There’s something I forgot to mention in the previous post but that’s well worth talking about: pricing the rewards. There’s a lot psychology involved with that topic, and how you price your rewards can have a significant impact on how successful your campaign might be. Here are my observations.
As I mentioned before, the price for a reward level needs to cover the cost of delivering the reward and then some so that it actually contributes to building the budget for your film. When your campaign is about ultimately selling a product, the process would seem simpler (disclaimer: I haven’t run a campaign for a physical product, so this isn’t advice, just suppositions): You take the cost of the product and add your markup so that the backers can get the product for a price that is discounted compared to what the price would normally be in order to attract the backers. Then you hope to have enough backers for the profit margin to cover your expenses.
You can’t really do that with a film project. It would take thousands of backers to cover the film’s budget with rewards that would match the retail price of a DVD, for instance. If you look at Kickstarter rewards as a product and from a consumer perspective, they tend to be bad value for money (at least for film projects), but in my opinion they have to be for the project to have a chance of success. Rewards are a gift to thank a person for giving a certain amount of money to help make the project happen or an incentive to give no less than that amount, they’re not items in a catalogue.
That said, most people have a hard time getting rid of that reasoning. Actually, I seem to be part of those people as I keep writing “price” when I should be writing something along the lines of “minimum donation threshold”. Ideally, the thought process of a potential backer would be:
- I want that film to exist.
- I can afford to give X amount of money.
- I’m going to pick this reward because the contents are cool.
But what tends to happen is more along the lines of:
- I want that reward.
- I can get it at that price.
- That’s what I’m going to give.
I can tell because according to my campaign’s statistics, “overpledgers” are pretty rare. What I call overpledgers are people who pledge more money than the minimum required for the reward level they have selected. For Back to the Source, I had an overpledging rate of 6%. More interesting, two thirds of the overpledgers (or 1.7% of all backers) are people who didn’t select any reward. Also, nobody upgraded their pledge unless it was in order to get a higher reward level.
What I’m trying to say here, is that the minimum price you set for a reward is going to have a tremendous impact on the behaviour of potential backers, because while they can give any amount, nearly all of them will stick to the numbers you put on the project page.
So what levels do I set?
For the Back to the Source campaign, I didn’t dice roll the reward levels. In order to maximise my chances of success, I undertook some painful but eye-opening research and number crunching. I took a number (53) of successful Kickstarter campaigns comparable to the one I was about to launch:
- Documentary film
- Based in the UK
- With a campaign target between £2,000 and £10,000
Then, for each campaign, I looked at 3 parameters:
- The reward levels that were offered.
- How much each level contributed towards the target
- What was offered at that level.
Note: I am not a data analyst and I had incomplete information (as I was using the information available on the Kickstarter project pages), so this isn’t a 100% accurate or even 100% correct analysis. Hell, the whole approach might be wrong. But that was good enough to give an idea of what to do.
To begin with, I listed all the reward levels to see which ones were the most popular among the project creators, and which ones the backers actually chose (establishing a ratio of levels that were chosen by at least one backer).
More than a third of the projects offer the following levels: £5, £10, £20, £25, £50, £100, £250, £500 and £1000.
30% of the projects offer the minimum £1 level.
What’s noticeable is that while being widely offered, relatively few people bite on the £500 and £1000 levels (respectively 63% and 41% of the projects who offer it have had at least one backer at that level). That said, it’s still a significant enough adoption ratio to considered having one in a campaign.
Reward level contribution
Now if we take the most common reward levels (offered by at least 25% of the projects) and compare to the associated funding revenue, we get the following:
On average, 7% of a project’s backers go for the £1 level, but this only amounts to less than 1% of the campaign target, so that level is basically useless. Remember that rewards are optional and people who put in a symbolic coin probably aren’t interested in any kind of reward anyway. And as we mentioned before, people tend to want stuff and you’re unlikely to offer anything interesting for that amount.
The £5 level engages 11% of the backers for 1.36% of the target. The level of engagement makes me think it’s worth having as lowest level even it doesn’t really contribute much, though the £10 tier seems more interesting both in engagement and contribution, respectively 17% and 3.6%.
The biggest contributors are the £20 and £25 tiers, which together engage 43% of the backers for 25% of the target sum. This makes sense since this is usually the level where people get access to the completed film (either as a download or a physical DVD). You’d have people arguing that this is too expensive for a DVD, but as I said above, this isn’t about the value of the reward.
The £100 level retains a surprisingly high engagement rate, even though the associated rewards aren’t that much better than the levels just below. Nothing unexpected for the levels above £100 (low engagement, high contribution).
So now that we have a rough idea of what levels people put their money at, we can start thinking about what we can offer.
In the campaigns I looked at, I found 5 types of rewards to be most common:
- Credit: Having your name appear in the film’s credit is a surprisingly costly thing, with a median at £50.
- Producer credit: It seems that people are interested in being listed as Associate or Executive Producer in the credits, with the campaign often specifying that backers will be listed as such on the IMDB page of the film (which is apparently a big deal). The listing doesn’t come cheap though, prices ranging from £100 to £5,000 with a median at £500). But as I mentioned in the previous article, offering that reward was definitely a good idea.
- Sponsorship: This is for companies and organisations who want their logo visible in the film, either at the end or in the title sequence. It’s basically product placement, so it comes quite expensive (£900 average).
- Digital Download: Getting a digital copy of the movie is what most backers are interested in, and is usually granted for a fair price (£21 on average).
- DVD: It’s interesting to note that in the Full HD, 4k UHD, etc., almost no project offers a physical copy as a Blu-ray disc. The physical copy comes in slightly more expensive than the digital one (£39 average, £30 median), which is funny, as the DVD version is likely to be of a slightly lower quality than the digital copy, but I guess the physical object trumps over content quality. Some physical copies are marketed as being “collector” (signed or not), but that’s not really common place.
How did it work out for me?
Here’s a breakdown of the reward levels I offered and how successful they were:
£5: thanks on social media4% of backers, 1% of money raised.
Sort of matches the predictions, nothing to say here, really.
£15: credits1% of backers; <1% of money raised.
Only 2 backers there, actually. I suspect most people decided that the digital download was worth the extra fiver.
£20: digital download57% of backers, 38% of money raised.
The obvious winner here.
£30: DVD21% of backers, 22% of money raised.
To be honest, I was expecting more people to want a DVD. Maybe dropping the level to £25 would have made more £20 backers go for the DVD. But that would have meant higher reward delivery costs. Not sure it would have been worth it.
£50: Blu-ray and photo prints4% of backers and 7% of money raised.
I definitely think I didn’t offer enough things for that level. But as you should know by now, I’m quite wary of physical rewards. It didn’t help that it’s difficult to convince people to get stills when they have no idea of what they’re going to look like. That’s probably a more viable option if you’re campaigning to finish a film rather than start one.
£100: Associate producer credit4% of backers, 15% of money raised
This worked better than I thought it would. These backers usually were people excited about the project to the point that some sent me messages offering help.
£500: Executive producer credit1% of backers, 14% of money raised
I was really surprised when I got my first backer at that level (and subsequently got paranoid about pledge cancellations). But there are people out there who look at projects, and if they think they are strong enough are willing to lay that amount of money on the table and have their name associated with it. I think that’s where making a really good and representative video pays.
£500 and £1,000: Club and retailer sponsorshipNothing
On these ones, I clearly didn’t consider what was the marketing budget of those groups and companies, and it was definitely asking for too much. I did think about cutting those levels in half at some point in the campaign (you can do that if nobody’s selected that reward), but I had reached my target by then, so it didn’t seem necessary any more.
At the end of the day, having done some research has helped me make sensible decisions, but I definitely could have made better ones. The one thing to remember is that the behaviour of potential backers is partially driven by the reward levels you set and the relation between those levels.
There’s a lot of psychology research out there pertaining to consumer behaviour (such as the attraction effect, which I suspect has something to do with what happened to the £15 and £20 rewards) that’s worth reading before starting a Kickstarter campaign.