How to Figure the True Cost of a Kickstarter Project

Posted on March 4, 2010

Check out my latest Kickstarter film Strike: The Greatest Bowling Story Ever Told, now featured on The New York Times’ Made with Kickstarter series.

This post is a dissection of my Kickstarter project for my documentary Bots High to both figure out a) how much I needed to raise to successfully finish filming my project and b) have enough money to fulfill all the rewards.

Before posting, I did a lot of research into successfully funded projects. This post will get a bit mathematically nerdy, but hang in there because I think it’s quiet useful. (Check out my last post, Behavior Patterns of Kickstarter Funders, because the data in that post is what I use to figure out the cost)

I’m not a mathematician. The purpose of this post is to give you something to think about and make sure you’re aware of everything that goes into successfully pulling off a Kickstarter project. If you see more accurate or easier ways to figure out the total, please let me know.

Here’s the breakdown of the steps needed to figure out the true cost of your Kickstarter project:

  1. Focus of Project
  2. Cost to Complete Project
  3. Project Fees
  4. Create Backer Levels
  5. Project Number of Backers
  6. Cost of Fulfillment
  7. True Project Budget

Focus of Project

The first big question is do I go for all the money I actually need (to film, edit, and send to festivals) or focus the project on one specific event, and take it one step at a time, with future projects for different stages of the production if need be. I decided to go the latter route, and focus the Kickstarter project on getting the money needed to film the final championship of my film and wrap up all production.

Cost to Complete Project

This is pretty straightforward budgeting – what’s the bare minimum you need to complete the project you’re proposing? Be honest, and think of everything. I budgeted that to rent additional cameras, hire and feed a crew, get rental insurance, and travel to San Francisco to film the second championship and do interviews would be around $7000.

Total cost to complete filming Bots High: $7000

Project Fees

Kickstarter takes 5% of whatever you raise to cover their costs. Fair enough, we all need to stay in business. Now you might think, “Oh, I’ll just take that out of what I raise, I don’t want to pass that cost onto the funders.”

Well, if you were 100% honest and your project budget is the bare minimum you need to complete it, then where is that couple of hundred dollars supposed to come from?

Also, Amazon takes its own fee per transaction. This isn’t as simple as a flat 5% (it’s a combination of a flat fee and variable percentage which hovers around 2.9%). For the sake of simplification, I used 3.2%. If you have a more accurate estimate, please let me know (As Andrew did below).

Kickstarter Fee: 5% of $7000 = $350

Amazon Fees: 3.2% of $7000 = $224

New Project Budget = $7574

Create Backer Levels

Create a variety of backer levels with different rewards. I’ll post a brainstorm I did of possible things to offer next week. In the Behavior Patterns post, the numbers used in the graph are the most popular levels, so if you want to stick with what people have come to expect, use a variety of those levels. Make sure you have something on the very low end ($1-$5) and on the high end ($2500 – $5000). Yes, most projects don’t get any high end backers, but some do, so it’s worth having it.

Project Number of Backers for Each Level

Ok, now it’s math time. In order to do the next step, which is to figure out approximately how many DVDs and t-shirts and posters you’ll need to fulfill your backer levels, you need to have a rough idea of how many backers to expect for each level. Using the pie chart in the Behavior Patterns post, you can guesstimate how many backers you’ll get/need for each level.

So right now the budget is $7500, and from the pie chart I can predict 15% of the backers will give $50. Here’s the formula:

(Total Budget $ / Reward Level $ * Percentage in Decimal Form = # of Backers Needed)

($7500 / $50 * .15 = 22 Backers)

So I’ll hopefully have 22 backers at the $50 level, and need to plan to supply 22 people with everything I offered at that level.

Repeat with each level

(Note: The math works up until the very high levels, around $1000 and higher. One large donation will pleasantly throw this all out of whack.)

Cost of Fulfillment

Whether or not this is an extra expense for your Kickstarter project (or if you could call it an expense at all) is debatable and varies from project to project. I’ll explain in a second.

But first, you need to figure out how much it’ll cost to fulfill all the rewards you’ve now promised your backers. That means DVD, t-shirts, posters, stickers, props, dinners, etc.

Not only do you need to know how much each item will cost to make, but how much it’ll be for packaging and shipping. Yeah, lots of details.

Now I say debatable if it’s all an expense related to the Kickstarter project because a lot of these items are things you’d need to buy anyways for marketing and distribution (t-shirts, posters, DVDs for screeners and festivals). And of course the more you buy quantity wise, the lower the individual cost of each item is. And depending on what stage you Kickstarter project focuses on, this might be stuff you already have. Either way you should just be fully aware of everything that you’ll need to satisfy your backers, and not just your project’s needs.

So for each level you need to figure out how much of the actual funding you’ll be getting, minus expenses.

For my $25 level, which is a DVD and updates and input on the film, it’ll cost me about $6 to fulfill the DVD, so I’m getting $19 towards the project.

Assuming I don’t get any large donations, I know I’ll need 150 people to buy a DVD (which would bring in $3750), but it’ll cost $900 to fulfill.

So you need to figure out all the fulfillment expenses for each level, add them up, and budget them in the project total. If you already have some of these rewards already made, then budget the packaging and shipping costs.

Total Cost of Fulfillment: $1538

True Project Budget

Kickstarter Goal: $9000

That’s what I put on my project. Higher than I initially thought when I first had the idea to do a Kickstarter project, but I think it would be worse if I set a lower project goal, got all the money, and then realize I need another $1500 to print and ship all the rewards I promised.

Update: These numbers are slightly more variable than presented, because the fees are coming off the total budget and I figured them out earlier. Read Andrew’s comment below for a better formula and keep in mind a little contingency padding might be in order.

I hope you found this useful, or at least it gave you something to think about. If you did, then why not support that project that prompted this study?

Visit the Bots High Kickstarter Project!

Written by Joey Daoud

Joey Daoud is an award-winning documentary filmmaker. His past films have appeared on Netflix, The New York Times, and National Geographic. He is also a YouTube creator across multiple channels with videos garnering millions of views. In his free time, he likes to climb mountains, scuba dive, and brew unique coffees.

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  1. Andrew

    Math check – since you assessed the kickstarter and amazon fees at the $7,000 dollar level, the “new project budget” is not accurate. if you change your budget to $7,574, your fees would come in at that amount, making the total add on $621 instead of $574., meaning you’d still come in shy of your required $7,000 by $47.

    Kickstarter Fee: 5% of $7000 = $350
    Amazon Fees: 3.2% of $7000 = $224
    New Project Budget = $7574

    the numbers should look like this:

    Kickstarter Fee: 5% of $7574 = $378.7
    Amazon Fees: 3.2% of $7574= $242.4
    New Project Budget = $7621.1

    Which in turn, readjusts the fee assessment. Instead, the proper formula should be something like:

    B – (.05B + .032B) = X

    Solve for B, given that X = $7,000

    B – (.082B) = X

    B – .082B = X

    B*(1 – .082) = X

    B*(.918) = X

    .918B = X

    B = 7000/.918

    B = $7625.27

    And now that you’ve raised the budget to $9,000, those fees adjust accordingly.

    .918B = X ———–> X/.918 = B

    Solve for B, given that X = $9000

    $9000/.918 = 9803.92

    Therefore, your final budget request should be closer to $9800. However, since you’ve already included the fees but assessed them at a lower budget request, it throws off these numbers too. The point being, it pays to be flexible. Give yourself a 10% contingency so that you have wiggle room to function. If you add ten percent to the final budget and the fees take out 8.2%, you’re still up 1.8%, which allows you to cover additional postage or whatever incidental costs come up over the course of the project.

    It should also be noted that 0.918 is 1.00 – (.05 + .032). If the fees vary, change the numbers accordingly.

  2. Joey

    Yes, I did have the thought that these numbers will be more variable than I presented, because the fees and total budget will be adjusting.

    But if I read you right, the final number you figured out is the percentage of the fees off of $9000, however the $9000 already had some of the fees built into it, so yes, the final number would be more than $9000 (and I was rounding to make things easier), but it wouldn’t be $9800, more like $9250 ($8538/0.918).

    I think an overall 5% to 10% buffer might be an easier solution, also because you’d need more backers to make up for the additional money, since I figured it from $7500. It’s kind of this confusing cycle that I’m not clever enough to fully break into and make a Google Doc formula of.

    Like I said, it’s an approximation and more food for thought. And if you reach your goal in an early time frame, you’ll most likely exceed it too.

    • Prabha Sivam

      hi Mike, i am doing a calculations on my crowdfunding project as per your guided calculation costs. i also plotted the figures into the kickstarter calculator –

      i’m not getting correct results.
      about to launch. could you email me so that i can send you my excel file on project costs breakdown and estimated backers etc and guide me on getting this right. thanks.

  3. Morgan

    Joey! (and Andrew!) this is great and very well thought out
    I love what kickstarter can do and its great to see how it does what it does
    hope filming is going well! expect a new kickstarter backer soon!

  4. Greg

    Joey and Andrew,
    Great help, many thanks! You’ve de-fuddled some of the math that was befuddling me!

  5. Nik

    This is a great article. Thank you., I’d appreciate some feedback on my rough draft kicksarter video. any comments / critiques would be great:


  6. Renaissance Austin

    Thank you again for this and Andrew as well. This confirms my thoughts on a certain percentage of the donation amount going to the cost of the rewards. There is definitely a lot to think about when going into a crowd funding project like this.


  7. Joey

    No problem – glad it was useful!

  8. Clint

    Based on your numbers (the 5% Kickstarter fee and the 3.2% Amazon fee), it’s probably easiest if you calculate those at the end, and use an 8.94% for the both (the .94% accounts for the fact that the fees will raise do to this increase, given by 1/(1-.05-.032) rounded up slightly)

  9. Thomas

    Wow. This post made my head spin! It’s super helpful. I just hope that I can wrap my head around the figures and formulas and come up with the appropriate amount that I need for my project.

  10. Bradon

    But isn’t the Amazon processing fee 3.2% per pledge? If you calculate it that way then you get a much smaller number than simply taking 3.2% off your funding total.

  11. Dan

    Another great post! Will put to use for my upcoming campaign. Thanks so much.


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