A few #SciFund people have told me that they have not been receiving my e-mails or notifications via the #SciFund e-mail list. If you applied for #SciFund but haven’t heard from me in the past week, please contact me immediately (contact info on About page).
Okay, on to the topic of this post: how do you figure out the right dollar target for your #SciFund crowdfunding project?
There actually is some thinking involved in getting to the answer. The first step is to talk about fees. The organizers of #SciFund aren’t making a penny off of this, but RocketHub does charge some fees. If you make or exceed your target, RocketHub keeps 8% of what you raise (4% going to credit card fees, 4% going to RocketHub). If you don’t hit your target, RocketHub charges 12% (4% going to credit card fees, 8% going to RocketHub). Additionally, for people not in the US and Canada, there is a bank wiring fee, which is 10-20 dollars, when RocketHub sends your money to you.
So, what does this all mean? One very important note is that – if you exceed your target, then you keep the extra (minus 8%). So, in fact it makes sense to have a low dollar goal.
Further, our research on the first round of #SciFund shows that people are FIVE TIMES more likely to give you money once you have hit your target.
Sounds funny, right? Why would people give money to a project that is fully funded?
The answer is that crowdfunding is all about percentages and momentum. Let’s talk about percentages first. In crowdfunding, distance to goal is always measured as a percentage. People always want to go with a winner, so people are much more likely to give to a project that already has hit a high percentage of its target. If you have a very high target, even if you have gotten several thousand dollars in contributions (which is in and of itself challenging), as a percentage a project still comes off looking like a loser (which detracts from further contributions).
A second key thing is momentum. A project which is rapidly blasting through percentage targets (50% today!, 75% tomorrow!) will attract contributors, because (again) people really, really want to go with a winner.
So here is where the psychology comes in. I would suggest that you have a public target (which is relatively low) and a real target (which is higher, but you keep to yourself). With your low target, it will be easier to hit it. Once you have hit your 100% mark, you slightly revise your campaign to say something like “Wow, thanks everyone for all of this success! If we now can hit 150% of our target, here are all of the things we will be able to do with the money!”. And repeat for 200%, 250% (etc.) of target. Note that your actual target on RocketHub stays fixed through all of this – it is just the number of contributions that is changing.
So, back to the question: what is the right dollar target? You need a little more information to figure that out. You will need to pad your target to account for the RocketHub charges. You should also pad your dollar target to account for two other factors. First, we strongly encourage you to route your SciFund money via your university (the check would still be sent to you – the name on the check would be your university’s name). This kind of contribution is a no-strings attached gift, and universities generally charge overhead in the range of 0-8% for gifts. Check with your own university to get your own specific percentage.
The third factor which you will need to consider in figuring your budget is the cost of your rewards that you will be sending back to contributors. It, of course, makes sense for rewards to be inexpensive, relative to the amount of money being contributed. But you should estimate the cost for creating your rewards and sending those rewards out (and add that cost on to your project).