posted this on November 28, 2011 17:03
You can pre-sell products or services on Indiegogo to raise start up capital for your business. Pre-selling your products is not only a great way to raise money to cover manufacturing and inventory costs, it can help you gauge demand and build a network of early adopters.
Here are some tips for campaigns that are pre-selling goods:
Pre-sell at a Premium. People will give money far above the value of the actual objects, because they're not just buying a product, they're investing in your idea. You want to make sure that there is something left over to invest back into your business after you've taken out the cost of the object and shipping. For example, you might give away a t-shirt at a $50 Perk level, even though it only costs you $10.
Keep your Contributors Updated, Especially After the Campaign is Over. There are an infinite number of snafus that may arise, which push back your timeline to fulfill your Perks. After your campaign has ended, tell your contributors what's going on and give them an updated estimate on when Perks will arrive. Transparency is far more important than pretending that everything is running smoothly. People understand that your business is just getting started. By being transparent and sending your contributors regular updates, you build trust and lasting relationships.
Tell People How to Pay for Shipping. Is shipping built into the Perk level? Should they add an extra $5? Should they pay you separately? It's important to clarify in your pitch description how shipping costs will be handled. Make sure to give separate instructions for international contributors, if their shipping costs are higher.
Disable PayPal if you Can't Ship Within 30 Days. PayPal recently implemented a policy that places a block on any account that pre-sells goods for longer than 30 days without fulfilling them. The criteria to lift the block will vary for each account. In a worst-case scenario, PayPal could start reversing payments, sending contributions back to contributors. If you are not sure if you'll be able to ship goods within 30 days, consider disabling PayPal as a payment option.