Crowdfunding rewards: a plan for success
A successful crowdfunding campaign has the potential to harness your current fans’ enthusiasm while building your fan base and spreading the word to new eyes and ears, which can bring in even more money.
One key to success is setting a mix of rewards that encourages your backers to pledge the most amount of money they can to your project. Your approach should focus on three keys: 1) getting pledges from more people, 2) enticing your backers to contribute at higher amounts, and 3) achieving your funding goals (and stretch goals) as quickly as you can.
Rewarding the right way
Make sure you avoid strategies that discourage pledging or cause you to lose money when setting your reward levels. Sounds obvious, but these pitfalls seldom are. Here are things you should do:
Set the right prices. Don’t offer a simple reward that costs more than what someone can easily find elsewhere. For example, a straight digital album download reward should not cost more than what you’ll charging on CD Baby or iTunes. A digital download could be a nice addition to add value to another reward, though.
Don't forget shipping costs! As a general rule, don’t offer a reward for less than $25 if it requires shipping, as shipping and postage costs will eat into your profit. Instead, offer digital-only rewards – exclusive MP3s, digital posters – for your lower price points. The price point where you can begin to offer physical goods – a CD, vinyl record, printed poster – is around $25-$30. Remember, as rewards grow, size and postage options will grow, and every cent paid toward shipping is money that isn't going to your project.
Keep price gaps between rewards. Offer potential supporters a variety of pricing options and support levels to choose from. Every backer is different: some want to support you and can afford big-ticket levels while others can’t afford to pledge a lot. Provide multiple options and allow people to find the level they’re most comfortable contributing to.
Keep some rewards exclusive and limited. You shouldn't offer a $5,000 reward to unlimited people, for instance. If you're putting a premium price tag on something, you should introduce scarcity and competition and emphasize how special and exclusive the reward is.
If one of your goals is to entice donors to pledge higher amounts, you need to ask yourself, "what will inspire people to pledge more money?" One approach is to be creative in the rewards you offer and the pledge levels you set. Offer lots of limited-run or special rewards at ever-increasing levels, ranging from $25 to as high as $5,000, $10,000, or more.
To get the most out of your pledges:
Set a $1 reward. This might hook someone who is only casually interested in your project, but once they become a donor, you'll be able to message them. Every update you send to your list presents another opportunity to up-sell these supporters to a higher level. If you are diligent in your crowdfunding efforts, you’ll be communicating regularly – including when you’re close to achieving each goal, stretch goals included. You might influence a backer to get more heavily involved or to pull in other people to help your project succeed. A good entry-level $1 reward might be an exclusive (unreleased) download or PDF image of a handwritten page from your lyric notebook.
Set $10 rewards. This is an excellent price point for a downloadable digital album, but you should add something extra so it becomes a true reward – not the same thing they'll be able to get from CD Baby or iTunes. Include an additional song or custom wallpaper.
Set $25 rewards. This is the most common pledge point, so offering a variety of rewards at this level will make it more likely that you'll capture numerous types of backers. As mentioned, this is the first level where we recommend offering non-digital rewards – though offering physical and digital equivalents is worthwhile. Non-physical rewards that don’t require shipping are better for you, as they put more money into your project.
Offer rewards greater than $25 at varying price points. Prepare a graduated set of rewards for donations of more than $25 all the way through $500-$1,000. Your options are practically endless. Consider offering previous albums or rarities from your back catalog. Create various packages: CDs in various packaging, vinyl, USB drives, etc. Offer a souvenir photo book or access to a video diary of the “making of” your project. Add funders’ names to a “thank you” page on your website and in the liner notes.
Offer creative control. You can even offer your fans a little control or input into the creative process. For example, offer high-level backers a chance to vote for the album art from an array of finalists or to vote for a cover song they want you to record. Mix and combine rewards to create bundles at higher price points.
Create top-level rewards. It might seem pie-in-the-sky, but some fans really might donate at multi-thousand dollar levels – but not unless you ask. Also, offering high-priced rewards makes the pricier mid-level options appear more affordable. These high-level rewards do need to be exclusive and/or personalized. For example, offer backstage access, a day with the band, or a private/house concert. Think big, but don’t over-commit yourself to something you can’t do, and don't offer too many of them.
Don't be afraid to improvise
Before you launch, study successful music crowdfunding campaigns, and incorporate the best ideas into yours. And don’t be afraid to adjust the rewards, even as the campaign is live. Monitor progress and see what’s working; note what your backers are choosing, or skipping; and make changes as you go.
This post originally appeared on Electronic Musician’s The DIY Advisor column.
Billboard Magazine called Randy Chertkow and Jason Feehan “the ideal mentors for aspiring indie musicians who want to navigate an ever-changing music industry.” Together, they’re musicians who are working on their 21st album, authors of The Indie Band Survival Guide: The Complete Manual For The Do-It-Yourself Musician, 2nd Edition (Macmillan), creators of the 15-hour online course, Making Money With Music (CreativeLive), and regular contributors to Electronic Musician Magazine, including the free weekly web column, The DIY Advisor. They also teach and consult about music business.