Understanding how Kickstarter operates is the difference between a dream come true and a bureaucratic nightmare. In this short post, we’ll answer some of the most common questions you likely have about how Kickstarter works.
When Does Kickstarter Release Funds?
Kickstarter releases funds approximately 14 days after the project’s funding period has ended. The reason for this delay is two-fold: it gives Kickstarter time to process any outstanding transactions and provides a buffer for potential issues, like backers’ payment methods failing.
Why Kickstarter Waits 2 Weeks to Release Funds
After a successful campaign, Kickstarter doesn’t immediately release the funds. This two-week wait period is designed to ensure all transactions are finalized and any discrepancies can be addressed. This could include rectifying failed payments, or dealing with disputes or complaints from backers.
What Percentage of Funds Does Kickstarter Take?
Kickstarter charges a 5% fee on the total amount of funds raised. This fee is used to cover the cost of running the platform. There is also a processing fee of 3% + $0.20 per pledge, which goes directly to payment processors. Pledges under $10 have a discounted micropledge fee of 5% + $0.05 per pledge.
Why Kickstarter Takes Up to 10% of Funds
While the total percentage Kickstarter takes from a successful campaign can reach up to 10%, it’s essential to understand this includes both Kickstarter’s operational fee (5%) and the payment processing fees (around 3-5%). This helps the platform maintain its functionality, providing creators with the resources needed to connect with backers, and ensuring transactions are secure and efficient.
How to Save Money on Kickstarter Fees
Shipping is typically not included in the funding goal, so creators will need to handle it separately. Collect backers’ shipping information after the campaign has ended, either manually or by using a pledge manager. This allows you to adjust for any changes in address or pledge amount.
Additional Resources to Help You on Kickstarter
Remember that the end goal of any Kickstarter project is not just to reach your funding goal but to bring your creative vision to life. Knowing the ins and outs of the process is just the first step on that journey.
To that end, here is some additional information which you might find useful.
When to Collect Shipping Info: If you are shipping physical products, you must collect shipping info after your campaign ends. This ensures you have the most accurate addresses for your backers. You can collect this information using Kickstarter’s survey tool or an external pledge manager.
Tax Best Practices: Taxes can be complex, so it’s always a good idea to consult with a tax professional to understand any potential tax obligations. Remember, funds raised on Kickstarter are considered income.
Finding an Order Fulfillment Partner: To make reward distribution easier, consider partnering with an order fulfillment service such as Fulfillrite. They handle storage, packaging, and shipping, helping you save time and avoid potential logistical issues. Do your research to find the best one that fits your project’s needs and budget.
You’ve done everything by the book. Your Kickstarter campaign is almost ready to launch.
You made a great product. Built an audience. Set up a campaign page.
But how do you ship it?
We put this checklist together to help you get started. It's free.