It’s April 2021 and I find myself looking at a spreadsheet, in a few weeks I’ll be announcing my next Kickstarter and all that’s left to do is make the numbers work.
Shipping is always the most challenging part, with other expenses such as manufacturing I can get a fixed price and sign it off before I launch, but shipping is all about informed guesswork.
For this article I’ll start with my process and then I’ll talk numbers.
I start with the basics and write down the size and weight of each of my reward tiers
I then check to see if there are any rewards that are likely to be sent using volumetric weights and do the calculations.
When a package is physically large but doesn’t weigh much, some shipping carriers will generate a shipping weight by multiplying the dimensions of the package against a magic number, rather than using the packages actual weight. This means a very large package weighing just 1kg may end up being shipped as 3kg instead.
Next up I get the list of every country that I’ve ever shipped to and create a grid of countries against my reward levels in a spreadsheet.
Finally, country by country, reward tier by reward tier, I go through all the spreadsheets from each of my fulfilment partners and find the best current price for each combination, plugging it into my own spreadsheet.
With the current numbers in place, I then look back over the changes in prices for the recent years and predict how much the rise will be over the next year for each value.
For my 2021 Kickstarter this resulted in over 400 predictions to cover the variations I was working with.
I believe in accommodating as many people as possible and always want to get the best prices.
Once my calculations are complete, I then check through each number and look for any oddities. Sometimes a specific weight for a specific country can be very expensive and I highlight every number I’m not happy with.
I send emails to my fulfilment partners, look for better options, and spend days going back and forth trying to bring down as many numbers as possible.
Finding a middle ground
With the actual costs in place, the hardest question of all comes up, how much am I going to charge my backers?
The actual costs are far too high to charge on and will put large amounts of people off, and by selling directly through Kickstarter I don’t lose as much money as I do to distribution so I can use that saving to subsidise what my backers will pay.
This is a dangerous game as one miscalculation or bad prediction can end up costing thousands.
I had one shipment that I charged £40 for and it ended up costing me £270, sometimes it just goes wrong and you have to hope most of the time it doesn’t!
I will spend hours tweaking and adjusting the discounts given for each reward tier until I find a point where I feel the shipping is both acceptable to a backer and affordable to me.
By this point I will have spent over 50 hours getting to my final numbers.
With my final shipping costs in place, I run them through my spreadsheet and by estimating the percentage of backers from each country, and dividing this by my estimated number of backers for each reward tier, I can arrive at a final average cost per person.
For The Isle of Cats this was £23.87.
Keep in mind, this isn’t a number any one person would pay, but is just an average for all reward levels, all countries, and includes all my predictions for how shipping prices will change over the next 12 months.
If you multiply this against the number of backers I had (12,133), my predicted shipping cost in April 2021 was £289,556.
A year later, with the final shipping invoices paid I can confirm the final price was £273,025.92, thankfully £16,530.08 below my prediction.
This of course is great news, as my prediction was really based on a worst-case scenario and I’m glad we didn’t go over.
You made a profit?!
I’m sure some of you are thinking, wait a minute, you made £16,530.08 on shipping?!
Let’s take a step back, this prediction was based on my actual costs and it was not based on what I charged backers.
If you remember in the middle ground section, I went through a process of discounting the shipping costs for backers and they actually paid a combined total of £136,978 towards shipping.
An average of just £11.29 per person, while the actual cost per person was £22.50. In the end the average backer paid approximately 50% of what it actually cost to ship their rewards.
How much does it cost to ship a Kickstarter?
In my case, £273,025.92 or double what I charged (which you can see here in section 26).
Shipping Kickstarters is incredibly expensive and around 25% of all the money raised on The Isle of Cats don’t forget the Kittens! went into shipping from the warehouse to my backers doors.
(This does not include the logistics of getting the games from China to the warehouses.)