Setting your campaign’s funding goal is one of the biggest decisions you will make before your campaign launches. Getting it right can make all the difference between success and failure. Luckily, there’s exactly one correct way to set your goal: ask for what you need. That may sound circular and obvious, but consider some of the many ways you could go wrong:
Ask for less money than you need and raise the rest later.
This is essentially gambling with your backers’ money and is disingenuous, especially if you don’t tell your backers’ about this plan beforehand. You will come off as naive at best, criminal at worst.
Set your goal to be what you hope to raise.
An aspirational goal is healthy motivation for any product developer and, under the right conditions, almost any product could make it big, but that shouldn’t be the gating condition for simply getting the product made in the first place.
Include already sunk costs in your goal.
Sunk costs, such as the cost of prototypes or video production, are simply the entrepreneurial risk you take in developing a product in the first place. Sunk costs are funds that you’ve spent whether or not you reach your funding goal, so why reduce the chance of your campaign funding (and you recouping some or all of those costs) by including them in the funding goal?
Shoot for an unnecessarily high minimum order quantity (MOQ).
Yes, the per-unit cost of manufacturing 10,000 units can be much less than that of manufacturing 100 units, but if the only difference in the campaign is a high funding goal and more margin in your pocket, you’re only doing yourself a disservice by making the campaign less likely to succeed. Keeping your MOQ low also affords you the flexibility to quickly iterate and make changes to the product.
Set the goal high to convince the crowd you are serious.The reality is that as long as you have a great product and clearly present a reasonable plan for delivering your product, backers won’t think twice about a low funding goal. For proof of this, look no further than Chibitronics’ Circuit Stickers campaign.
Setting your funding goal to be what you need will not only steer you clear of the above mistakes, but doing so also has its own benefits by virtue of (typically) being a relatively low funding goal:
- Inspires backer confidence. Many people won’t back a campaign until they are certain it will succeed, even though there’s no risk in backing earlier.
- Makes it easier to overfund. Raising ten times your goal sounds better than raising barely enough, even if the absolute amount raised is the same.