I am assuming you are reading this piece because you are planning a crowdfunding campaign for your awesome idea/product. While people love great design and innovative products, one cannot rule out the importance of pricing it right to secure the desired backing. Since the context is pretty straightforward and clear, I will directly dive into our learning while we were preparing a Kickstarter campaign for our product (do check it out — Shifu Orboot 😉).

Costs

To be able to price your products well, you first need to understand all your input costs and estimate them to a 90/10 accuracy level. For our product, we considered:

Manufacturing costs : I suggest you visit potential manufacturers’ factories, understand the process, assess their capability and quality to ascertain the feasibility of getting the right product at the right cost.

: I suggest you visit potential manufacturers’ factories, understand the process, assess their capability and quality to ascertain the feasibility of getting the right product at the right cost. Shipping costs : These can be huge, especially if you are manufacturing outside US. I suggest you plan ahead of time and take advantage of lower cost sea shipping.

: These can be huge, especially if you are manufacturing outside US. I suggest you plan ahead of time and take advantage of lower cost sea shipping. Import duties : Since we sell educational games, we pay zero import taxes. However, these can be anything between 0 to 37%. Do not forget to build this into your costs.

: Since we sell educational games, we pay zero import taxes. However, these can be anything between 0 to 37%. Do not forget to build this into your costs. Packaging : Shipping costs (air, sea, inland) depend squarely on the weight of the product (logistics companies consider dead weight or dimensional weight — whichever is higher). So, design your packaging smartly. Do not leave void.

: Shipping costs (air, sea, inland) depend squarely on the weight of the product (logistics companies consider dead weight or dimensional weight — whichever is higher). So, design your packaging smartly. Do not leave void. Backers from other nations : US contributes close to 60% of the sales on Kickstarter. The other comes from UK, Canada, Australia, Germany, France. Do consider logistics costs and duties into these countries also. Since all of these do not have as big a share as US, you will mostly need to air-ship your products. Sea shipping works out only at higher volumes. So, either add shipping costs over the rewards OR bake this in the pricing model.

: US contributes close to 60% of the sales on Kickstarter. The other comes from UK, Canada, Australia, Germany, France. Do consider logistics costs and duties into these countries also. Since all of these do not have as big a share as US, you will mostly need to air-ship your products. Sea shipping works out only at higher volumes. So, either add shipping costs over the rewards OR bake this in the pricing model. Campaign promotion costs : Very few (less than 1%) of the campaigns go successful with minimal or no promotions. You will have to build in promotion costs and cover some digital marketing, PR and blog posts to ensure your campaign reaches to its right audience.

: Very few (less than 1%) of the campaigns go successful with minimal or no promotions. You will have to build in promotion costs and cover some digital marketing, PR and blog posts to ensure your campaign reaches to its right audience. People and other costs : You will need to build in some of your team costs. It takes a lot of effort to build a successful campaign and to make intelligent products that people love. You may also choose to skip this cost if overheads are a part of the bigger plan of selling these products via retail or online after Kickstarter success.

: You will need to build in some of your team costs. It takes a lot of effort to build a successful campaign and to make intelligent products that people love. You may also choose to skip this cost if overheads are a part of the bigger plan of selling these products via retail or online after Kickstarter success. Miscellaneous costs: Factor in kickstarter cut, bank-related charges and any other legal fees.

Benchmarking

Once you have a good handle on your overall costs, it’s time to benchmark (and this is extremely critical). Basically, so far we have taken a bottom-up approach to build for the price; we also need to cross check with a top-down approach to ensure our pricing is competitive/attractive to have a successful campaign.

For benchmarking, go through successful campaigns for other products in similar category as yours or through existing products in the market that have comparable value or are a credible alternative to your product — idea is to to get a sense of what $ people are willing to shell out for a product like yours. Now, compare this with the bottom up pricing. You certainly want your backers to feel that they are getting a great deal here. So, make sure you iterate and get to the right quality at the right price point.

Finally, design your reward categories well to get to the right average yield.

Good luck with your campaign and I hope this piece is helpful.