22 Sep Indiegogo Fees and Additional Crowdfunding Costs You Need to be Aware Of
Want to crowdfund on Indiegogo? Start by calculating Indiegogo fees and other additional costs before you launch your campaign. Most businesses make the mistake of launching a campaign only to realize later that the goal they pledge for does not cover up their costs.
Although crowdfunding is a great way to receive investment for your business or product, it does not come without its additional costs. From platform fees to bank fees, credit card processing fees to taxes, you have to pay a significant amount from your pledged amount.
Other than standard fees, you also have to take into account additional costs for photography, marketing, campaign page creation and a lot more.
This article aims to give an overview of Indiegogo fees along with other costs so you may have a clear idea of how much money you may have to spend to get your campaign rolling. The costs of a campaign should be factored into your total campaign pledge.
Indiegogo Platform Fees
Similar to Kickstarter fees, Indiegogo has a 5% platform fee which is deducted from the funds you raise. Remember, fees are only applicable to the funds you have and not on the goal you set.
Say you raise $25,000, you’ll be paying $1250 as platform fee.
If you’re using the InDemand program (moving from another crowdfunding platform to Indiegogo) you’ll have to pay 8% platform fees.
You are not charged any fees if your goal fails with fixed funding. Backers are refunded so no one loses any money if the campaign fails.
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You will need a payment gateway to receive the funds. Indiegogo uses Stripe as a payment gateway and the transaction fee is 3% + $0.30 on each transaction. There may be additional fees charged by the credit card networks and payment processors if contributions are made via a non-local credit card.
So again, with the $25,000, you’ll be paying $750 as transaction fees.
The above was merely your platform and transaction fees. Next, you need to evaluate additional costs to manage and launch your campaign.
Content Production Fees
When you run a crowdfunding campaign, you’ll need to invest in content production. That would mean creating:
- Hiring a copywriter to write your campaign page content
- Hiring photographers and video editors to manage the multimedia of your campaign
- Hiring marketers to market your campaign on social media
- Hiring a consulting agency to help you through the phases of your campaign.
Here is a rough estimate for the costs you’ll incur on these content products.
✓ Copywriters:A good sales copywriter could cost you from $35 to $125 an hour. Assuming they take 5 hours to finish your page, that’s around $600 for your copywriting costs.
✓ Photographers or Video Editors: Professionals will cost you from $1000 – $3000 depending on the length and complexity of the video.
✓ Marketers: If you’re hiring a marketing agency, expect to pay from $1000 to $10,000 depending on who you’re hiring and what kind of services you require.
So in total, you’re spending around:
$1250 + $750 + $600 + $1000 + $1000 = $4,600 out of $25,000 pledged. This leaves you with $20,000.
It is always a good idea to start early and create an estimate of your total costs in running a crowdfunding campaign. If you begin hiring people after pledging a goal or creating a page, you’ll be losing money and setting yourself up for possible failure.
Avoid the ordeal of losing money on a crowdfunding campaign and talk to an expert as early as you can to ensure a smooth campaign.