How does rewards crowdfunding work?

If you are looking for a way to test the market for a new product or service, or to gather the support of your community around your local business or artistic project, rewards crowdfunding may be a good fit for you. With this type of crowdfunding you provide incentives for your community to take action to support you by providing them with rewards or perks in exchange for their contributions. These rewards can be tangible like the pre-sale of a new product, or they can be intangible like access to a one-of-a-kind experience. 

What types of businesses can use rewards crowdfunding?

Rewards crowdfunding is a particularly good fit for consumer-facing businesses or for artists and creatives with an avid fan base, but rewards crowdfunding is also a good fit for local and community-focused businesses, especially businesses with a social purpose. The most financially successful campaigns tend to be focused on product pre-sales, especially for gaming (video and tabletop), technology and design products that have a worldwide audience. However, the largest number of successful campaigns are for artistic projects in film, visual art and music. In fact, crowdfunding as we know it today got its start because a British band reached out via the internet (back in 1997) to ask their fans to support their work.

What else should I know about rewards crowdfunding?

As with all crowdfunding, businesses are primarily responsible for bringing potential backers to the campaign. Pre-campaign marketing preparation is critical to the success of rewards campaigns, and therefore, many of the upfront costs (both in terms of time and money) are related to marketing. Delivery of rewards is another important cost to factor into your overall campaign budget and campaign funding goal. 

What are the fees to use a rewards crowdfunding platform?

While rewards platforms generally do not charge any fees up front, you can expect to pay the platform fees of 5-8% of the funds raised when a campaign closes. These fees include a platform fee and payment processing fees for contributions paid by credit card.

Ready to get started?

Our Rewards Crowdfunding Success 4-course Bundle will help you plan and prepare you on your path to reach your crowdfunding goals!

Want to know if your business is a good fit for Rewards Crowdfunding?

Our Crowdfunding Roadmap Package is focused on helping you understand your crowdfunding potential and assisting you in developing a campaign strategy poised for success.