Using crowdfunding successfully and profitably
Are you considering using crowdfunding to finance a planned project, be it a product or a service? Then you have come to the right place. The crowdfunding calculator will quickly and simply work out the expected profit or loss of your crowdfunding campaign. Why should I use the crowdfunding calculator? It is not as easy as it seems at first glance to calculate the expected profit or loss of a crowdfunding campaign in advance, but it is an essential step in avoiding any unpleasant surprises. Aside from fixed and variable costs, certain costs will only arise if specific intermediate stages are reached. Neglecting these probabilities can lead to losses, despite good planning otherwise. How does the crowdfunding calculator help me? The crowdfunding calculator helps you to plan your crowdfunding campaign by taking into account the probability of reaching specific intermediate stages, in addition to numerous possible costs. In addition, we provide data on real crowdfunding campaigns in order to draw relevant comparisons. The use of the crowdfunding calculator is free of charge, non-binding and the results can be viewed immediately. You can try out different amounts and see for yourself how the expected results change.
Calculate campaign profit
- Will I achieve a profit or a make a loss with my crowdfunding campaign?
- Are the set goals and expectations for my crowdfunding campaign realistic?
- Are my projections comparable with results from real crowdfunding campaigns?
German Crowdsourcing Association e. V. (DCV)
Since its establishment in 2001, the German Crowdsourcing Association e. V. (DCV) has evolved into the leading centre of excellence for crowd-based business models in Germany. Thanks to the skills and abilities of its members, its national and international network and strong linkages with business, science and politics, the DCV has become the first port of call for all issues related to the crowd economy. Together with the German Crowdfunding Network working group, the Association represents the interests of all people and companies that deal with crowdfunding or offer related services.
Daniel Blaseg is an expert in crowdfunding and works as a research associate at the Institute for Electronic Commerce.
Steffen Försch is an expert in online marketing and works as a research associate at the Institute for Electronic Commerce.
Prof. Dr. Bernd Skiera
Bernd Skiera has held the Chair for Electronic Commerce at the Goethe University in Frankfurt since 1999, which was the first such position in Germany at the time.
What is the crowdfunding calculator?
Crowdfunding is up and coming. Platforms such as Kickstarter or Indiegogo are recording steadily increasing visitor numbers and more consumers are seizing the opportunity to support interesting project proposals and to receive products early and for a cheap price.For entrepreneurs, crowdfunding presents a very interesting new market, as at first glance it offers both new customers and also basic financing for the project. But a closer inspection also reveals great risks. The experiences of project initiators vary, since a capping can develop in different ways:1) the campaign does not reach its goal and therefore does not receive any financing. The project plan is not implemented and the project initiator bears the costs that have arisen;2) the campaign reaches its goal and the project plan is executed. The supporters do not receive the product or service, the project initiator only achieves a small profit or even suffers a loss due to underestimating the costs involved (e.g. Brooklyn Bridge
).3) the campaign reaches its goal, but fails as a result of massive miscalculations regarding the implementation of the project plan. The supporters receive the product or service and the project initiator has to bear the costs and compensate his supporters (e.g. Coolest Cooler
)Here the crowdfunding calculator comes into its own. It quickly and simple calculates if and when crowdfunding will pay off. After entering some basic information, you will immediately be able to assess whether a campaign is likely to be profitable for you or not. What is so special about the calculation of the profit or loss related to a crowdfunding campaign?
Crowdfunding is based on an ‘all-or-nothing’ principle: the collected funds are only paid out if the campaign reaches or exceeds its target. However, only a third of all campaigns succeed in meeting this goal. The costs for preparation, as well as expenses related to the production of a video, are incurred regardless of whether the campaign goal is met. The risk of failing to gather any money while having to bear these costs is often ignored. And even a successful crowdfunding campaign is not a guarantee for achieving a profit. Miscalculations and incorrect estimates result in every tenth fully funded campaign still failing to deliver the promised product or service, since the funds raised prove to be insufficient and a loss arises. The crowdfunding calculator helps you to plan your crowdfunding campaign by taking into account the probability of reaching the campaign goal as well as the successful completion of production. The use of the crowdfunding calculator is free of charge and non-binding. There is no requirement for registration or login. You can easily send the summary provided at the end of the calculation process to an email address of your choice. We have scientifically developed the crowdfunding calculator, and it is based on proved calculation models. As a project initiator, you start by providing details about your planned campaign. You are likely to be able to provide some exact values, while you will need to estimate others. The model gives you all the necessary leeway. You can try out different values and see how these affect the overall result. We have made every effort in designing the crowdfunding calculator. Despite this, we cannot make any guarantees for the crowdfunding calculator.
How do I use the calculator? An example.An entrepreneur has long had an idea for a new type of fever thermometer that can be linked to a smartphone. Based on a comparison with similar products, he plans to sell the product for 250 euros a piece. He has already developed a partly functioning prototype, but requires 20,000 euros for the further development of the product. As a result, he is considering starting a crowdfunding campaign. However, he is unsure whether he can achieve a profit with his plans and therefore uses the crowdfunding calculator.Step 1:In order to compare his projected figures with the results from real crowdfunding campaigns, during the first step he chooses the platform (Kickstarter) and the category (technology) he plans to use for his crowdfunding campaign.
As compensation for their financial contribution, he would like to offer the thermometer to supporters of the campaign for 100 euros (instead of the regular retail price of 250 euros), excluding shipping costs. As such, in order to reach his target of 20,000 euros, he needs to gain 200 supporters for the campaign.
Since he has to send the thermometer to his supporters, he offers the option of shipping. He asks for an additional contribution of 10 euros per thermometer to cover the costs of packaging and shipping. He estimates that he will largely gain supporters nationally, with these making up 70% of all supporters. In order to cover his costs, he asks for 20 euros a piece from his international supporters, who make up the remaining 30% of supporters.
In order to raise awareness of the campaign and to enable the visualization of the product, he would like to create a professional marketing video. He estimates that this will cost 500 euros. Since he requires a functional prototype for the video, he estimates that he will need around 750 euros for the further development of the product. Additional marketing materials such as posters and flyers to raise awareness of the campaign will cost 250 euros. The costs for use of the crowdfunding platform and the payment service provider to process all payments are dependent on the effectiveness of the campaign and will be shown as a percentage of the collected contributions. He estimates that these costs will be around 8% of the amassed capital.
The variable costs (materials and assembly) of the production of the thermometer are estimated to be 50 euros per unit. In addition, he estimates 2000 euros of fixed costs for production, in order to acquire the necessary machinery and tools.
The costs for shipping will be 10 euros domestically and 20 euros internationally. The packaging material will cost a total of 2000 euros, but there are no variable packaging costs.
He assumes that quality control will not suffice in all cases and that 10% of thermometers will therefore be faulty and must be newly produced and shipped. In addition, he estimates a 30% chance of a 3-month delay in the production process. The additional communication costs would be 0.50 euros per supporter per month.
He estimates a 50% chance of successfully reaching his campaign goal. Since there are often unexpected problems in the production process or the product possibly cannot be developed as planned, he estimates a 90% chance of successful completion of production.
Based on his expectations, by using the crowdfunding calculator he can see that his campaign is unlikely to be profitable and that he can expect a loss of 411.50 euros. A comparison with real crowdfunding campaigns shows that he has realistically estimated his chances of reaching his campaign goal and successful completion of production.However, the comparison also shows that he is offering only very few reward levels and is also offering his product too cheaply. With the aid of this insight, he can adjust his plans and increase the chances of successfully and profitably using crowdfunding.