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Being a Product Manager means helping great people to build awesome things…but what happens when you want to flex your tech muscles and build something yourself?
Plenty of product people have started their own side projects, which we go over in more detail in our comprehensive guide to side hustles. Thanks to technology and the online product community, building something of your own has never been easier. There are tools for building no-code apps, easy website builders, and places to hire freelancers to do the little jobs that are just out of your skillset.
For something truly ambitious, however, there are no shortcuts. You need more time and more resources…which often means you need money.
Money isn’t the dirty word that it used to be, and although many of us still don’t feel comfortable asking for money when we need it (or even admitting that we need it), crowdfunded projects are becoming more and more commonplace. And crowdfunding might just be the thing that gives life to your most ambitious product dreams!
What is Crowdfunding?
Crowdfunding started back in 1997, according to Fundable, when a British rock band sourced the funds for their reunion tour through fan donations.
In 2020, crowdfunding is a powerful tool for social good, allowing for people all over the world to donate to crisis relief charities, political causes, and to pay struggling individuals’ medical bills. While these forms of crowdfunding have their own appropriate platforms, there are others which are geared towards backers of physical and digital products.
If your side project isn’t a product, but a podcast or community, you also have costs that need to be covered. This is where crowdfunding can help.
The traditional model for selling physical products, has been “I’ll spend my money making this thing. Then you will buy the thing for more than it cost me to make it.”
Crowdfunding democratizes the process, allowing those who don’t have a substantial amount of capital to get their projects off the ground. The crowdfunding model says “If you pay me to make this thing, I’ll deliver it to you when its done, and give you a good deal on it.” The most successful crowdfunding campaigns, as we’ll go over later, worked because their backers wanted something to exist, and wanted to help make that happen, with the promise that they would get to enjoy the product later on.
While crowdfunding has more commonly been used to sell physical products (gadgets and accessories) and entertainment (video games and albums) it can also be used help product people create digital products without the backing of companies and investors.
How to Monetize Your Crowdfunded Product
When anyone builds products to sell online – be they an individual, a small startup, or Google – they need to think about how they’re going to get people to pay for it. While your backers will, we assume, be your initial pool of users, you need to think about how other people will pay for your product once the crowdfunding campaign is over.
We’ve been over this in our guide on how to monetize an online product, in case you need more guidance. For now, let’s just have a quick overview.
There are pros and cons to the most common payment models, and they will affect how you crowdfund your product.
Subscriptions: You can modify your subscription model to best suit your product. It could be an annual subscription or a monthly subscription with a discount if you commit to a particular chunk of time (eg. $10 per month or $25 for three months). When setting your crowdfunding goals, think about how this model would work for your backers. Will you be giving them lifetime access for free, or a free first year? You could opt for a half-price monthly subscription, if they money they save is more than what they pledged before launch.
Freemium: A freemium model, such as the one used by Spotify, provides everyone with a free basic level of service, with certain features locked behind a paywall. If this is the model you choose, your backers could be given the premium subscription for free.
Advertising: This model sometimes goes hand-in-hand with freemium, where users can pay for an ad-free experience. Similar to freemium, if you choose to use advertisements in your digital product, your backers could receive the ad-free version for free. Nobody wants to pay to be advertized to.
One-time-download/licence fee: This model is popular in the entertainment industry, and in crowdfunding circles is most commonly used for video games and albums. This is probably the easiest transaction for potential backers to understand, as there are no further payments to be made once they’ve backed your project. They pay for the software, and then they get the software. Simple.
Whichever model you choose, the key is to make sure you repay your backers’ loyalty, faith, and patience. If at the end of the day they end up getting the same deal as everyone else (AKA, they’ve spend the same money for the same result), that’s not in the spirit of crowdfunding.
You can circumvent this by providing bonus content or features that are exclusive to your crowdfunding backers. There needs to be some incentive for people to invest in a product that doesn’t exist yet. Some crowdfunding campaigns go down the merch route, offering exclusive t-shirts/posters/boxes to accompany the product. This might not work in the B2B spheres, in which case you should circle back to your payment model, and try to find a way to give backers an obvious advantage over late adopters.
You might also be interested in: Design Thinking for PMs: 3 Lessons from Apple and Google
There are many crowdfunding sites out there, but to keep the selection process as simple as possible, we only recommend two. If you’re building a digital product, we recommend Kickstarter. If you’re building something creative like a podcast or a community, we recommend Patreon.
Kickstarter is one of the most famous crowdfunding sites, and is the most loved by digital creators as opposed to charities and social good. This means that people coming to the platform expect to see apps, games, and gadgets, meaning they’ll be more interested in a business venture like yours.
Kickstarter is a great option if you’re planning to offer a one-time software download.
Product Managers don’t have to be building apps all the time. Patreon is well suited to on-going creative projects, and is the better choice if your side project isn’t necessarily an app or a piece of software. If you’re working on a podcast about tech (or any other passion!), running a community, or even building a video game, Patreon will allow your audience/users to pay in support of your project.
If you’ve been wanting to build a community for product leaders in your local area, but need help with things like venue hire, Eventbrite fees, or even website costs, Patreon can help members of your new community contribute. It also provides you with some great community building tools.
How to Get Funded:
Choose Your Platform and Set Your Goals
Once you’ve decided on how you’re going to monetize your product, there are 2 main steps to start raising money for your project. First, you need to set your funding goals. Work out how much money overall product development is going to cost -don’t forget to factor in your own living expenses if that’s a barrier to development.
You also need to decide how much of your own money, or teammate’s money if this is a group project, you’re willing to put into the venture. Pro-tip, never assume that whatever figure you write down on Day 1 is set in stone. Unexpected costs may pop up at the last minute, so don’t go all-in and pledge your absolute maximum budget right from the start. Always hold a little back for a rainy day.
Once you have your goals set, it’s time to choose your platform. Let your goals and your monetization plan for your product help you decide which platform works best for you. Every platform has its own guides for best practices and advice on how best to set up your campaign. Go through all the advice on offer before you proceed, and make sure your landing page is fully set up and optimized before you start promoting it.
You might also be interested in: 5 Product Management Myths: Busted!
Gather Your Marketing Resources
As a Product Manager, you may already have some product marketing expertise. If you’re going it alone and becoming a one-person marketing machine, you should try to keep it as simple as possible. It’s better to select one or two marketing channels and use them well, rather than putting in half the effort and spreading yourself thin across every platform possible.
You could also consider reaching out to freelancers, and setting some budget aside to pay for things like a blog writer, a social media manager, or even a graphic designer to create brochures.
Don’t worry about building a website. While this can be nice, you can save yourself some money and use your crowdfunding page as the main hub of activity for your project.
Share Your Story
Be genuine in your storytelling, which as a Product Manager you should be very used to, as storytelling is a key skill.
Treat your side project as you would a product. Think about who you’re creating it for, how your project fills their need or solves their problem, and what messaging will get through to them.
Think about key messages, like your elevator pitch, and your ‘north star‘. When you look at other successful crowdfunding campaigns, most of them are great at telling you the story of who they are as well as what they’re doing.
Keeping the Momentum Up
In the spirit of treating your project like a product, be open to feedback and iterations, especially from your backers. A portion of your backers could be your beta testers, or a user feedback group. Help your backers to get more involved in your project, which in itself can be its own reward.
A Crowdfunding Horror Story (Don’t Do This!)
If you’re looking for the ultimate example of how NOT to crowdfund this is it! U in a Bottle‘s campaign promises the delivery of a new kind of social app, but honestly nobody is entirely sure what it does. One look at this campaign, and you’d be forgiven for thinking that it must be satire.
But even satire has its uses and can teach us some valuable lessons on how to avoid being mistaken for a joke.
- Be clear about what your product is, does, and looks like. The main issue with U in a Bottle is that the messaging is very obscure. Your potential backers know that your product is a work in progress, so feel free to share wireframes and mockups if that’s all you have right now. Anything that helps to give people a clearer picture of what they’re investing in.
- If you’re going to use rewards tiers, offer a variety of rewards. You don’thave to have a tiered rewards system, but if you do, make sure each tier offers something more than the one before it. Why should someone offer you $1000+ for the same offering they could get for $1? It’s not about greed, it’s about gratitude.
- Invest in proper translation/content writing. In digital marketing, content is king and words matter. There’s absolutely nothing wrong with building a product in any language, but it’s true that for maximum visibility in the west, English is a more universal language. If it’s not your native language, invest in proper translation services or a native content writer, especially if you’re not fluent.
- Invest in good visual design. With do-it-yourself tools and templates like Canva, and freelance design communities like Dribbble, there’s no excuse for bad design.
Where to Start
So you’re ready to dive into your side project and get funded? That’s great!
Make a start by creating your very own product/project roadmap, which you can do by applying all the Product Manager tricks and strategies you’ve picked up in your career: