Crowdfunding is, hands down, the best way to launch a new product. It takes a lot of work and doesn’t guarantee overnight success, but if you want your product to help grow your brand, crowdfunding is the way to go.
While LaunchBoom would love to talk to you about your product launch, we can also provide some crowdfunding basics so you know what the process involves. It’s not as mysterious as it might seem at first!
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What is crowdfunding?
Crowdfunding is a way to raise money for your product launch directly from your customers. They make contributions to your campaign in return for one of your products or other associated merchandise, and you use the funds raised to manufacture and distribute your product.
What do you need in order to crowdfund?
- A prototype of your product
- A community of people excited about your product
- An advertising plan and money to spend on ads
- Images, copy, and video that will help explain and promote your product
- A campaign page on Indiegogo or Kickstarter
- A plan for fulfillment and shipping
It’s okay if you don’t have everything on that list yet! The best time to launch your crowdfunding campaign is “when you have everything ready,” so it’s a good idea to take the time to make sure that everything is in place before you launch.
How long does crowdfunding take?
Your campaign can run anywhere from 1 to 60 days, but the actual process will take longer than that. You’ll need to spend a lot of time planning and preparing before your campaign launches, and you’ll spend time after it ends manufacturing and shipping your product.
Do I get all the money that people pledge to me?
The crowdfunding platform will take a portion of your raised funds as a service fee; it’s generally around 5% of your total. You’ll also only get the money if you raise enough to reach whatever funding goal you set. If you don’t meet that goal, the funds will be returned to the backers and neither you nor the platform will get any money.
So… what makes crowdfunding so great?
It provides access to funding sources that you wouldn’t otherwise have
Conventional wisdom says that your options for raising funds to launch a new product are limited: you can borrow from a bank or you can find an investor. Crowdfunding lets you raise that money directly from your customers, and you can do so without going into debt or giving up equity in your company.
Your campaign itself can be its own marketing tool
Crowdfunding platforms like Indegogo or Kickstarter show exactly how much money you’ve raised, and that number serves as social proof. You can also leverage that number to get placement in the platform’s newsletter, on their homepage, or in a “projects we love” section. You’ll still have to advertise, but you’ll be able to leverage your campaign itself to get some organic traffic.
It proves that your concept is viable
One problem that creators face in the early stages of product development is proving that their product will work in their market. Crowdfunding is an easy way to show that it will: if you get backers to fund you, then it shows that people are interested in your product.
It can get you loyal repeat customers
Every company needs a base of loyal customers who are willing to support them and spread the word about their products. Crowdfunding is a great way to build that base. By launching a great product and providing an excellent customer service experience, you’ll find yourself with devoted fans who will be more willing to purchase your product—and to support your future product launches on day 1.
You can launch a campaign without having stock of your product
Crowdfunding isn’t a store; it’s a pre-order platform. This means that while you do need a working prototype of your product before launching your campaign, you don’t need to have hundreds of units waiting to ship the second you launch. People on crowdfunding platforms are used to purchasing products and then waiting for delivery, so you can use the funds you raise to produce your deliverable without worrying that your customers will get mad about the delay in shipping.
Convinced that crowdfunding is the best way to launch your product? Get in touch with us today to talk about the next steps for your project!
