It’s been awhile since I’ve visited the costs of producing a successful Kickstarter. Many of the older posts have been taken down because Kickstarter projects have evolved and those posts have become outdated.
Today, I’d like to look at our Silverback Playing Cards project.
This was a tricky project because of the actual cost required to make it happen. It’s an expensive product relative to other things that we have made, and it doesn’t have the greatest track record to begin with. Let me explain…
In July of 2014, the Gorilla Playing Cards were launched by Dave Edgerly, who is also located here in Austin. I really liked the project, but it didn’t fund and so it was cancelled and relaunched again in August. It still didn’t fund and I was disappointed because I really liked the design.
So afterwards, I approached the designer and asked to buy the design so that we could try it on our project and see if we could make them happen. Fortunately, in June of 2016, we funded the project and the Gorilla Playing Cards became a thing.
They came out looking pretty good too. You can check them out here.
That was until Bicycle started making what they call MetalLuxe cards. This is some really cool foil technology that they developed just for their card backs. So EVERY card back has this cold stamped foil back that looks and feels like any other standard Bicycle playing card.
And punny me just couldn’t resist trying to make the Silverback Playing Cards with just that, a silver back.
But that’s where the problem comes in, MetalLuxe cards are NOT cheap to produce. Our cost just to manufacture a deck of them is about $10, and we normally like to print at least 2500. There wasn’t any way we were going to be able to quickly fund a deck of cards for $25k when our normal goal was usually closer to $5k.
And that was just manufacturing costs. We still needed to take into account the following:
- Art Fees
- Kickstarter Fees
- Stripe Fees
- Shipping Fees
- Fulfillment Fees
- Manufacturing Fees
For every project we do, I start with a baseline number of backers that I think we’re going to get. Over time this has gotten much easier because I can look at projects we’ve done in the past and guesstimate how popular I think it might be. Having 25 projects already done gives me a good idea.
Obviously, the best example to pull from was the previous Gorilla Deck campaign. We had a total of 272 backers, so let’s round up to an even 300 for some easy math.
If you’re reading this, you probably don’t have a lot of your own statistical data to pull from. Your best bet is going to be to go out and look at other projects similar to what you want to do and just be cognizant of the fact that you will probably not hit those numbers unless you are a marketing genius.
The shipping cost for first class on a single deck of cards is $2.66. The mailer that we use is about $0.10 and the label is about $0.10. So our minimum cost to ship a single deck of cards is $2.86. If all of our backers only order one deck, our total shipping cost is $858.
A typical deck of standard Cobalt or Crimson MetalLuxe playing cards from Bicycle are about $20. That’s standard pricing on these and Bicycle is the one manufacturing them so they get a significant price advantage on production.
We have done deluxe playing cards in the past with fancy tuck boxes, foil, etc. so we’ve seen how high they can sell for on the secondary market. The Silverbacks will likely sell for $35 in post production, however they have to get there first. So we had to choose a price point somewhere between $20 and $35. We decided that we’d rather offer an amazing deal to try and maximize volume and get as many backers on board as possible. So we decided on a $20 price point.
Assuming 300 backers as our baseline, that would only bring in $6,000 by the end of the project. Not nearly enough to get close to our $25k manufacturing costs.
This is more of an art than a science. It’s become unrealistic to put the goal of what your Kickstarter would actually cost because it looks completely unattainable to the average backer. It’s far better to set a goal that will offset your financial risk as much as possible.
In our case, we tend to set the lowest possible goal that we are comfortable paying the difference for. Most backers don’t see this as an issue because we are an established company and have always fulfilled our projects.
Oftentimes, if you can hit your goal quickly, you will “overfund” enough to hit what you actually need. Assuming there is enough interest and momentum going into the stretch goal phase.
For this project, we split the difference and set the goal at $15,000.
Now that we know where our minimum is for the goal, we can calculate some additional fees. This is straightforward since it’s roughly 10% of the funded total. In our case, $1,500.
I know what you’re thinking, didn’t we already calculate this in the shipping fees? Yes and no. The shipping fees are a straight cost associated with the packaging and shipping of your product, it does not take into account any of the extra time or effort associated with these activities.
If you do it yourself, you can pretend it’s free, but there is always an opportunity cost associated with the amount of time you spend doing your own fulfillment. Is it more productive for you to make something new or waste time on drone work? And believe me, it’s monotonous.
Let’s say you go the other route and pay someone to fulfill your Kickstarter. We’ll say the entire amount for that is $3 per package. That’s a ridiculously low number to put on it since it includes almost all of the post Kickstarter work on the fulfillment side, but it’s easy math for this example.
That would be about $900 according to our baseline.
Manufacturing / Art Fees
I’m going to wrap these together. This comes out to just under $12,000 for 1100 units. It’s 1100 instead of 1000 because there is typically 10% of overages printed, we can revisit that in another blog post someday.
So as you can see…
“Wait a minute, you said if 300 backers all bought one deck then it would only raise $6,000. How did you get to $15,000?”
Fair enough. Let’s assume for now that they all bought 2.5 decks and it didn’t change our shipping and fulfillment costs at all.
This was meant to give you a very high level overview of what you should be looking at when setting your goal. There are more in depth articles coming soon about how to mitigate a project that gets too successful (there is such a thing), how to set up your pledge structure so that you can cut overall expenses, and more details on shipping and fulfillment tricks.
If you’d like to follow along with this Kickstarter, the Silverback Playing Cards are still live for another 11 days as of this posting. We’ll be using it as a case study a few more times.