a simple hobby into a six-figure business. Evan Packard, creator of The PACK Rack, was able to do just that when he went from selling prototypes out of his garage to a $259,348 raise on Kickstarter.
How did Evan go from unknown to six figures on Kickstarter? He did so by perfecting his pre-launch marketing strategy. By targeting the right audience Evan was able to build a massive email list of potential backers who were highly likely to convert. How did he know he could rely on their purchasing intent? Because those who joined his pre-launch email list placed a $1 reservation for the guaranteed lowest discount.
Here were the results:
Evan took advantage of the Kickstarter audience. Early-adopter-type buyers are always on the lookout for new products at a discount, and giving them access to first-day discounts allowed his campaign to get extremely over-funded on day one (what we call a LaunchBoom). Because he used our proven system for the pre-launch phase, Evan was able to successfully validate his product, raise the funds to produce his product, and turn his hobby into a viable business.
Desk Nest: Lessons from past campaigns
Sometimes, creators aren’t able to get the results they want the first time around. That was the case for Scott Salzman, the creator of Desk Nest. He had launched three crowdfunding campaigns before launching Desk Nest, and was never able to raise more than $10,000.
For his fourth Kickstarter campaign though, he worked with our team at LaunchBoom and raised $468,628 (that’s 20 times more than his previous three campaigns combined).
Scott was able to see a dramatic improvement in his results thanks to one key change: his pre-launch strategy. Meta ads are the biggest drivers of campaign awareness, and Scott was able to use LaunchBoom’s tools to perfect his ads. Once he found the perfect mix of ad copy and imagery, he started seeing rapid improvement in his pre-launch stats that would indicate a successful launch.
From there, it was a matter of making sure he could keep his audience engaged until the big day finally came. On day one, he made $165,229, giving his campaign an organic boost on Kickstarter. This bump in visibility, plus continuous advertising with his highly effective ads on Meta, allowed him to ride a wave of momentum that got him 4,686% over his funding goal at a rate of 9.07x return on pre-launch ad spend.
Desk Nest is proof that there’s always a chance for more success when you’re open to new strategies and learn from the past.
Pros and cons of Kickstarter: Frequently asked questions
What is the downside of using Kickstarter?
Some of the most noteworthy downsides of Kickstarter include:
- There’s an all-or-nothing funding model that doesn’t pay you if your campaign fails to meet its funding goal by the end of its set duration.
- The fees that the platform takes can amount to up to 10% of each pledge.
- Kickstarter campaigns require a lot of time and effort, and can be very costly if the campaign doesn’t succeed.
- There’s a high statistical chance of failure.
Additionally, depending on your product type, you might be more suited to a different crowdfunding platform. For example, if you are launching a game, you may want to consider launching on Gamefound.
Do you lose your money if a Kickstarter fails?
Kickstarter will not apply any of its fees to your campaign if it fails; however, you also will not receive any money from the backers who supported your campaign if your funding goal is not met by the end of the campaign duration. The only money you lose if your Kickstarter campaign fails is whatever money you invested into the whole process.
What are the advantages of Kickstarter?
There are many benefits of using Kickstarter. Those include:
- Access to funding: If you have a successful campaign, you get to use the money you raised to manufacture your first batch of inventory.
- Market validation: Kickstarter success is proof that there’s a market for your product.
- Community building: The unique Kickstarter community typically become fans of the products they support and will continue to do so as the brand continues to grow.
- Marketing and exposure: Kickstarter is a popular platform with the potential for new audiences to learn about your product.
What is the failure rate of Kickstarter?
As of August 2024, the failure rate of Kickstarter projects is 58.36%.
Pros and Cons Summary
This table highlights the main advantages and disadvantages of using Kickstarter for your crowdfunding campaign.
Pros | Cons |
Access to funding with just a prototype | All-or-nothing funding model |
Market validation before overinvesting | Various fees and costs (up to 10%) |
Community building and engagement | Requires significant time and effort |
High potential for marketing and exposure | High statistical chance of failure |
Built-in trust from the community | No revenue if funding goal is not met |
Early adopters eager to support new products | Can be costly if the campaign doesn’t succeed |
Final thoughts on the pros and cons of Kickstarter
Now that you know the pros and cons of Kickstarter, you can make a more informed decision on if this platform — and crowdfunding in general — is right for your product launch. If you’re still unsure, or would like to learn more about the pros and cons of other crowdfunding platforms like Indiegogo or BackerKit, LaunchBoom has your back. Our product launch experts are ready to answer any questions you might have, no matter where you are in your crowdfunding journey. Just answer a few questions to speak with one of our experts.