Kickstarter Budgeting: Expectations vs Reality

As of today, it's been a little over two months since the Kickstarter for Mage to Order ended. Shortly after the campaign began, I wrote about things I learned during the Kickstarter while it was still ongoing. Now, that the dust has settled and the funds have been deposited, I thought it would be interesting to take a look at how I budgeted the Mage to Order Kickstarter; particularly how similar or dissimilar the final numbers turned out to be.

So first, let me explain the budget I had going in. Because Mage to Order was a #ZineQuest project, I tried to keep our target number low and set the campaign to fund at $800. I also supplied the budget breakdown listed below as part of the campaign's FAQ:

• 20% - in-house writing, editing, layout and art
• 30% - printing
• 25%- shipping
• 20% - fees and taxes
• 5% - emergency money

I arrived at these percentages from researching averages online, and pricing 100 copies of a 36-page, 5.5x8.5, black and white interior booklet, with a color cover from our printer. This set my price point at $256, or around $1.67 per book.

Because I had decided to use a local printer that did contactless pick-up, I saved a bit of money by not having the printer ship the books to me, before passing them along to my backers. This meant I would have to do all of the shipping myself, since I wasn't using a fulfillment service. Knowing that going in, and not expecting an overwhelming response that would raise significantly more than $800, I decided to set shipping at $5 per person within the continental US, both for postage and materials, and did not offer international shipping.

By that assumption, shipping should cost around $500--but wait! Since I also offered a cheaper PDF option, I predicted about half of my backers would only choose the PDF, which was priced at $5 apiece, and that would give me some wiggle room. This meant shipping should average out to roughly $250 and I would need to raise around $506, just for shipping and fulfillment.

However, despite all of my research, I failed to realize that Kickstarter actually counts your shipping fees toward your funding goal instead of keeping those two numbers separate. This meant, for every $5 I was collecting for shipping, Kickstarter was adding $5 toward my $800 funding total. As expected, this threw off my numbers a bit, as I really should have been factoring 30% for shipping, instead of 25%. This also meant I'd need to make adjustments elsewhere to cover that additional 5%.

I was also trying to be cautious about taxes and fees, since many people had told me that was one of the trickiest parts of running a Kickstarter campaign. I knew that Kickstarter fees would be around 5%, with additional payment processing fees of around 3%, while taxes tended to vary wildly based on the amount of funding, project scope, and location (my business is located in New Jersey, which means I also have to contend with paying state retail taxes). From everything I read, and my low funding goal, I knew that taxes were unlikely to reach beyond 10%, so that's how I factored them into the budget. Just to be safe, I also rounded the Kickstarter and payment processing fees up to 10%, making my "taxes and fees" amount around $160. Fortunately, that extra 2% came in handy when adjusting for my shipping miscalculation.

At this point, I was expecting to need to raise around $666, just to pay for taxes, fees, shipping and fulfillment. That left only about $134 to pay for labor and "emergency money;" approximately $66 dollars less than expected. But, since I was the only one working on the book (other than my editor, who was being paid via "exchange of labor;" I'd previously edited a book of hers, and she was returning the favor by now editing mine), I was less concerned about making a profit. However, thanks to my shipping error, the original 25% estimate (20% for labor and 5% emergency money) ended up being closer to 27%.

Fortunately, once the project met its funding goal, I was able to add a few stretch goals that would help make up for the additional labor costs needed that weren't especially pricey on their own (fillable PDF character sheets and paper upgrades for the print book--which were surprisingly affordable). Meeting those goals meant I was also able to offer additional upgrades that were slightly more expensive, such as color printing (which literally doubled the cost per book!) and commissioning a new cover. Also, by overestimating the amount of taxes and fees I would spend, that meant I gained around 2% that could be put toward labor.

However, there was one other snag I hadn't anticipated, which I hadn't seen many articles or people commenting upon before it happened: more money doesn't necessarily mean more profit. As more and more people pledged for physical rewards, the cost of shipping and fulfillment also increased, meaning the original percentages for those things I'd used when creating my Kickstarter budget remained roughly the same, even though I effectively doubled our funding goal.

Finally, by the end of the campaign, our budget breakdown looked something closer to this:

• 7% - in-house writing, editing, layout and art
• 40% - printing (with new cover art and upgrades)
• 30% - shipping
• 18% - fees and taxes
• 5% - emergency money

So, despite raising $1734 total, my "profit" was only about $121 or, with the "emergency money," a little over $200.

In the future, I'll know better about how Kickstarter handles shipping, and simply offer "free shipping" by factoring it into my funding amount. For my next project, things like paper upgrades and color printing will be standard, so I'll also factor those in. At this point, however, I've budgeted well enough to fulfill my goal of creating a print game at a low price point and, despite not making a great deal of money, I have the experience of completing a Kickstarter behind me, so I'll be better prepared for the next time.