Types of Crowdfunding Consultants for your Kickstarter or Indiegogo Campaign
In my experience, the majority of creators who launch a project on Kickstarter or Indiegogo are hustling entrepreneurs or creative artists that have few excess funds to hire a marketing consultant or run a PR campaign.
At the same time, there are seasoned game production companies and establish businesses that pour money into their crowdfunding campaign, hiring a professional PR agency and often times “crowdfunding experts.”
Below, I’ve written a short overview of this new job title: Crowdfunding Consultant or Crowdfunding Expert. If you’re having trouble finding a crowdfunding consultant, check out the Crowdfunding Directory.
Be sure to review part 1 of this series Doing due diligence on crowdfunding service providers.
3 Ways Consultants Charge
1. Strict hourly rate or fixed project cost
– These types of crowdfunding consultants charge an hourly rate for their services (and sometimes a consultation fee to have an initial discussion). They may also be willing to invoice a fixed amount for the project, provided a certain amount is paid up front.
Pros: For the fixed project rate, you know your costs up front. You’re also likely to get a good understanding of the time and attention they are dedicating to your project. Finally, if you have a run-away success, they will not receive any cut of the earnings.
Cons: The costs add up quickly. Usually the time of service providers is only valuable in a cumulative effect over a long duration. Also, there is little incentive for the consultant to give everything they have to make your project successful, as their pay is a flat rate.
2. Commission based compensation
Crowdfunding consultants who embrace the uncertainty of raising money on Kickstarter or Indiegogo may be open to commission based compensation, where they receive a percentage of funds raised if the project is successful. Based on my experience, these types of consultants are rare, or are new to the business. You will find several that are willing to be paid on a percentage of funds raised basis, but often these consultants will only take on the project if a certain amount has been raised already.
Pros: No up-front costs for you. It will be in the consultant’s best interest to see the project funded because their income is based on the campaign’s success.
Cons: There is a free-rider effect, in that sometimes the actions of the crowdfunding consultant don’t directly cause or contribute to the success of the project, in which case they would receive compensation anyway. Also, be sure to ask how many projects the consultant is involved in or how many they will be involved in throughout the duration of the campaign. Being involved with more campaigns means the consultant will not be able to devote as much attention to yours and increases the chance of the free-rider effect.
3. Hybrid model
A hybrid compensation structure includes partially hourly or fixed rate cost in addition to a percentage of funds raised. Usually, the hourly rate or fixed rate is lower than you would expect in the marketplace. Also, the percentage of funds raised is a lower number than if you were to approach a commission based compensation only crowdfunding consultant.
Pros: Personally, I like this model most. The consultant is paid, which always is a good way to focus someone’s attention on an endeavor, and there are incentives to work hard. Just be sure to budget in the cut they take when you are considering how much money you need to raise.
Cons: The typical risks that come with hiring any kind of contractor or consultant. See Doing due diligence on crowdfunding service provids for some tips on this aspect.
Consultants Can Add Value (or not)
When hiring a crowdfunding consultant, it’s important to be crystal clear as to how they will add value to your campaign. Will they be helping you market your campaign to your target audience? Will they be working to generate news articles about your project? Are they helping with planning the campaign strategy?
Some consultants specialize in the pledge generating marketing and PR activities that many creators have trouble with. Others take a more analytical approach, working with creators on their copywriting for the campaign, the reward tiers, the video, and the social media strategy for the duration of the campaign.
In order to make sure you are getting the most bang for your buck, it’s best to hire a consultant that fills the desperate needs of your project If you have a strong network in the gaming industry, it might not make sense to hire a “crowdfunding expert” if they don’t have any contacts in that industry to promote your campaign, or if they don’t understand how it works. It would make more sense to go with a PR or marketing firm that specializes in this industry.
You can do some research on these consultants via LinekdIn, going through google searches, or by looking through the crowdfunding directory.
3 Common Mistakes or Things to Watch
1. Being impressed by the “successful campaigns” they’ve worked on. Be sure to dig deeper into this information. If they’ve worked on 50 campaigns and 5 have been successful and raised a good amount of money (what they include on their webpage), that’s a horrible success rate if they are charging by the hour. Don’t just ask them about the successful campaigns they have worked on. Ask them about the failures as well.
2. Seeing the process as hiring a consultant rather than making an investment. You should only hire a consultant if you are confident you will receive a positive ROI from their activities. Also, don’t overestimate the value they can add to your campaign. For example, on CrowdfundingPR, at the time of writing we charge $39.00 for the top promotion tier. Expecting this purchase to bring you an extra $1000 in pledges is an overestimation.
3. Looking for consultants before taking any other kind of action. Read as much as you can on your own before contacting consultants. It’s also best if you’ve put a bunch of work into you campaign already. It’s easier to for a consultant (and less costly) to critique your project, than create it. Finally, it may be tempting to outsource the mundane aspects of the campaign, but what makes Kickstarter and Indiegogo special is that creators have a direct connection with their fans. No one likes to find out that their hero doesn’t actually write their own tweets or responses.
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