Kickstarter Fees Explained: What Percentage Does Kickstarter Take?
The post Kickstarter Fees Explained: What Percentage Does Kickstarter Take? appeared first on Fundraise.net.
Key Idea: Kickstarter relies on an All-or-Nothing (AoN) funding mode. The fees you pay depend on the success of your campaign and the size of your pledges.
Planning to fund your next creative dream but unsure of the fees involved?
We’ve got you covered.
Here’s the short and sharp version…
If a Kickstarter project is successfully funded, and reaches your assigned target, Kickstarter receives 5% of the total funds collected. Kickstarter’s payment processing partner, Stripe, also collects a processing fee (roughly 3%) plus $0.20 per pledge.
On the flip side, if your funding target isn’t reached then there are no fees at all. This removes risk for creators and backers.
You either get 100% for your project, or nothing at all. And if your funding target isn’t reached, Kickstarter won’t take their 5%.
But all great creators know you have to break a few eggs to make an omelette.
So here’s a detailed look at the fees you should expect to pay on your next creative adventure.
First Kickstarter takes their fee…
If a project is successfully funded, Kickstarter will take 5% of the total amount raised.
Here’s a simple example of how that will look…
Your project raises its target of $10,000
Kickstarter receives 5% of $10,000 = $500
This is known as an All-or-Nothing (AoN) model of crowdfunding.
Kickstarter has used this model of crowdfunding since 2009 and has set the standard for creator-friendly funding as a result. We’ll let Kickstarter explain why they went down this path…
“We use this model because we believe in paying artists as much as possible. We’re a tool for going around traditional gatekeepers like agents, dealers, distributors, fiscal sponsors, record labels, and publishers, and we accordingly take a much lower cut than they do.”
Seeing as roughly 67% of Kickstarter campaigns fail to meet their funding goals, there’s no guarantee of success.
Thankfully, there is a secret weapon you can use to smash your funding goals (don’t worry, we’ll get to that a little later).
Then Stripe takes their fee…
With Kickstarter’s flat 5% fee out of the equation, there’s still a few more bills to pay.
Stripe is Kickstarter’s payment processor. They will also receive a small cut of any successful campaign.
This amount will depend on the amount being funded by your backers.
If pledge is above $10
- Payment processing fee = 3%
- Fee per pledge = $0.20
If pledge is below $10
- Payment processing fee = 5%
- Fee per pledge = $0.05
Wait, I have to pay a fee per pledge?
When it comes to individual pledges, there’s a flat fee of $0.20 per pledge. So you won’t be losing a large chunk of change.
If the thought of $0.20 falling out of your pocket with every pledge gets you down, try flipping the script. You didn’t LOSE $0.20.
You just gained a pledge that’s helped nudge you towards your funding goals!
With all fees and commission taken into account, you’ll end up paying roughly 8% of your total Kickstarter funds raised.
Don’t Forget: Cancellations & Refunds
Another expense that project creators often forget about is cancellations and refunds. Kickstarter charges you a fee when you have a pledge, and that fee is not refunded if you have cancellations or refunds.
For example, let’s say a backer pays $100 for your reward. Before you deliver, they either:
- Refund their pledge,
- Have a chargeback,
- Have a failed billing,
You will still have paid the 5% + $0.20 fee ($5.20) to Kickstarter, and $3 to Stripe, for the $100. But you’ll still have to refund the full $100. In other words, your net total will be -$8.20.
Refunds, cancellations, and chargebacks can be very dangerous to campaigns for this reason. You should do everything you can to minimize them, as they can take a big bite out of your margins.
Don’t Forget: Marketing Costs Money!
Every Kickstarter campaign begins with your circle of friends and family, who are willing to splash their cash on your vision.
But this supportive bunch isn’t enough to get your funding goal over the line (unless you have a VERY wealthy relative).
So, most campaigns spend money to promote their Kickstarter campaign. This can help you by:
- Spreading the word
- Maintaining the buzz
- Getting those wallets open
You’ll want to start advertising your Kickstarter campaign as soon as it’s up and running.
Great Kickstarter campaigns are built through momentum, and advertising (mostly through Facebook & Instagram ads) are a proven way to generate exposure, drive interest and create a community of excited backers.
Unfortunately, following Facebook’s recent algorithm changes mean it’s close to impossible to get the word out using organic posts. So your best bet is a pay to play approach.
That means you’ll need to pay to get eyeballs on your campaign (because let’s face it, friends and family are great but you’ll want to cast a wide net to reach your goals).
Unsure of how much to spend on Facebook ads?
Budget around 10% of your total campaign goal to invest in social media ads, or about 20% of your gross margin. With your ad spend set aside, try running your Facebook ads for at least one month to give your campaign enough runway to take-off.
You don’t want to sell your campaign short and harm your chances of reaching your funding goals.
You won’t get paid unless your campaign succeeds
If your Kickstarter campaign fails to reach its funding goals, you won’t pay any fees.
This helps backers see that they’re not tossing money in a tip jar.
They’re either part of a successful new launch, or they get a full refund. With zero upfront costs on the platform itself, Kickstarter makes it easy for creators to put themselves in front of an audience too, without placing unnecessary financial pressure on their backs.
This drastically reduces the amount of risk for you. And this risk-free approach benefits your backers too. If your project fails to reach its funding goals, your backers receive their donations back.
This seems like a lot of “fees”. Is Kickstarter worth it?
In short, yes.
Crowdfunding is an innovative way to bring your creative passions to life.
While these fees and payments might seem like annoying headaches in the moment, they’re minor distractions to what is your ultimate goal – successfully achieving your creative project’s funding goal and sharing something awesome with the world.
Plus, the team behind Kickstarter need to eat too. So don’t think of your fees and payments as punishment.
Think of it as you feeding someone’s family.
Hey, now you’re a charitable hero!
When does the money come into my account?
You’ll have to wait around 2 weeks for money to be transferred into your Amazon Payments account – minus payment fees and commissions – so remember to keep this in mind.
From here you’ll still need to transfer the funds to your own bank account. This will add a little extra time (depending on your banking institution).
You know what they say about the best laid plans though, they never go to plan. Because your backers won’t pay until you meet your funding goal, roughly 10% of pledges won’t process successfully.
This can leave a gap between funds promised and funds received. It’s common for credit cards to fail payment, and with the typical Kickstarter project running for 30 days, you’ll need to mentally prepare for slightly less money than you hoped for.
But if the wait starts to become frustrating, just remember it means your campaign target was successfully hit! Good things come to those who wait.
Please Note: Your Kickstarter campaign may have tax implications. Find out more about your taxation rights and responsibilities here.
Let’s wrap it all up
By now you know about every cost that goes into a successful Kickstarter campaign.
And while Kickstarter fees stay the same, you can boost your odds of success by getting your Facebook ads campaign perfect.
More attention and more eyeballs means more clicks and more pledges.
Of course, you’re not on Kickstarter to chat about money, you’re looking to launch your vision and change the world! So to simplify the entire process, just add an additional 10% to the total you want to raise.
This will go towards Kickstarter fees and Stripe fees, without digging in the amount you need to bring your project to life.
For example, if your product requires $10,000 of funding, set a target for $11,000. This will leave you roughly with your actual $10,000 target once all fees have been taken out.
With more than $4.6 billion in total raised in pledges, it’s pretty clear that money talks on Kickstarter.
Now you speak the language of money on Kickstarter too.
Ready to smash your funding goal? Discover the secrets of a $100,000+ campaign with our online Kickstarter course.
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