For any crowdfunding campaign to be successful, it's important to have the kind of enticing rewards that will actually motivate fans to donate or become patrons. In this piece we look at some key tips for choosing rewards that will maximize your crowdfunding revenue.
Guest post by Randy Chertkow and Jason Feehan of Discmakers
Maximizing the amount of money musicians bring in from patronage and crowdfunding campaigns is all about setting up enticing rewards and smart support levels. Follow these tips to boost the revenue you bring in.
When it comes to funding your music career or next project, two approaches allow you to raise money in advance, directly from your fans: patronage and crowdfunding music. When run successfully, these campaigns can turn your backers’ enthusiasm into real money for your music business. It can even help spread the word to other people, which in turn can bring in additional money and grow your overall fanbase.
But how do you maximize the amount you bring in? It’s all about the rewards and incentives you create.
About 80% of your funds will come from 20% of your backers. To maximize the amount of funds you raise, you need to concentrate on your large backers, those with “deep pockets” who can get you to your funding goal or on-going patronage level quickly. To do this, you need to choose rewards that get them to pledge more than they would pay for a regular album, event, or show.
Here’s how to think about structuring your rewards for both short-term crowdfunding music campaigns and on-going patronage.
Setting up crowdfunding campaign rewards to maximize revenue
The rewards you choose to score pledges is similar to how you set up your merch table: you need enough low-end rewards to get people to participate and you’ll want high-end rewards — at the $1,000, $10,000, even $25,000 mark — for your biggest backers.
You also want to be conscious of when to set up rewards which require you to ship products to fans vs. digitally downloading them, since shipping costs you time and effort. In fact, if you choose the wrong reward at the wrong level, you’ll end up costing yourself money. Use the following tips for your next music crowdfunding campaign.
Always have a $1 reward! Everyone can afford it and it’s a perfect way to hook people in who are only casually interested in your music project. Once they commit $1, you can then message them to keep them up to date with what you’re doing as well as upsell them to higher rewards. Also, the fans who only pledge a dollar know people they can forward your latest messages to, growing your sphere of influence.
For a good low-barrier $1 reward, try choosing a single downloadable track.
The $10 reward level is the perfect price point for a downloadable digital album. Our advice is to offer something slightly different than whatever it is you’re finally producing. For example, if you’re raising money for your next album, add something extra so it becomes a true reward for pledging early, such as additional songs, downloadable extras like a PDF lyric sheet, videos, phone or computer wallpapers, etc.
Crowdfunding data shows that the $25 reward is the most common pledge. Because of this, you’ll want to offer a bunch of different rewards at this level. This is also the first level where you can consider non-digital rewards since shipping is never free. But if you do, be sure to offer at least two $25 rewards: a physical reward you can ship and a digital equivalent which you can call the “save-the-earth” version. Encourage your backers to choose non-physical rewards whenever possible to save on shipping costs as well as your own time and effort to pack everything, address envelopes, and go to the post office.
$50, $100, $500, $1,000, $5,000, $10,000, and higher rewards
After the $25 mark, you’ll want to create a graduated set of rewards all the way through $5,000, $10,000, or greater. Why? Because you never know who might pledge to fund your highest amounts, so don’t limit yourself and get less out of your campaign. Plus, it makes the other levels seem extremely affordable!
When it comes to these reward levels, there’s no end to what you can offer to incentivize someone to pledge. For example, if it’s an album-funding project, create different packaged rewards: vinyl, special and elaborate CD cases, USB drives, etc. Offer previous albums or rarities from your back catalog. Create a limited-amount of souvenir photo books documenting the “making of” your project. Offer to add the supporter’s name to a “thank you” page in the liner notes.
You can also go beyond products by letting fans buy some control. For example, let backers who pledge $100, $250, or $500+ have a chance to vote for the album art (offer multiple selections to choose from), create a setlist for a tour to their city, get backstage access, spend a “day with the band,” or perform a house concert at their place. Don’t over commit yourself, but think big. Who knows? Someone might fund your $10,000 or $25,000 reward.
Setting up patronage rewards to maximize revenue
The goal behind patronage rewards is exactly the same as crowdfunding: get the most pledges possible by offering a variety of rewards. However, since patronage requires that pledgers pay monthly, your job is to create rewards that make them feel like they’re getting their money’s worth each month. This requires creating a long-term relationship with your most dedicated supporters, so the rewards you offer need to be different and on-going.
As with crowdfunding your music, you always want an entry-level, low-end reward to hook people into supporting you on a monthly basis. At $1 or $2, you’re really asking for $12-$24 a year, which are common crowdfunding levels of commitment. Of course, once someone becomes a subscriber, you can keep messaging them to encourage them to increase their rewards. After all, it’s easier to get more money out of a current customer than it is to go out and find a new one.
Rewards at this level should be digital and need to be shared at least quarterly. Some ideas include sharing alternative versions of your songs, images/posters you’re creating, behind-the-scenes footage, etc.
The $5 reward ($60/year) is one of the most common for patronage platforms, so you’ll want to give supporters something tempting. In addition to the $1 or $2 rewards, this level should start offering sneak peeks, early access to releases, pre-release tickets, and other extras the entry-level reward supporters don’t get access to.
The $10 reward ($120/year), depending on the size of your fan base, could be when to give them access to the streams of your live shows (which you can still charge everyone else to access). Other ideas include sharing your demos and songs-in-progress (or songs you’ve nixed), live versions from recent shows, or access to behind-the-scenes of your creation process (studio video streams for example). You could also provide this level of supporter the ability to buy limited-access band merchandise which is not available at lower levels.
At this level, which ranges from $180-900/year, you can start offering the types of rewards which require some additional work on your part, like customization and personal access. For example, this may include offering to write a song based on a request, adding names as “executive producer” to your album liner notes, and more. For personal access, this can include talking directly with the fans or playing for them via online tools like Skype or Google Hangout every quarter. Or, hold mini concerts for people at this level, along with all of the lower-level rewards.
Keep in mind, you have total control as to the number of people who can sign up for which reward, so you can limit the number of people if you don’t want to provide too many fans this kind of access. Also, know you can offer multiple rewards at the same level. This means you can offer a $15/month reward for special in-person live show access and then a $15/month reward for your worldwide fans who can’t attend shows in person.
$100/month and higher rewards
Always offer a $100 or more reward! Just like with crowdfunding, you never know who may want to back you at this level (and again, it makes all the other levels appear more reasonable in relation). At this level you’re looking at someone supporting you at $1,200 a year or more, so get creative as to what you’d offer. This could include guest-list access to your shows with backstage privileges, special one-off events, and more. Don’t over commit yourself, but definitely provide value for their support.
Whether you’re setting up patronage or crowdfunding music campaigns, using these tips to choose the right rewards can help you maximize the amount of money you raise and help you make more music and grow your fan base in the process.
Authors of the critically-acclaimed modern classic, The Indie Band Survival Guide, Billboard Magazine called Randy Chertkow and Jason Feehan “the ideal mentors for aspiring indie musicians who want to navigate an ever-changing music industry.” Their latest book, Making Money With Music (Macmillan) and free Making Money With Music Newsletter, help all musicians — from startups to pros — build a sustainable music business so you can make money in today’s tech-driven music environment.