How Do You Run a Successful Kickstarter Campaign for a Product?

[0:00] hey there and welcome to Startup Chuck

[0:02] today we're going to talk about product

[0:04] pricing and also why most kickstarters

[0:07] fail because people don't understand all

[0:11] of the costs go that go into selling a

[0:15] product and getting it manufactured and

[0:18] getting it to the customer so we will

[0:21] take an example of a I don't know just

[0:25] maybe a portable electric coffee maker

[0:27] off of Amazon and then we'll walk

[0:29] through a spreadsheet that I like to use

[0:31] in order to

[0:33] determine how much it's going

[0:36] to cost to make it um what its true cost

[0:39] is going to

[0:41] be whether or not it's even going to be

[0:43] successful on Kickstarter how many

[0:46] customers I need to get along with how

[0:49] many uh email subscribers and people

[0:53] committing before I even launch the

[0:55] kickstarter so that I don't fail uh I'll

[0:58] go into all of that so let's pull up uh

[1:04] our sponsor today which is Chuck rack

[1:08] Chuck rack is a great bucket ski rack

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[1:13] got the Chuck bucket they also have a

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[1:20] ski season or the bike season so we want

[1:23] to thank them for sponsoring this so now

[1:27] let's imagine our product is this

[1:30] wonderful thing on Amazon it's about

[1:33] $139.99 and I'm sure they make a

[1:36] bajillion of them

[1:38] and let's imagine that that's our

[1:41] product

[1:43] so I've got this handy dandy spreadsheet

[1:46] here and in it basically I like to have

[1:49] as my Roi C for product launch but

[1:52] really what we're doing is let's take

[1:56] our item with an MSRP of 139 so

[2:01] because I think that's what it was if I

[2:03] go back over here yeah 139 real world

[2:06] example so how much how much would you

[2:09] expect that product to sell for on a

[2:12] Kickstarter well this is this

[2:15] is you would think typically

[2:17] kickstarters are lower but that's not

[2:20] always the case you know 139 is the mass

[2:24] produced version cost of that

[2:28] so in smaller quantities you might

[2:31] imagine it's not going to be

[2:33] 139 so it might cost you let's say you

[2:38] know it's new it's niche 199 is MSRP and

[2:42] then may be your early bird super early

[2:45] bird is

[2:47] 79 and then your early bird is 99 and

[2:51] your Kickstarter special price here

[2:53] would be like 125 now one thing to note

[2:56] is that you never actually want to ever

[2:58] hit this

[3:00] level here this level is supposed to be

[3:04] so much higher so maybe it's like

[3:09] 149

[3:12] 149 uh that a customer sees this and

[3:14] says oh man I better get in on this

[3:17] early bird level and you just keep

[3:20] upping the number of units that you

[3:22] allow in that tier so always look like

[3:25] it's about to sell out and then more and

[3:28] more people buy it for $9

[3:30] 9 instead of um you know usually if it

[3:34] ever hits the 149 people feel like they

[3:36] don't want to buy it

[3:38] anymore it's too expensive now it's not

[3:41] as good a deal and

[3:43] so with that in mind you you basically

[3:47] can take these numbers and then you can

[3:49] put in how many availability you're

[3:51] going to have for each of these

[3:53] tiers um so there might be only 200

[3:56] super early and then and here I just

[3:58] have 189 early bird but you'll see

[4:01] that's me estimating 389 units

[4:05] sold

[4:07] so the big thing for you to know is with

[4:10] your

[4:11] manufacturer you already have your

[4:13] prototype you have a general idea how

[4:16] much it's going to cost to make it

[4:18] whether it's made in the US or it's

[4:20] overseas there's a minimum order

[4:22] quantity price that makes sense for you

[4:24] in order to manufacture this item in

[4:26] bulk so let's say it is something you

[4:28] want to make over

[4:30] you want to make this this coffee

[4:32] product thing and they said okay we're

[4:34] willing to make it for you for a minimum

[4:37] of th000 units and we're going to cover

[4:39] all the tooling costs and those units

[4:43] are going to cost $35 each and you go

[4:47] okay great

[4:49] $35 each th000 units put those in

[4:54] here and you end up with

[4:58] um basic basically at $3500 product cost

[5:02] which is right here okay so how many

[5:06] units you need to make is not how many

[5:09] units you need to

[5:11] sell you want to basically break even on

[5:14] all of the costs that you have during

[5:15] your Kickstarter so that way you don't

[5:17] end up uh not having enough money to

[5:19] fulfill the product that people are

[5:21] getting and

[5:24] so all right minimum order minimum order

[5:27] quantity is a th000 so you know it's

[5:29] going to cost you

[5:31] $3500 for the cost of the product next

[5:35] is ocean Freight press plus local

[5:37] shipping so that's actually a pretty

[5:38] small product might take half a

[5:40] container and you can say okay so and

[5:45] you can look at how large a container

[5:46] size is so you can go uh container

[5:50] shipping

[5:52] sizes

[5:54] and there's all these charts for

[5:56] standard shipping container sizes and

[5:59] it's like like 7.8 ft by 19.4 ft by oh

[6:04] 8T so let's assume that you could

[6:07] fit um one of these in a box you could

[6:11] probably fit

[6:15] oh six no one two three

[6:19] four let's just say you could fit nine

[6:22] of these in one cubic foot

[6:27] so um

[6:31] [Music]

[6:36] thid by let's just even make it easier

[6:38] 10 100 100 square feet so if you've got

[6:44] a

[6:47] 88

[6:50] by 8 by

[6:53] 19 1,200 one less than container load

[6:58] basically

[7:00] for a small container here um you're

[7:04] looking at maybe $6,000 let's say to get

[7:09] it shipped in and to you so we'll just

[7:13] estimate that in here as ocean Freight

[7:16] and shipping and I'll go over um when

[7:18] you're when you're looking at ocean

[7:20] Freight by the way you want to

[7:22] know what uh inco terms you're going to

[7:25] have so it's

[7:27] not Direct in terms of how easy it is to

[7:30] understand so inco terms are basically a

[7:34] set of internationally recognized rules

[7:38] and here's a chart that specify who

[7:42] takes control at what point in the

[7:43] shipping so what most people are used to

[7:46] having is what's called delivery Duty

[7:49] paid and that is

[7:51] where you pay somebody 100 bucks for

[7:55] something and it comes all the way to

[7:57] you and taxes are paid on it and fees

[8:00] and it arrives at your doorstep and you

[8:02] just get it it's yours uh most often you

[8:07] will have something in between here the

[8:09] worst of it being X Works where

[8:13] basically you get it you handle

[8:16] everything from the manufacturer to your

[8:19] door and then there's things in between

[8:22] like foob Freight on board or free on

[8:25] board

[8:26] rather so that is where the manufact

[8:29] says I will ship it from my point of

[8:32] manufacturer to the port and make sure

[8:35] it gets onto the

[8:37] boat and then the rest is up to you and

[8:41] that may or may not include insurance so

[8:43] you can see here insurance is fairly

[8:45] negotiable um and then there

[8:48] is uh like cost of insurance and freight

[8:52] and then you know you go all the way

[8:54] down here and you say okay at what point

[8:57] does it make sense for us to Take Over

[8:58] Control

[8:59] in my case for products that I've had

[9:02] made I have typically done Freight on

[9:05] board and then I have the warehouse

[9:08] where I ship my product to they have a

[9:11] logistics team which handles then the

[9:14] rest of the logistics of getting the

[9:16] product

[9:18] from you know from the boat uh insured

[9:23] cross the ocean paying basically for

[9:25] it's on the boat but you didn't

[9:26] necessarily pay for the voyage paying

[9:29] for the voyage across the ocean uh it

[9:31] gets arrived it gets taken off the boat

[9:34] it has to go through customs you have to

[9:36] pay taxes you have to get it then put

[9:39] either into a warehouse or onto a train

[9:42] to then or in a truck um they have to

[9:45] pull it out of the container which is

[9:47] another thing so unless you have a full

[9:50] container and they can take that

[9:51] container and pick it directly up and

[9:53] put it onto a train typically it has to

[9:55] go to a intermediary Warehouse where

[9:58] they pull it all out and then it goes

[10:01] from there uh into a truck or whever and

[10:05] then to your Warehouse or to your house

[10:07] or wherever it's going to go and then

[10:09] you ship it out so uh we can go more

[10:13] into all specifics on inot terms in a

[10:15] different uh episode but the big thing

[10:19] is um you want to make sure that this

[10:22] number is accurate because it can

[10:24] actually end up being quite considerable

[10:26] cost that you didn't have planned so

[10:29] here I have 13,000 that was for big and

[10:31] expensive products that I was selling

[10:33] like Crown rollers and things like that

[10:35] but for this product which is smaller

[10:37] and lighter and you might be able to fit

[10:38] nine in a cubic foot you might have a

[10:42] lower rate of

[10:44] around oh let's just

[10:46] say

[10:48] um

[10:50] $7,000 so here's the big thing okay

[10:54] $7,000 for ocean Freight and local

[10:57] shipping and whatnot that do doesn't

[10:59] include tariffs tariffs thank you Mr

[11:02] Trump and Biden because you guys haven't

[11:04] done anything to reduce this uh 25% so

[11:09] 25% on any of the products that you're

[11:11] shipping in assuming it's coming from

[11:13] China and you can look up your own Duty

[11:15] rates but for things that I had been

[11:16] doing it was

[11:17] 25%

[11:19] um it's a big hit is it enough to make

[11:22] you want to manufacture it in Mexico

[11:24] maybe in the Eastern block countries

[11:27] maybe in the us well unfortunately

[11:30] chances are if you want to manufacture

[11:33] in the US your product is going to have

[11:34] to cost about five times more most

[11:36] people don't typically want to have

[11:38] their um item costing substantially more

[11:42] if it's a high value item maybe not as

[11:44] much but that's something that you can

[11:46] trade off maybe you're making already in

[11:48] the US and you've got a nice streamline

[11:51] manufacturing setup that you think you

[11:53] can take your prototype through to

[11:55] regular manufacturing great well then

[11:57] you can just ignore this tar part and

[11:59] the ocean Freight but figure out your

[12:01] local

[12:02] rates um to get it from wherever they're

[12:05] making it to you uh if you're doing it

[12:08] in Mexico there's great trade agreements

[12:10] you basically almost pay no taxes on a

[12:12] lot of things and then uh your marketing

[12:15] budget so my marketing budget typically

[12:20] uh and this is fairly true for most

[12:22] kickstarters is you take however much

[12:24] you want to raise and 30% of that is

[12:28] marketing budget so here on the

[12:32] $35,000 that we would gross if we were

[12:35] to sell a random

[12:36] 389 then we would end up uh with about

[12:43] $35,000 um and 115 in a marketing budget

[12:48] so you take all

[12:50] those and you add them up and you get

[12:53] basically all the expenses that you

[12:55] could have so your

[12:59] your Kickstarter might have raiseed 35k

[13:02] but the cost of your product was 35k

[13:04] plus all of these items and now you have

[13:08] $62,000 in

[13:11] expenses and so oh I didn't even add in

[13:15] so you have 34,000 from Kickstarter

[13:18] Kickstarter takes about 9% between them

[13:20] and their Payment Processing Company and

[13:23] then uh you have shipping to your

[13:25] customer I randomly estimated $15 per

[13:28] unit

[13:29] how much is your product going to cost

[13:32] for this particular item to get a

[13:35] fulfillment center to ship it out to a

[13:37] customer you could say probably around

[13:40] $15 is a decent estimate you could do a

[13:44] flat rate box let's say or some places

[13:47] will be closer than others and on

[13:49] average it's about $15 but that's a

[13:51] important number to realize I didn't

[13:54] realize for one of my products it was

[13:55] very heavy that I had to have a lot of

[13:57] customers that were AC cross the country

[14:00] on the east coast and so I ended up

[14:02] having a lot more shipping charges than

[14:04] I thought and then what if somebody

[14:06] ordered it in Alaska if you let that

[14:09] happen you'd be surprised how much more

[14:11] shipping is to Alaska or Hawaii so be

[14:13] very careful with that uh it Kickstarter

[14:17] is not great on allowing you to charge

[14:20] actual shipping retroactively it's a big

[14:22] pain in the rear so you're much better

[14:25] off either charging a flat rate or just

[14:28] is free shipping and you include it in

[14:30] the cost of the

[14:32] item so let's see here

[14:35] um so you got your marketing budget

[14:38] you've got your total expenses now are

[14:41] actually

[14:42] $62,000 okay so now you're getting a

[14:45] better idea of um how much do we need to

[14:49] raise in order to make this work

[14:55] so um if you take the 34 you th000 you

[15:01] raise and you net 25 add up everything

[15:03] you end up $36,000 short so clearly some

[15:07] things here need to change we can change

[15:10] how many we sell we can change the uh

[15:15] price of what we

[15:16] sell and that'll give us a better

[15:20] estimate uh so let's go ahead and do

[15:22] that and I'll show the whole screen so

[15:24] it makes it easier so all right let's

[15:27] say we sell

[15:29] 500

[15:31] units um 500 units I gotta come over

[15:35] here and edit this so really we get

[15:38] 29,000 here 15

[15:45] now where is it

[15:48] getting Kickstarter

[15:52] gross

[15:54] net cost of product ocean Freight

[15:56] marketing marketing went up

[15:59] uh total

[16:01] expenses so now we're at

[16:05] 32,000

[16:07] and this number

[16:10] is

[16:12] arbitrary so maybe what I would do is

[16:16] just delete this line out

[16:19] okay shipping

[16:22] fees uh is equal

[16:27] to

[16:29] this plus

[16:33] this sorry I'm editing this on the Fly

[16:36] okay that's

[16:38] better

[16:42] uh all right so again we have a

[16:46] shortfall what if we were to sell all

[16:49] thousand units right so this is a great

[16:52] example here 800 units oh now we're only

[16:56] $10,000 short so does this make sense

[16:59] that if we sold our entire minimum order

[17:02] quantity we are still going to lose

[17:04] money in this and this is the problem

[17:06] that people have is that they set their

[17:09] funded amount to

[17:12] $88,000 because and I'll get into why

[17:14] you want to do this

[17:16] but if you don't raise 95,000 not even

[17:21] let's say now we sell 1,200 units okay

[17:26] not enough 1,00 unit

[17:29] un

[17:32] um that's not

[17:35] 1100

[17:38] 11,100 okay that's let's just say that's

[17:41] break even

[17:43] so if we were to sell 1100 units

[17:47] basically you can see now we are going

[17:50] to break even here um with you know

[17:55] $1,000

[17:57] profit and and still our minimum order

[18:01] quantity is um I didn't even include

[18:05] that on here probably so now it's 1,300

[18:09] units is actually really what it costs

[18:12] and we're still at a shortfall so

[18:13] clearly you can see the price of the

[18:16] product is not sufficient to cover the

[18:20] cost of the

[18:21] product so there there's a problem in

[18:25] here all right and so okay $79 is not a

[18:30] good enough

[18:32] MSRP uh let's change this to 99 and now

[18:37] 129 and

[18:40] 179 okay great now we've got a better

[18:45] sense of having enough money here oh and

[18:49] one thing I didn't add into this is so

[18:52] you have these total

[18:54] expenses and uh based on the number of

[18:58] cust customers that you get we can do

[19:01] something where

[19:02] we funnel customers in sorry I'm not

[19:05] showing the whole screen again so

[19:08] there's a great method through this

[19:10] company uh well many companies do this

[19:14] but launch boom's a great example of

[19:17] they teach you how to do a click funnel

[19:20] where you basically get a variety of

[19:24] people to give you a deposit for

[19:27] whatever buying and then that makes them

[19:29] feel like they have sunk costs and sunk

[19:32] costs will make them want to then

[19:33] convert further when you actually launch

[19:35] your product so it's pretty neat let's

[19:38] say you have a website and uh you funnel

[19:41] all your advertisements to your website

[19:43] and you say Okay enter your info in this

[19:46] email and we'll keep you posted and you

[19:49] get 10,000 people to enter their emails

[19:52] but because you say we're launching soon

[19:54] on our Kickstarter

[19:56] well the thing is

[19:58] you might be launching soon on your

[20:01] Kickstarter but what you can actually do

[20:05] is then have another section and say hey

[20:07] guess what if you give us $5 we're going

[20:11] to lock you in at the lowest possible

[20:13] rate in

[20:15] Kickstarter for $99 well make sure you

[20:18] get it for

[20:19] $99 because if you miss that then it's

[20:22] going to be 150 right or MSRP is going

[20:25] to be 180 and so we'll make sure you

[20:27] email you as soon soon as it launches

[20:29] and you're going to be locked in and

[20:30] even if you miss it well make sure you

[20:32] get locked in at that $99 rate so people

[20:35] say oh for

[20:36] $5 I can save $50 or $100 this is great

[20:41] of course I'm going to give you $ five

[20:44] and then now that they have given you $5

[20:48] they

[20:50] are 10 times 100 times more likely to

[20:54] actually buy that product because they

[20:56] have some sunk cost into it well I

[20:58] already spent $5 so I might as well

[21:00] spend 99 94 or 99 more and then if you

[21:05] put on there that it is fully refundable

[21:08] you feel like there's no risk but the

[21:10] actual number of people who want to try

[21:12] and get their $5 back is pretty low so

[21:14] you don't have to worry typically about

[21:16] refunding every single person or $ five

[21:19] dollar and then those people become

[21:23] Advocates typically of your product and

[21:25] want to tell all their friends like hey

[21:26] I just you know you didn't they didn't

[21:28] back you yet but you know hey I just saw

[21:32] this thing and it's really cool and I'm

[21:34] super excited to get it so uh you have a

[21:39] much better known conversion rate with

[21:41] those than you have with just regular

[21:42] emails so something you can do is

[21:45] actually raise Capital through this

[21:48] method so let's say you get 5,000 email

[21:50] subscribers but you get a thousand

[21:52] people who are

[21:54] VIPs

[21:56] that might convert at 50

[21:58] 15% and they gave you each

[22:01] $5

[22:03] and you would expect to get 150 of those

[22:07] people and so you can use this and say

[22:10] okay expected sales 1,00 is 150 well we

[22:13] know now we need to hit, 1300 here right

[22:17] okay interesting so if I put in you know

[22:24] 10,000

[22:26] VIPs right

[22:28] now I've got 1,500 expected sales and

[22:33] I've raised

[22:34] $50,000 in pre-campaign advertising

[22:37] money and so you can actually put that

[22:40] in

[22:41] here

[22:43] $50,000 uh let me go back to the full

[22:46] screen

[22:47] here

[22:49] and now uh you basically can offset a

[22:53] lot of your expenses so I'm going to do

[22:55] that in here actually is I'm going to

[22:56] put uh uh another line move that line

[23:00] and change all of this so you've

[23:04] got marketing budget but then you also

[23:10] have uh VIP

[23:15] cach right and we'll just move this over

[23:21] here

[23:24] and great so

[23:28] now we can take our marketing budget and

[23:30] our VIP cach we can go to our total

[23:32] expenses and we can actually subtract

[23:36] out this line and now our total expenses

[23:41] are um much lower and our product and

[23:45] profit shortfall is much better and this

[23:48] is great so now you'd actually end up

[23:52] with a profit margin of roughly

[23:54] 37% um if you had that so let's go back

[23:57] now to our minimum order quantity of a

[24:00] th000 and let's assume we

[24:04] sold oh

[24:07] 600 or sold all

[24:11] 800 and we needed

[24:17] um oops

[24:20] 67 not even well it' be like a thousand

[24:24] and all of these are not going to come

[24:26] by the way through

[24:28] through your your Kickstarter here you

[24:30] could imagine that half half of your

[24:33] people that buy your product are going

[24:36] to be through your VIPs and the other

[24:38] half are going to be completely random

[24:40] people so what you could do is maybe

[24:43] bring this number down to like 3,000 or

[24:47] something but the cool part is you can

[24:50] continue to

[24:51] advertise your product saying like hey

[24:55] Kickstarter coming soon sign up sign up

[24:57] to be a VIP and you just keep

[25:00] advertising and until you've reached

[25:04] however many VIP $5 deposits that you

[25:08] think you need to get the with the

[25:10] conversion you think you'll get to then

[25:12] end up with the expected sales that you

[25:15] need in order to launch your product and

[25:18] not end up with a shortfall so again

[25:23] 450 doesn't seem like it's a problem uh

[25:27] so let's go back down

[25:29] to um even less

[25:34] 350

[25:36] 350 and this would end up being

[25:42] oh you know I could probably do this the

[25:45] opposite way wouldn't that be

[25:47] smart let's take this expected sales

[25:51] number and make that equal to

[25:55] that and then

[25:59] uh well actually I don't like doing that

[26:02] because then it doesn't give you a

[26:04] differential so because again maybe all

[26:07] of these aren't from that so let's make

[26:10] this

[26:12] 2,

[26:14] 300 perfect so if you got 2,000 VIPs you

[26:20] raised

[26:21] $110,000 you end up getting these

[26:25] 350 and then you know let's say these

[26:27] two

[26:28] 00 out of the total that you have is

[26:31] organic and you end up

[26:35] with

[26:37] um let's see

[26:39] here a total gross Kickstarter amount of

[26:43] 65

[26:45] 65,000 your

[26:46] [Music]

[26:49] fees y shipping fees yep net

[26:55] 50k product cost 35k

[26:58] your ocean Freight your tariffs and this

[27:00] is still

[27:03] the yeah

[27:08] uh

[27:09] yep your marketing budget third of what

[27:12] you

[27:12] [Music]

[27:14] raised uh oh this was not live that's

[27:19] why things are

[27:21] off

[27:26] um

[27:28] this is also not

[27:34] correct okay

[27:38] weird sorry about

[27:42] this all right

[27:45] so VIP cache is actually equal to this

[27:50] number ah all right so now we're off

[27:54] this is making more

[27:56] sense so

[27:58] so you can play with the numbers again

[28:01] so

[28:03] 350

[28:06] 450

[28:08] 550 okay break even so this is where you

[28:12] about break even and of course this

[28:13] doesn't include your time and

[28:16] so you know you need to have about 5,000

[28:21] you know email subscribers at this

[28:23] conversion here but the real thing is

[28:24] you need 2,000 people how long is it

[28:27] going to take take you to get 2,000

[28:28] people and again if you go back to this

[28:30] launch

[28:31] boom uh how to know if your pre-launch

[28:34] ad is good so this talks about VIP and

[28:37] non-vip conversions and then how much

[28:40] you're spending in dollar amount and

[28:43] then you know the revenue you get from

[28:46] that and so like you might spend

[28:49] $112 in ads and you get 13 VIP leads

[28:54] those 13 VIP leads will end up you know

[28:57] giving you x amount more profit or

[28:59] whatever and you can determine whether

[29:01] or not you are having uh good

[29:04] conversions or not

[29:07] but it's just you know again if you look

[29:09] at this across the whole there's a lot

[29:12] more going on than most people think

[29:15] about they typically go on Kickstarter

[29:17] and they say oh I'm gonna you know sell

[29:19] this product and they don't take all of

[29:21] this into account and then their

[29:24] shortfall is

[29:26] substantial and then that's why people

[29:28] never end up getting products from

[29:29] kickstarters so I've had three

[29:32] successful kickstarters Now using this

[29:35] method and in all of them I've not lost

[29:38] money in the kickstarter which is huge

[29:41] and then I also had a bunch of extra

[29:42] inventory which if you look down at the

[29:44] bottom here I have you know okay

[29:47] shortfall basically Break Even no profit

[29:50] zero profit margin uh but what's the

[29:52] value of the product remaining

[29:55] so um it's supposed to

[29:59] be uh whatever your MSRP is and then you

[30:03] take the minimum order

[30:05] quantity um and you subtract away the

[30:08] number of units that you had so if I put

[30:11] in here

[30:13] total is equal to that okay and then I

[30:19] go this

[30:23] minus

[30:25] that there we go so now the the value of

[30:29] the product remaining would be 50k let's

[30:32] assume you still spend a third on

[30:34] marketing or advertising or in this case

[30:37] Amazon

[30:38] Fulfillment and So eventually The Profit

[30:42] you end up after you sell everything out

[30:44] would be about

[30:46] 33,500 so this is where again is it

[30:49] worth going through all of this to then

[30:54] only end up with 35k and not even

[30:57] including all of the time that you put

[30:59] into it maybe not so this is this is a

[31:03] thing is if you're only selling a th000

[31:05] units and they're $35 each is this all

[31:09] going to make sense and again also true

[31:14] cost of goods is $71 here if you added

[31:17] up your minimum order quantity your

[31:19] thousand units you're buying and your

[31:20] total expenses here and that's not even

[31:23] including VIP cach so uh

[31:27] I mean really it's you'd have to get rid

[31:31] of this VIP

[31:33] cache uh see

[31:36] here

[31:40] total non-

[31:43] reoccurring expenses would

[31:45] be equal

[31:48] to

[31:54] um

[31:56] this

[31:58] plus your ocean Freight plus your

[32:07] tariffs

[32:09] okay so you might have a $71 cost of

[32:13] goods for your Kickstarter but

[32:16] afterwards

[32:22] um let me just say

[32:26] retail

[32:28] it's going to

[32:29] be you know 50

[32:33] bucks

[32:35] so typically MSRP is 4X your cost of

[32:40] goods and what do you have here 199 so

[32:45] this is why any future sales would have

[32:49] to be at the 199

[32:51] rate at you know Amazon or local stores

[32:56] and whatnot and that's if you're selling

[32:58] directly if you are selling to um any

[33:03] sort of actual

[33:06] retailer you're going to be selling for

[33:08] just a 2X markup so you're going to be

[33:10] selling it to them for $100 each and

[33:13] then you're just hoping to get

[33:15] volume

[33:17] so that's all I've got

[33:20] on how to do uh Kickstarter budgeting I

[33:24] hope that this was super useful

[33:28] and that you've learned it's a lot more

[33:32] involved than you thought I hope you can

[33:34] use this to actually get a better

[33:37] understanding of the costs that go into

[33:39] producing the item that you want to make

[33:41] and this doesn't even include adding up

[33:43] all the pieces and then um if you wanted

[33:46] to like budget out the cost of something

[33:49] yourself right piece by piece this is

[33:51] just assuming simple lumpsum

[33:53] manufacturer says it'll cost this to

[33:55] make a thousand it's not that simple

[33:59] but it'll at least prevent you from

[34:02] making a massive mistake in budgeting

[34:04] when you're trying to then launch a

[34:07] Kickstarter and um also make a lot of

[34:10] people angry when they don't get the

[34:11] product that they're hoping to

[34:13] get in terms of Manufacturers um usually

[34:17] it's 90 days from when you wire the

[34:20] money over to when you'll receive

[34:23] product locally again if you have a far

[34:25] more complicated product it's going to

[34:27] take longer but uh 90 days is a good

[34:32] start and this is assuming no

[34:33] manufacturing problems so are you going

[34:35] to have scrap if you're going to have

[34:38] scrap that's going to add to the cost a

[34:41] lot rework I suggest getting samples

[34:44] pre-production samples from your

[34:46] manufacturer as soon as possible ideally

[34:48] you already have them again if you go

[34:50] back into the sourcing episode I had

[34:52] when you have your prototype ready let's

[34:54] say you have your provisional patent or

[34:55] something and and you send it to your

[34:58] vendors to vet them out at this point

[35:00] they should have already hopefully been

[35:02] able to send you back prototypes or

[35:05] examples of things that they've made so

[35:07] that you know that they can make the

[35:08] product reliably that you

[35:11] want

[35:14] um and then let's see

[35:17] here so yeah I mean if you're giving

[35:20] people delivery timelines on Kickstarter

[35:23] it's super useful then to show them that

[35:27] hey you know we've already got factories

[35:30] lined up we know that from when we send

[35:32] them the money it's going to be four

[35:34] months and you should expect it this

[35:37] time frame and then that way it doesn't

[35:39] take a year because you're still

[35:41] prototyping it at the

[35:43] factory your prototype is good to go

[35:47] um okay so I guess the other thing I

[35:50] didn't count in or cover in here is you

[35:54] look at your MSRP price and and you look

[35:57] at your Kickstarter pricing and all that

[36:00] and your true cost of goods and you

[36:01] played with all these numbers you have

[36:04] to be realistic in terms of am I going

[36:06] to hit this number of

[36:08] VIPs am I going to is there enough

[36:12] people who would want this

[36:13] product and am I going

[36:17] to

[36:19] um basically be able to hit a price

[36:22] point that people even want and so if

[36:27] none of that is going to work out if you

[36:30] are priced way outside of the market

[36:31] you'll find out when you're doing all of

[36:33] your marketing and then maybe just pull

[36:35] a plug on the whole thing or you um try

[36:39] and find a way to add value or things

[36:41] like that

[36:43] but if for example you find out oh this

[36:46] just doesn't make any sense financially

[36:48] at least earlier on before you have

[36:51] committed to a much more

[36:54] substantial um failure

[36:57] here then you can back off and save a

[37:00] lot of face with this so that's it

[37:02] that's all I got if you like it please

[37:05] like And subscribe to this and I'll have

[37:07] a lot more things like this

[37:10] thanks