The biggest mistake novice crowdfunders make isn’t asking for too much money; it’s not making a realistic estimate of how much money they will need to cover their expenses.
Say, for example, that you know it will cost $3,000 to record an album of traditional Scottish fiddle music or to publish a photo book of rare birds. Subtract fees (of about 10%, including payment processing), the cost of shipping out gifts to your backers, and taxes (yes, contributions are considered taxable income if you send a gift in exchange and are not a registered non-profit), and you might net only half of your total funds raised. In other words, you should ask for at least a third more than the total amount you think your project will cost.
Many crowdfunders don’t realize until after their campaign is over that they underestimated their costs. “I was asking for way too little,” says Ed “El Celso” Tahaney, a Calfornia-based artist who recently raised $5,744 from 95 individual backers for his installation of plastic soda bottles at an Incan temple in Qorikancha, Peru this past summer. (Click on the video above to see part of the completed project.) Since Tahaney beat his target goal of $5,000 by nearly 15%, he was able to use the extra funds to cover some of his unexpected expenses.
If you feel uncomfortable asking for the full amount up front, once you reach a lower goal, you can announce a stretch goal and send updates to your backers explaining how you’d use any extra funding. Starburns Industries—which initially asked for $200,000 but ended up raising $406,237 for an animated, stop-motion film written by Charlie Kaufman—explained to backers that the extra donations would go toward making a better movie. “You can make a movie for $200,000, but you have to make more compromises,” says executive producer Duke Johnson. The extra $206,237 will go toward things like better puppets and higher picture quality.