Sunday, January 25, 2015

My Dog Ate My KS Funds (part 5 of 10)

5:  Shipping and Scale Up

     Customers generally want three things when placing an order with your crowd funding project.  #1 approximate shipping date, #2 confirmation when it ships, and #3 no hassles or damages upon delivery.  Customer satisfaction cuts down on problems and keeps them coming back for more.  Always put yourself in the customers shoes. 

Damaged goods are not entirely avoidable.  We are dealing with a middle man, the postal carrier.  When a box travels from point A to point B, you will never know how that parcel is handled.  Then there is the possibility that customs will open your carefully packed box, look through the contents to assess value, and then carelessly throw the figures back in the box for delivery. 

There is also figure design.  One particular sword wielding figure that I shipped out in my first KS was prone to bending and breaking off.  I’m currently having a sculptor redesign the hand and sword on the figure so as to avoid future shipping problems. 

Regardless, the goal is to keep the figures from shifting and you can never over insulate from that possibility. Here are some materials to help prevent damage. 

Chip board boxes:  These little boxes are shipped condensed and flat, are offered in many sizes/shapes and can be quickly assembled. In my region of the world, I order them from or for the cheapest shipping rates to me.  You want to order heavy cardboard office supplies that are close to your location to save money.  I primarily use chip board boxes to fill up the space as best I can within the main shipping box, creating a box or boxes within the main box.  This re-enforces the strength of the box and helps to prevent against damage should your box end up at the bottom of a heavy pile of materials during shipping.  (customer satisfaction #3). 

Chip board boxes on the left and corrugated on the right

Zip lock baggies:  Initially I was against the use of these handy and cheap containers, but over time I discovered they are great for separating parts into groups, keeping tiny parts from loss, and can be folded in many ways and tightly packed into the chip board boxes.  These too can be ordered from in many sizes.

Case of 1,000 zip baggies size 3 x 4 inches

Stuffing:  Recycle whenever possible.  I shred most of my business paperwork after seven years because you can’t be audited in the USA after that period.  If you don’t generate a lot of paperwork, then shred newspaper which you can find in great quantity from neighbors or recycling center dumpsters even in today’s digital age.  You will have to invest in a paper shredder (mine is a floor model with wheels, cost around $160 several years ago, and holds eight gallons of shredded paper).  Small table top shredders are not very reliable so spend the money and get a good one. There is that initial cost but then your stuffing is free for years to come.  Fill in areas within the chip board box with shredded paper to keep the contents tight. 

My shredder can cut 30 sheets at a time, paperclips, and CDs
Outer shipping box:  In the USA, use because your priority shipping boxes are free.  I do keep a generic brown corrugated box on hand (ordered through for orders that I want to ship first class outside of the USA to reduce shipping prices.  You can further save money by creating prepaid shipping labels through the website.  Tracking information is generated on each online purchase and automatically e-mailed to customers fulfilling (customer satisfaction #2).   The online service allows you the convenience of running the labels the night before, and then simply dropping them off at your local United States Postal Service center avoiding having to wait forever for the clerk to do the same time consuming work.

     Basically, if you design it right, you should only have costs tied up in zip lock baggies, chip board boxes, and packaging tape with the stuffing and outer boxes costing you nothing. 

Scaling up:  The maximum amount of orders I could cast, sort, box, and label in a weekend was 50.  The online labeling alone took approximately one hour per 10 labels.  I would cut and paste the shipping information and e-mail information directly from my KS pledge report found in my accounts area online, into the account to keep the information as accurate as possible.  This also allowed me to flag the rewards that were shipped as I was generating the labels and then filter pledgers out of future reports to keep track of who was taken care of.  If I were to type and copy it by hand, there may have been typos and delays in delivery.  Lastly you pre-pay before the labels can be downloaded and printed, and affixed to the boxes.  Time is a major factor in running a successful crowd funding project and scaling up is simply the term for repeating a process in greater multiples.  I had close to 250 pledges divided by 50 a week or five weeks.  Due to some unforeseen problems it took me six weeks to ship them all.  If I would have received 1,000 pledges the shipping would have taken 20 weeks or five months to complete. Scaling up is a good estimating tool that allows you to pass information to your supporters to keep them informed as the project moves forward supporting (customer satisfaction #1).

Shipping charges:  As mentioned in the previous article “The Math Behind Rewards”, if you need $10 shipping and handling to cover expenses per reward, you will need to increase this amount by 1.1 or ask $11 shipping because the crowdfunder host is going to take fees out of the end total.  I can offer free shipping in the USA even though it costs me $5.25 each because I factored that into my formula as a cost for my project like metal, packaging, etc.   Free shipping is a great way to attract customers if you have room in your profit margins.  I asked $10 from overseas customers because my average overseas package cost me $14 to ship (base cost/expense of $5.25 on all orders plus $9 overseas customer after crowdfunding fee). 

Crowdfunders:  Keep costs down by looking at many ways to box all orders, as long as the savings does not impede the safe arrival of the products within.  Scale up when a project ends so you know how long it will take to ship.

Pledgers:  Projects that ship beyond the year they were promised will often run into increased shipping costs for the crowdfunder, who has already  budgeted in that expense in a previous year and now has to raise more funds. 

Next Week:  Walk the Talk

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Monday, January 19, 2015

My Dog Ate My KS Funds (part 4 of 10)

4: The Math behind Rewards

     The object of a crowd funded project is not to gross as much money as possible, but to keep your costs from running beyond the gross sales while maintaining a profit or break even point.   Rewards cannot simply be given away indefinitely, there is a limit.  If you go over the limit, you’re now taking a loss and the project will fail unless you chip in your own money.  Here is an example of how to calculate when each new stretch goal can be afforded.

     Starting pledge level example:  You want to create 10 human sized figures and sell them for a pledge for $30.00.  The pledge value is one of many values that can be tweaked and changed to make the project break even or profitable.  You’re going to lose roughly 10% of all the funds you raise due to credit card processing fees and crowd funding fees.  So you will actually be receiving $27 per pledge.

     Pre-production cost value example:  Your sculptor quotes you $3,000 for 10 humans and a mold maker quotes you $100 for a master mold and $600 for production molds for a base total of $3,700.  

     Core packaging cost value example:  Remember in article #2 (Income tax and profits) I showed my total costs per pledge?  Use that same logic to create what your cost will be per pledge in packaging materials, zip baggies, paper costs, etc.  Let’s say $2.00 not counting the cost per figure.

    Production cost value example: Each human figure costs 75 cents to cast if outsourced or 25 cents if you own your own equipment but for the sake of this article we will assume you are outsourcing which is what most miniature crowdfunders do.   10 figures cast at 75 cents = $7.50 per pledge plus the $2 in core packaging fees = $9.50 cost per pledge.    

    Goal calculation example: Using your starting pledge level of $30 for 10 figures (not counting shipping charges), your profit per pledge will be $17.50 (production cost of $9.50 minus $27 due to fees off the $30).  Divide $17.50 into the initial pre production value of $3,700 you want to raise = 211 pledges.  Your “Goal” is now 211 x $30 (not counting shipping) or $6,330 to break even. 

     Shipping charges:  For the sake of simplicity, we will leave out the calculation of shipping charges and cover that in article #5.  Remember to multiply the shipping charge received by (1.1) to take into account the 10% extra you will need due to crowdfunding fees.

     Stretch goal #1 example:  Stretch goals are not necessary crowdfunding requirements but are greatly appreciated bonus figures to supporters causing many of your supporters to spread the word about your project. 
     One additional stretch goal pre production cost sculpture and molds work $370.00 (estimated based on the average cost to make 10)  added to the “Pre-production cost” $3,700 = $4,070.  Take your production cost value of $9.50 add in the #1 stretch goal casting cost of .75 cents = $10.25 minus $27 remaining pledge your new profit per pledge is $16.75 divided into the new “pre-production” total of $4,070 in this example 243 x $30 your next “Goal calculation” is $7,290.  In other words, when pledges reach $7,290 you can afford to add in ONE human sized stretch goal to the initial $30 pledge and still break even on the project.  That is an increase of $960 from your original starting goal.  This is assuming your stretch goal is the same size/weight etc as all of the figures in the project and you only have to create one set of molds per figure with metal castings. 

Stretch goal #2 example:  Using the same formula, watch the compounded costs increase outcome per stretch goal added.  Pre-production cost $370 + $4,070 = $4,440.  Production cost 75 cents + $10.25 = $11.00 minus $27 pledge level = $16.00 divided into pre-production $4,440 = 278 x $30 = $8,340.   The new increase is $1,080 to break even and add in stretch goal #2 to the $30 pledge level.

Stretch goals compounded costs on a $30 pledge: 
Initial goal to break even $6,330 ….................10 figures     211 pledges
Stretch goal #1  $7,290   ($960 increase) …….11th figure   243 pledges
Stretch goal #2  $8,340   ($1,050 increase) …..12th figure   278 pledges
Stretch goal #3  $9,450    ($1,110 increase) ….13th figure   315 pledges
Stretch goal #4  $10,710  ($1,260 increase) .…14th figure   357 pledges
Stretch goal #5  $12,120  ($1,410 increase) .…15th figure   404 pledges
Stretch goal #6  $13,650  ($1,530 increase) .…16th figure   455 pledges

     When would stretch goals begin losing money?  As soon as your combined production costs, pre-production costs, and core package costs reach $27.  In this example, by stretch goal #23, assuming that every sculpture, casting costs, and mold work costs are the same. 

Remember to always double check the math on all stretch goals. 
(Example using stretch goal #5)
Sculptures 15 x $370 = $5,550
Cast figures 15 x .75 = $11.25 x 404 pledges =$4,545
Core package costs $2.00 x 404 pledges = $808
Subtotal $10,903
Gross sales $27 x 404 pledges = $10,908 ($5 off to my advantage because I rounded up or down on some of the fractions in the example)
Gross sales before 10% fee $30 x 404 pledges = $12,120

     Note that this article is a rough calculation and is designed to show the math behind compounding.  There are plenty of “variables” that will greatly alter the calculation such as a higher dollar pledges to increase profits, casting or sculpting your own figures, giving away rewards that are overstock, lower processing fees, smaller or larger figures, free or reduced shipping, increased shipping charges due to added rewards, etc.

Crowdfunders:  Thoroughly work out the math first and get quotes for mold and casting work from many sources.  Always round up to protect against error, but be prepared to take a loss if necessary because there can be unforeseen expenses when you are starting with absolutely nothing.    

Pledgers:  Avoid projects where stretch goals vary in size dramatically.  Larger figures such as monsters cost two to 10 times more to produce and make calculating costs for the project creator nearly impossible.  Therefore, the project could be at risk of failure.

Next week:  Shipping and Scaling Up

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Monday, January 12, 2015

My Dog Ate My KS Funds (Part 3 of 10)

3:  Metal vs. Resin

     What exactly is a resin?  For the purpose of this article, it is a polyurethane product that comes in a two or more part mixture and cures into a plastic.  The resin can be poured in a variety of ways, but for mass production we would use the spin casting method. 

     What exactly is metal?  For the purpose of this article, we are specifically talking about a tin alloy that melts around 500-600 degrees.  

Costs per figure:  Resin is the most cost effective material versus metal.  Pricing discounts are minimal when purchasing metal in a larger quantity.  However, if you are able to afford part A and B of a polyurethane resin in 55 gallon drums, your savings are substantial.

Here is one example of a manufacturer of resins and silicone mold materials.  Feel free to comment below and link other manufacturers of resins.
Smooth Cast 300Q (5 minute cure time) 1 gallon purchase = 2 gallons total (A and B combined) $85 plus shipping as of this writing. Based on my past experience with resin pouring, I’m roughly estimating 1,000 to 1,500 human sized figures for $100 outlay in resin liquids (8 to 10 cents each) compared with metal (25 cents each).  This price includes resin waste.  (See Recycling below)

Storing the material:  Metal wins this category, because it can be stored at any temperature, comes in ingots that weigh between 4 and 16 pounds each, has no expiration date, and can easily be transported by hand in the casting room to the melting pot when needed.  Resin on the other hand must be stored at room temperatures around 70 degrees, has a shelf life which is greatly reduced once the containers are opened, is hard to handle in larger quantities (450 plus pounds for a 55 gallon drum), and must be mixed for every single casting.

Recycling:  Metal wins this category hands down.  When a metal figure does not cast properly, you simply throw it back into the melting pot to be reborn again.  Unfortunately with resin, all bad castings, large spru if you spin cast, and all mixing containers like paper cups and stir sticks, go into the trash.  As in part one of this series, pouring figures with resin makes it difficult to know exact costs per figure but is certainly the best option for large figures like giants, dragons, buildings, or vehicles. 
Mold life:  Metal wins this category hands down.  I use the hard rubber organic 700 series molds from

Mold life varies on the figures design and the mold maker’s ability.   I have owned molds that have generated over 1,000 spins and I would put the average life at 500 spins minimum.  Even with mold release agents, resins degrade hard rubber and silicone molds rapidly.  The average mold life using resins are 50 pours/spins.  In other words, the use of polyurethane resins causes the caster to create 10 times the number of molds, eating up valuable time and resources. 

Product detail:  A variety of resins allow for high detail yield, whereas metal castings have limits.  High resin detail is an appreciated advantage, but primarily caters to a small percentage of gamers.  Resin figures are easier to do conversions with too, but the metal figure has been around in the hobby for more than 40 years. 

Crowdfunders:  If you’re going to cast very small quantities of individual miniatures (500 or less), resin is your best method in a manufacturing set up and offers the least amount of investment.  However, if you plan on producing long term, with quantities exceeding 500 per figure, metal is my number one choice.  Metal is the simplest and fastest method of casting.  No hassle with shelf life, 100% recyclable, low mold upkeep, and offers plenty of detail for the average gaming fan.  Note that you will have to ventilate your casting area regardless of what materials you use.

Pledgers:  Resin figure projects may have longer wait time regarding shipping, because resin casting production is a slower procedure than metal.  Resin requires a mixing of liquid agents and a cure time that far exceed metals 30 second cooling period. Mold making is a very time consuming process.

Next Week:  The math behind rewards
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