# Crowdfunding Project Mathematics

Having worked with dozens or hundreds of crowdfunding projects, I decided to write several articles for those who are just going to launch their own project.

The first article that I would like to publish is directly related to crowdfunding money. The “crowdfunding math” is not as simple as it seems at first glance, but neither is Einstein’s “theory of relativity”. This article will help you not to be in a situation where, when collecting money, you yourself will also have to and sell the apartment, paying off your debts.

#### So what does the financial component of crowdfunding consist of?

First of all, it’s the “Necessary declared amount of the project” itself - the figure that you indicate on the crowdfunding platform and are trying to achieve:

For example: friends, if we collect 100,000 rubles, they will publish my book “Crowdfunding in Russia”!

To correctly calculate this figure, you need to consider all the costs that exist.

Keep in mind that the projects are very different, so here are the general recommendations for drawing up a crowdfunding plan.

The “project amount” includes:
• The budget for the implementation of the idea;
• Remuneration
• Crowdfunding platform commission;
• Commission payment systems;
• Taxes
• Pillow.

The first and main component of the project, which we include in the "project amount":

Budget for the implementation of the idea
This is the total amount of money that will allow you to implement the project in the promised quality.

The concept of a budget is loose, so I would like to warn you from two mistakes initially:

This is when you decided to put it in a book and without knowing the real value, you declared the amount of 100 thousand rubles. Arriving at the publishing house, you learned that in fact all this costs 300 thousand rubles. As a result, panic and an attempt to complete the amount. In this case, you will most likely have to either cancel the project or report your own funds. Which is not entirely nice.

Therefore, it is necessary to calculate everything in advance and put the figure that will allow you to realize these promises.

2) A very common mistake among domestic authors is an attempt to assemble the entire project immediately in one go.
This may not be a small figure at all, for example, to develop a high-quality mobile game, the required amount often reaches 1.5 million rubles, the amount is large enough for Russia and so far, most projects do not reach it. Therefore, betting too much, you risk being left with nothing: without money and without a project.

What to do? In English, this is called "stretch goals." From English lang deferred goals can be translated as rounds, stages of the project.
Divide the project into parts and collect at some minimum that will allow you to start, for example, 300 thousand rubles will often be enough to create a prototype of the game.

So did the authors of the 28 Panfilov project, they didn’t collect for the entire film at once (60 million rubles), but for the teaser of the film - 300 thousand rubles. As a result, from the first attack they rebuilt up to 3.2 million rubles and were able to significantly advance .
Another example: Tim Kerby, an American, suggested that his sponsors directly influence the scale of the game “Overthrow of Mutants - the Battle for Russia”, which he will release this summer.

Rewards (~ 30%)
Further into the calculations, you should lay one of the most enticing reasons to sponsor your project: rewards!

What these rewards consist of:

• This is their cost (for how much you will produce them);
• Delivery cost (mail, courier service, place in stock);
• Reserve (lay a small percentage in case you suddenly have to send delivery to Brazil);
• Typically, the cost of remuneration is about 20-40% of the amount contributed by the sponsor.

Important: when rewards are also the ultimate goal of the project, as, for example, with books, they can be included in the budget of the circulation edition; in other cases, for example, a T-shirt with a logo, they must be considered separately.

Important: Do not forget to set limits on the number of rewards.

We figured it out, went on:

Commissions (~ 10%)
Crowdfunding platforms exist at the interest that they take from projects.
The standard scheme is 5-10% of the amount of the successful collection, this also includes the commission of payment systems.

Thus, in the total amount you still need to lay 10% of the crowdfunding platform commission.

Since there are other conditions for crowdfunding platforms, be sure to check.

Taxes (~ 6-13- ...%)
Nobody likes to pay taxes, but they have to be reckoned with and included in the Project Amount.

If you are an individual, the Russian state will charge you 13% of the amount remaining after the commission of the crowdfunding platform.

If you are a legal entity, you already know your tax rate, it can be from 6% on a simplified tax system to ..., in general, everyone has different ways.

PR / SMM / design
Although with serious preparation for the promotion it will not be necessary to spend money on advertising, it will sometimes be useful to pay for several key publications that will certainly pay off in money or information equivalent.

In addition, you may need funds to pay for the designer, shooting the video, and other costs associated with the design of the project.
If you need a very large amount, then perhaps you will have to spend a decent amount of money on promoting the project.

Therefore, estimate the amount necessary to promote the project that you would like to return and put it in the “project amount”.

Pillow (1% -15%)
Very often there are unplanned expenses. So that they do not become a pleasant event, it is recommended to lay 1% -15% of the "project amount". This money will fulfill the role of an airbag for your project, which will allow you to implement a project with reduced risks.

Initially, having correctly calculated everything, you can fully work on your project without worrying about the financial side.