How to Create an Expert Kickstarter Budget

There are many ways to define success in crowdfunding. After raising $350,000+ from more than 20 publishing campaigns, I don’t think success should be measured by the number of backers or the amount of dollars raised. Instead, I consider a successful campaign one that ends up in the black at the end of the day, meaning that it raised more than it cost to fulfill. Somebody who runs a $500 campaign and ends up with $100 extra at the end has done a much better job than somebody who raised $100,000 and ended up $10,000 in debt.

Budgeting may not seem like a sexy topic, but it’s one of the most crucial steps for a successful campaign. When I started crowdfunding more than a decade ago, I nearly bankrupted myself by failing to properly estimate stretch goals and international shipping costs. Luckily, I was able to skirt disaster, which taught me that a little bit of preparation can save a lot of heartbreak.

The budgeting process is your opportunity to fully visualize your campaign and all its associated parts. It’s exciting to think through all the possibilities of your project, and doing so will help you fully understand the scope of your campaign.

In this article, I’ll show you the seven parts of a good Kickstarter budget: project creation, production, shipping, marketing, your own time, a buffer for contingencies, and administrative fees. I’ll share some tips for each area, and hopefully leave you ready to plan your campaigns confidently — now and far into the future.

Before we get started

This article will take you through a step-by-step budgeting process. It would be helpful to have Excel, Google Sheets, or a similar program open while you read along, or to at least have a sheet of paper to work out your budget.

If you’re making your own spreadsheet, set it up like this:

I’ll fill this in throughout the article, using approximate numbers but not creating an accurate budget.

Project Creation

This is the easiest budget element to explain, because it’s the thing you’re making. Publishing campaigns run a broad gamut of creative literary ideas, but for the purposes of this article, we’ll use the example of creating a book and getting it ready for printing.

This part of the budget only covers taking an idea from conception through “prototyping,” or printing a proof of a book. We’ll deal with the costs for printing and shipping your finished books in the following sections.

“Project creation” here includes editing, proofreading, cover and interior design, blurbs, formatting, and anything else you need to get a book ready to go to print. Write in your costs for each of these elements and any others you’ll be using in your budget spreadsheet, like this:

If you forget something in your first pass through this spreadsheet, it should be easy to insert it later. A budget is a living document that grows and changes as your project evolves. You don’t need to complete it on the first try.

Production

This section will include the costs for producing your book and all your rewards, as well as any charges for storing everything until it’s ready to ship. You could pay to warehouse your books in a storage unit or an office, for instance, but most likely you’ll keep everything in your garage or another room in your house.

Digital rewards, like ebooks, will have minimal production costs, while physical items — like prints, stickers, swag items, and physical books — will have significant production costs that could turn your profit into a deficit if you’re not careful.

When working out your production budget, consider the quantity you’ll be making of each item. Books can be printed either one at a time through print-on-demand (POD) or in large print runs (offset). Depending on which method you choose, your budget can vary wildly. While it’s possible to print a dozen books for $100, if you choose to offset print, those same dozen books will cost several thousand dollars, as the minimum print run is generally between 500 and 1000 books. A major advantage of offset printing is that the unit cost is significantly lower, but you’ll also have to store a large quantity of books.

Items like bookmarks, postcards, and prints often must be ordered in quantities of 100+, whereas swag like coffee mugs and sweatshirts are very expensive to order in small batches and often are not worth the expense. Consider the resulting revenue (total amount raised) vs. profit (total amount raised minus fulfillment costs) when planning your rewards, as there is often little benefit to producing items that generate lots of revenue but little overall profit. This is one reason Kickstarter encourages creators to consider digital, experiential, and other non-swag rewards that have much lower production costs. Here’s a roundup of 70 reward ideas that won’t cost much to produce or ship.

My recommendation is to make sure every reward tier has at least a 50 percent profit margin, which will help you recoup your project creation costs. You can determine this by taking the total value of the reward and subtracting production, shipping, and administrative costs (these are discussed in further detail below). If a pledge costs a backer $25 and it costs you $12.50 to fulfill, that’s your 50 percent profit margin.

A budget is a living document that grows and changes as your project evolves. You don’t need to complete it on the first try.

There is no magic to finding out how much things will cost to produce, just diligent legwork: contacting production companies, getting quotes, and often going through the order creation process to find the right vendor. Do not guess on this step. Having accurate estimates from the vendors you intend to work with is critical to a strong budget.

If you’re not sure how many of an item you will end up producing, I recommend budgeting for print runs of 50–100 books and other materials, depending on minimum order quantities. For items like mugs or sweatshirts, I recommend starting with 5–10. If you don’t think you can make 5–10 sales of a given item, I recommend cutting it.

Here’s a sample Production section of my budget worksheet:

A note on stretch goals

A full discussion of stretch goals is outside the scope of this article, but it’s worth touching on because this is an area where creators can get themselves into trouble if they’re not careful. Even during the frenzy of an exciting campaign, remember that any stretch goal you decide to offer will need to be paid for, including production and shipping. It’s best to plan out your stretch goals at the budgeting stage — long before you launch your campaign — to make sure you’ve accounted for them fully. I recommend trying to keep the cost of stretch goals to 10 percent of the reward cost differential. For instance, if your campaign goal is $1000 and your stretch goal is $2000, then your differential is $1000, so you should try to keep your production cost to $100.

Shipping

Once all your rewards are printed and warehoused, they’re ready to be shipped out. Keep in mind that Kickstarter only collects money once, so you'll need to factor all shipping costs into your campaign goal. Some creators choose to work with fulfillment partners who charge for shipping later, but in this article I’ll focus on those who work within the Kickstarter system.

Shipping will almost certainly be more expensive than you think, and the costs increase every 6–12 months, if not more often. But as with production, there is no secret to an accurate shipping budget: just go to USPS (or your local shipper) and price out costs based on the weight and size of each item, to every state and country you intend to ship to.

It may be tempting to skip this step and try to benchmark shipping costs off of other similar campaigns, but please note that you may not have full visibility into someone else’s budget, and you also have no way of knowing whether they’ve appropriately budgeted for shipping. Creators across the board, even experienced ones, tend to underestimate shipping costs.

If you’re an author or publisher in the U.S., you have access to media mail, a significantly reduced shipping rate for books and other educational materials. However, there are many rules about what can and can’t be shipped this way, and if you violate these, your packages can be returned to you for additional postage.

Other than ill-conceived stretch goals, the likeliest killer of a campaign’s profitability is international shipping, which can balloon rapidly and significantly. For this reason, many creators forego international shipping altogether, since it makes their rewards so much more expensive for overseas backers. My recommendation would be to go ahead and offer it, charging whatever it costs, which lets backers make their own decision about what they want to pay. Many will choose digital versions instead, and perhaps you won’t wind up sending anything internationally. But this puts the choice in the backers’ hands and does not require you to absorb those costs.

Regardless, Kickstarter allows you to specify which countries you’ll ship to, so if you want to only send your books to certain places, you have that flexibility. You can also choose whether to include shipping in the reward price or have it added on once a backer has chosen their tier and listed their country.

In addition to shipping charges themselves, this section of your budget also needs to include shipping materials. I recommend a strong book box to prevent corners from being damaged, as well as some packing material to keep your rewards from jostling around. There are many websites that help you print mailing labels at home, which are often both cheaper and faster than waiting in line at the post office.

Here’s my budget worksheet with shipping costs added.

Marketing

The costs associated with marketing can vary widely, including things like targeted email blasts, digital ad campaigns, exhibiting at live events, running virtual giveaways, and even hiring a publicist or a PR firm to coordinate all those efforts and more.

This means that marketing is the most variable cost in your budget, and each creator will make their own choices based on their comfort level, the money they want to spend, and the scale of their campaign. Some people spend tens of thousands of dollars on advertising, and others spend nothing at all, focusing instead on marketing efforts that can be done for free.

I generally don’t pay for digital advertising, but I work with a PR agency on larger projects, and I’ve spent years booking my own media interviews.

If you decide to pay for advertising, choose a daily budget and stick with it. Creators can spend anywhere from $5 to $5000 (or more) per day on ads, but I recommend keeping to the low end until you’ve run a couple of campaigns — or not paying to advertise at all, unless you have an average pledge value of $50 and significant interest in your project at the pre-launch stage. I consider 200 people following your pre-launch page a good indication of significant interest, but you might set yourself a different number.

Your Time

Creative people are not always great at compensating ourselves for our time, which is why I think this line item is so important. Writing a book, drawing a comic, and running a campaign are all really hard! So don’t get to the end of it without some sort of reward for all your work.

You can choose anything as your reward, and allocate whatever cost feels appropriate. I have been getting tattoos after my big campaigns recently, so that’s what I’m putting into my budget. Here’s one I received that depicts Anjelica, one of the main characters from my graphic novel Black Market Heroine.

Yours might be a fancy dinner, a new dress, a massage, or anything that makes you happy, so long as you’re giving yourself a nice treat.

Contingency

Now it’s time to add a little padding, because something unexpected is bound to happen, and you want to be prepared. This can be used if you underestimate any costs, if there are production overruns, if shipping gets more expensive, or for any number of reasons. I always add a 10 percent contingency to every budget. If you are very conservative, you could add 15–20 percent.

If you’re working in Excel, use the formula =SUM(C1:C27)*0.1 to add up all your line items and then multiply by 10 percent to get your contingency. If you have more or fewer cells, adjust the formula accordingly, and if you want more than 10 percent, make that change as well.

The beauty of this line item is that if you don’t use your whole contingency, you can use it to pay yourself a little bonus.

Administrative fees

Finally, there are two main administrative costs for running a Kickstarter campaign: Kickstarter’s 5 percent flat fee and Stripe’s payment processing fee, which is 3–4 percent variable, depending on your bank and the credit cards and locations of your backers. When combined, these fees should be 8–9 percent of your total funds raised, but I always budget 10 percent to be safe. If you are using a backer management system, there may also be costs associated with it which you’ll put in here as well, if you haven’t factored them in elsewhere.

As with your contingency, use the formula =sum(C1:C25)*.1 if you’re working in Excel, making sure to change the cell range and percent if needed.

And there you have it: a Kickstarter budget fit for a crowdfunding expert!

Conclusion

As you can see, there is a lot that goes into a budget, but hopefully this article has helped demystify the process of creating one.

If you get to the end of your budget worksheet and see that your costs have spiraled out of control, don’t worry! That’s precisely why you’ve done this exercise. Now you can go back through and make different choices for each area, working until you feel that you’ve got a goal that’s realistic and achievable. You can also decide to scale down your campaign, but don’t deny the scope of doing your project properly. There is no value in an inaccurate budget.

When you create your budget thoroughly and accurately, you’ll be able to launch your project confidently, knowing that you’ve built a rock-solid foundation for Kickstarter success.

Russell Nohelty is a USA Today–bestselling author, editor, and publisher. He’s run 23 Kickstarter publishing and comic campaigns, raising more than $350,000 on the platform. He runs a Kickstarter Accelerator for publishing and comics projects with USA Today–bestselling author Monica Leonelle that includes more than 30 hours of videos, worksheets, and more. They also wrote the book on the subject, Get Your Book Selling on Kickstarter, and host the “Kickstart Your Book Sales” podcast.