Unveiling Kickstarter's Revenue Streams Beyond the 5 Fee

Introduction

Kickstarter is a well-known crowdfunding platform that has revolutionized how independent creators and entrepreneurs can gain financial support. While many might be familiar with the 5 fee charged per donation, the platform generates a multitude of revenue streams beyond this. In this article, we will explore these additional revenue sources, understanding how Kickstarter has diversified its income and how other crowdfunding websites might emulate its success.

Understanding Kickstarter's Business Model

Kickstarter operates as a platform that charges a 5 fee on successful projects, which may seem straightforward. However, this doesn't fully capture the revenue picture. The platform's business model is complex and diverse, incorporating various sources of income. Let's delve into these.

The 5 Fee

One of the most recognizable revenue sources for Kickstarter is the 5 fee. This fee is applied to the funds collected by creators on successful campaigns. For instance, if a project collects $10,000, Kickstarter will take $500.

Total Revenue Sources

According to reports, Kickstarter has helped entrepreneurs raise approximately 4 billion dollars since its inception. This amount translates to a substantial revenue for the platform. While the 5 fee is a significant portion of this, Kickstarter has also explored other avenues to generate income. Let's break down some of these additional sources.

Revenue Streams Beyond the 5 Fee

1. Premium Services

Kickstarter offers premium services to creators, providing them with additional support and features. These services often include advanced analytics, enhanced branding, and more prominent placement in the platform. While specific details on the cost of these services are not publicly available, they can be substantial revenue generators for the platform.

2. Reaching for More Donations

A strategy many creators employ is to launch campaigns on multiple crowdfunding platforms simultaneously. This increases the chances of raising funds, as different platforms appeal to different audiences. While this doesn't generate additional revenue directly for Kickstarter, it can boost the overall fundraising efforts.

3. Exclusivity and Desirability

One of the unique aspects of Kickstarter is the exclusivity and desirability it offers. Campaigns rake in substantial donations, leading to a sense of exclusivity for those who contribute early or for larger amounts. Kickstarter can leverage this by offering premium rewards to early backers and larger donors, creating a more premium offering that brings in additional revenue.

Comparative Analysis with Other Crowdfunding Platforms

Investment banks and crowdfunding platforms like GoFundMe and Indiegogo operate in different ways. Kickstarter focuses on creative projects and businesses, charging a flat 5 fee. In comparison, GoFundMe offers a range of fees based on the type of campaign (personal, business, etc.), and Indiegogo has a tiered system that can go as high as 9.9 percent.

1. GoFundMe

GoFundMe offers a range of plans for different types of campaigns. Personal campaigns typically charge 2.9 percent for credit card transactions and 0.35 percent for debit card transactions. For business campaigns, the fee structure can fluctuate based on the promotional materials and additional services selected. GoFundMe also provides premium plans that offer enhanced features and support, generating additional revenue.

2. Indiegogo

Indiegogo has a tiered fee system that ranges from 3 percent to 9.9 percent, depending on the success of the campaign. Projects that meet their funding goal at the lower end of the fee scale will pay a higher percentage than those that exceed their goals. Additionally, Indiegogo offers premium tools and services, including marketing support, for an additional fee.

Conclusion

While Kickstarter's primary revenue comes from the 5 fee on successful projects, the platform has effectively diversified its income streams. Premium services, reaching for more donations through cross-platform campaigns, and leveraging the exclusivity and desirability of its platform are key strategies that contribute to its success. Other crowdfunding platforms can learn from Kickstarter's approach to revenue generation, creating a more comprehensive income model tailored to their specific business models and target audiences.