24 August 2014 | 51 Comments
One of the common fallacies on Kickstarter that I and many other project creators have succumbed to is doing the same thing that other projects did simply because they did it (and successfully funded).
This happened when I launched my campaign for Viticulture almost exactly 2 years ago. I had all the things I actively discourage now: exclusives, early bird rewards, ancillary reward levels between $1 and the main reward, lots of add-ons, etc.
One element of the project that still leaves me a little puzzled–and that I continue to see on projects today–is a bundled reward level for two copies of Viticulture at a reduced price:
$49 (427 backers): 1 copy of Viticulture + Arboriculture expansion
$79 (59 backers): 2 copies of Viticulture + Arboriculture expansion
I’m sure you’ve seen this elsewhere in pretty much every category on Kickstarter. I’m specifically referring to bundled sets of 2-3 units, not retail or group-buy levels between 6-10 units. Does it make sense to offer 2 or 3 units at a reduced price compared to 1 unit.
To give credit where credit is due, I never even questioned this idea until Dice Hate Me launched their campaign for The Great Heartland Hauling Co. On that project, if you want 1 copy of the game, you pay $25. If you want another, you pay another $25. Simple as that.
Since then, I haven’t offered low-number bundled pricing on any of my campaigns. Some backers have asked for it, but it just hasn’t made sense to me. Today I wanted to explore why I think that (and why I might be wrong).
Pros for Bundled Pricing
- It gives backers a good deal. Everybody likes to pay less for stuff. As a positive side effect, this could drive up the overall funding and unlock more stretch goals.
- It encourages backers to share the project. For most products, each backer only really wants 1 copy for themselves. But if there’s a bundled reward, they have an incentive to talk to other people about the project to see if anyone else in their area wants one. Thus it creates organic sharing.
- For those backers who want multiple copies, it’s easier than making them add on extra money. Add-ons are hard for many backers to understand–it’s a lot easier to just click on a reward level and get what you want. This pro would apply even if backers didn’t get a discount for buying multiple copies.
- It’s great for international packages sent from within the US. If I want to send one 4 lb package from the US to Australia using USPS, it’s around $55. If you want to send one 8 lb package from the US to Australia, it’s around $60. You can pass on those savings to international backers. Ideally you wouldn’t ship many international packages from the US (or wherever you are), but it’s likely you’ll ship at least a few of them this way.
Cons for Bundled Pricing
- It doesn’t make financial sense. This is really what it comes down to. If you don’t budget correctly on Kickstarter, you’re going to lose money. The manufacturing cost of each unit is the same, so why would you charge less for a second unit? Do you save money on shipping by combining two products together? Let’s find out.
I use Amazon fulfillment. People use different fulfillment systems, but hopefully by now most people are seeing the value of having a fulfillment company take care of order fulfillment instead of you doing this out of your basement.
For Amazon multi-channel fulfillment (standard-size non-media), you pay the following:
- Order handling per order: $4.75
- Pick & Pack per unit: $0.75
- Weight handling per pound: $0.45/lb
Thus your costs are as follows for a 1-unit, 4 lb package vs. a 2-unit, 8 lb package:
- 4 lb: $7.30
- 8 lb: $9.85
- savings: $4.75
So yes, you save about $5, and you could pass that savings along to a backer. My concern is that it’s such a small amount for a backer to save, but it leaves you less wiggle room for things that end up costing more than you budgeted for. And trust me–things will cost more than you budgeted for.
This has been an interesting KS Lesson for me to write, because my opinion has wavered a bit just by writing out these pros and cons!
I actually think that having a 2-unit bundled reward at a ~$5 discount might be a good idea as long as it fits well into the flow of your reward levels. If you have a core product and a premium option, I would recommend offering the bundled discount for 2 premium options, not 2 core products. For example:
- $35: product (buy extras for $35 each)
- $49: premium product
- $89: 2 premium products
As you can see, I made it a $9 discount (off of $98). I just don’t think $93 is a compelling enough discounted price. It’s not ideal that you’ve created a $4 loss for yourself, but perhaps it’s worth it for the various pros I mentioned above.
What do you think? Have you ever backed multiple copies of a product? If so, tell me about your buying behavior–is the extra copy a collector’s item? A gift? For eBay? A split purchase between friends?