The “Tipping Point” in Crowdfunding
https://www.creativereview.co.uk/run-successful-kickstarter-campaign/
Kickstarter is a crowdfunding website where entrepreneurs propose products to sell, and rely on funding by “backers” in order to go forth in their projects. This article goes over tips to make your Kickstarter project a success, and many of the tips mentioned coincide with our discussions in class on how the “rich get richer” and how there is a tipping point, where if the product reaches that point, it will most likely be very successful. However, not all projects reach such success. As stated in this article, only 36% of projects posted on Kickstarter meet their funding targets.
Kickstarter products are often offered at a discounted price (from what they will cost when on the market after the kickstarter campaign) in conjunction with advertising campaigns to initially try to reach that tipping-point of popularity that will allow their product to succeed and receive enough backers to create and manufacture the product on a large scale. This is a commonly used tactic, but the article advises against lowering prices too much, since this may lead to money struggles as time goes on during the crowdfunding. Once the product reaches a certain amount of popularity, its progress should boom because of social media and its online presence. Oftentimes after reaching the kickstarter’s goal, the product will go up in price from the “early bird” discounts.
It has been shown that 90% of projects reach their funding goal if they reach 30% funded in the first week. While the goal of each crowdfunding project is to make enough money to have the campaign succeed for its initial batch, there is also a community that is created, supporting the product and sharing it on social media. This draws in even more customers interested in the new product. This is what allows those projects that already are 30% funded by the first week to succeed long-term.