?

Log in

No account? Create an account
neutral

ysabetwordsmith in crowdfunding

How to Monetize Your Crowdfunding Project

In order to qualify as crowdfunding, a project must have some way of making money.  This distinguishes crowdfunding from hobby projects of similar nature.  There are many different ways to monetize a crowdfunding project.


Methods

These are some broad options for collecting money.  Crowdfunding projects often mix and match them, such as having both a donation button and some ads.  For a comparison of several specific applications, see haikujaguar's post about weblit payment models.

1) Online money handling services.  The most popular is PayPal, but there are other services too.  These allow people to send money over the Internet.  This method works well both for random donations and for fixed prices.  It's a leading choice for writing, art, and many other crowdfunding projects.

2) Postal mail.  A paper check, money order, or even cash may be sent through conventional mail.  It's a good idea to wrap such items in a card or letter for extra security.

3) Advertising.  Placing ads on your website can generate revenue.  This is especially true if you have a large audience and if you put some thought into targeting the ads based on your content.  Random ads are annoying; matching ads are much less so.  Ads for novels on a fiction site or paint on an art site will fit right in.  Webcomics often make significant income from advertising.

4) Affiliate programs.  This involves forming an association with a company which gives you a kickback for sales made through your site.  It works best when tightly targeted; for instance, an online bookseller makes a good affiliate for a crowdfunded author.  An artist might pair up with someone offering courses in art.


General Principles

Crowdfunding is still a fairly new business model, so there isn't a whole set of rules to follow yet.  Some general patterns have emerged regarding money flow, though.

1) Offer some free samples.  Crowdfunding audiences typically prefer to sample first before they buy.  You might offer small excerpts of larger pieces, or a handful of complete but shorter works.  Some projects post new material for donors only, but release older material to the public.  Another popular approach is to begin a project for free, then add crowdfunding options once people know how the basic concept works, perhaps giving people the option to pay for more or different material.

2) Make it easy to give you money.  Online, people have short attention spans, so if they have to hunt and fiddle around in order to pay you, they may not bother.  The payment method(s) should be readily visible and user-friendly.  If you have multiple options for crowdfunding, such as a general donation fund and individual sponsorship, then includ a clear listing of those options.

3) Provide perks.  Many crowdfunding projects offer some kind of reward in exchange for donations.  Free icons might go from black-and-white to grayscale to color as more money rolls in.  A fiction project might post more often or extend the length.  Perks encourage people to spend more money on a project, and often put out more material which helps attract more people.

4) Consider setting goals and using a progress meter.  Goals give people something to aim for, often money (enough for a pizza, say, or a nifty new carpet) but they can be something else (write 10,000 words or finish 12 ACEO cards).  Audiences enjoy knowing where their donations go too, and they like watching the numbers go up.  A progress meter is a little image that gives a visual representation of the money gathered so far.  Put the two together and people can see how far there is before reaching a particular goal.  Note that it's common for crowdfunding projects to have multiple goals, but that ticker art can usually indicate only the highest goal.


Creators: What method(s) do you use for monetizing your crowdfunding project(s)?  Which seems to work best for you?
Patrons: Which method(s) do you find most convenient?  Are there things you particularly love or hate in terms of how creators monetize their projects?

Comments

Great list - thanks!