FREE FRIDAY! No subscription needed to read today’s post! One of the trickiest parts of running a successful Kickstarter is doing the math right. If you’re not careful with the numbers, you may not be able to fully cover the expenses required to fulfill your obligations. Here’s a simple tip that will help you.

Kickstarter math

Nearly every first-time Kickstarter campaign makes the same mistake. After carefully accounting for all of the costs required to produce their project, they set that number as their goal. And, after successfully reaching that goal, they find themselves short of the money they need.

Why? Even though it’s common knowledge that Kickstarter takes a 10% cut from the earnings when the campaign is fully funded, many of us fail to account for that deduction when setting our goal. And it’s not hard to see why. After all, how you do a set a goal that’s going to cover my costs after 10% is deducted from the goal itself?

Count your costs

The first step in running a successful Kickstarter is to correctly determine all of your costs. The rookie move is to determine the cost of the thing and set that as your goal. The seasoned Kickstarter campaigner knows that there’s a lot more than that! For example:

• Shipping all of the items from the vendor/printer/producer to you
• Shipping the individual items to your backers
• Shipping supplies — boxes, tape and padding, etc.
• ISBNs
• editors/spellcheckers
• storage for the merchandise
• insurance for the stored merchandise

And… if you’re smart, you’ll building a buffer for all of the little things that always come up. Whatever my rough goal is, I usually add in an additional 1-2% for incidentals.

Taxes

Just remember to keep your receipts on all of those costs. Kickstarter income is taxable income. This is especially important to remember in the happy circumstances of running a campaign that goes beyond the goal.

Algebra

It’s actually a pretty simple formula, but if algebra makes your brain hurt, just skip to the next subhead where it gets downright painless.

COSTS + (10%)(GOAL) = GOAL

In other words, we want our goal to be high enough that — even after we subtract ten percent from that number —it still covers our costs.

Simplifying our formula:

COSTS + (.10)(GOAL) = GOAL

COSTS + (.10)(GOAL) -(.10)(GOAL) = GOAL – (.10)(GOAL)

COSTS = (1)(GOAL) – (.10)(GOAL)

COSTS = (.90)(GOAL)

COSTS / (.90)(GOAL) = (.90)(GOAL) / (.90)(GOAL)

(COSTS) / (.90) = GOAL

The simplified formula

COSTS / 0.90 = GOAL

Or, simply worded, take your total costs, and divide that number by 0.90.

That will give you a final goal that is large enough to cover those total costs after 10% is deducted by Kickstarter.

Further reading…

Setting a price: Worksheet