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When to Consider Product-Incentive Crowdfunding Model for Your Business

The crowdfunding business model is a way for businesses and startups to seek support from individuals within their niche. It offers financial backing in smaller increments, thus building a community of individuals who might be interested in your company’s growth and offerings. Crowdfunding helps businesses grow by gaining potential loyal customers as backers, while also allowing businesses to start projects that they may not initially have the funding for. In this case, the growth is twofold, since backers offer an opportunity for exposure and direct communication with a startup’s target demographic, as well as financial backing.

There are different types of crowdfunding models a business can choose from. Product-incentive crowdfunding works best for businesses who are looking to launch a new product and can offer some form of return or incentive for backers. This has allowed it to make a splash in startups doing niche product development, creative works, as well as independent software and applications development.



You’ve Done Your Research and Know Your Niche

It is important to begin by knowing your niche. This will help you to decide where to host the campaign. You might opt for one of the two biggest crowdfunding sites, Kickstarter and Indiegogo, or your product might have a better niche-specific launching point.

You will also need to know reasonable costs for your product, what kind of time frame you need to mitigate your backers’ expectations, as well as other market analytics. Research will also help you to determine your investment goal. It should be attainable for your niche and audience, while at least covering the cost of the project and the incentives you offer.

You Have a Product and Prototype to Offer

Most crowdfunding platforms will work best if you have a compelling product that will inspire backers to take action and fill a need in your niche. Having a testable prototype will give your campaign a distinct advantage.

Keep in mind that backers will normally select a campaign for a few reasons:

  • The campaign offers good incentives or rewards.
  • The product is catchy, attractive, and a good concept.
  • Your brand offers a mission statement that draws sympathy.

You Already Know How to Pull Off a Big Project

Many crowdfunding startups are side projects from teams involved in other companies. It makes for a great opportunity for a team that already knows what it’s doing with project development to get a side project off the ground.

You Value Transparency

Much of your backer support will expect and appreciate the transparency implied in the individual’s ability to directly address the brand. This is often driven by a distrust of larger companies. In this case, crowdfunded endeavors have consumer experience at the heart of their mission and development. After all, startups rise to fill a need that often seems to be unheard of by bigger or established companies.

You Already Have a Marketing Campaign

Being listed on a crowdfunding site doesn’t mean that you can sleep on the marketing. It’s the opposite actually, as the more backing you get in this time, the better you will be able to make your products. Before and during your crowdfunding campaign, it is crucial to network and promote the campaign itself. 

If no one sees your campaign, it will be very tough to get people to invest in it. Instead, you should be ready to market and create hype for your future products, with prototype reviews, if possible, before your campaign even launches. Successful versions of these are often done through social media and influencer marketing.

Your Brand and Product Can Tell a Story

Your crowdfunding campaign isn’t just a product listing. Instead, these campaigns are compelling, because they offer a place for you to tell your story. This can include who you are, what you have made, and why it would be beneficial to your backers and the larger world.

Crowdfunding invites a community aspect to product creation since backers appreciate the feeling that they are part of bringing about an attractive and useful product. This is your opportunity to embrace that energy and connect with individuals.

Your Venture is Artistic or Creative

Investment in art and creative endeavors can be extremely competitive and difficult to come by. Fortunately for creatives, digital circles of content distribution have allowed creatives to gain followers, develop a standing in their niche, and even create direct routes for those followers to crowdsource their income as well as their creative projects. Crowdfunding validates a creative idea since it demonstrates demand at the same time as investment.

You Have Money to Begin Investing in the Campaign

Crowdfunding can save you money in a few ways. It offers a lower financial risk than personally bankrolling the manufacture of a new product. It also saves you from investing in a risky product that no one will buy, as the amount of backing you have will essentially vet your investment.

However, launching a campaign costs money itself, and if you want to make enough money to fund the manufacture of products that will launch your startup, then you’ll need to have a professional-looking campaign and platform. Some teams and companies will have this in-house. Others will need to invest in professional services, such as the ability to do decent video editing, to help their campaign measure up to others out there.

You Have the Time for It

Once your campaign starts going, time management is crucial. There’s a time limit for marketing and getting backers, then once your campaign succeeds, there’s still the probability that you will be on deadlines to get your products finished, manufactured, or bug-free, and in the hands of your backers. Of course, these incentives will give a strong sense of purpose and urgency to completing your project.

You Consider it an Opportunity for Feedback and Improvement

If you see your crowdfunding as a place to hear critical feedback, as well as praise and interest, it can result in the creation of a better product and a longer-lasting company. Successful crowdfunded campaigners often speak positively of the experience, as it gives the brand a strong interaction with customers who will later become loyal to the brand, as well as a feeling of community within their niche.


Crowdfunding is a great, non-traditional way to raise funds for a product or business. However, it is not right for all types of businesses and projects. Weigh the pros and cons to see if a product-incentive campaign is right for what you’re wanting to accomplish.

Also read:

The Crowdfunding Business Model Explained

4 Main Types of Crowdfunding Business Models


This article was first published in 2018 but has been updated and expanded

Rebecca Moses on Twitter
Rebecca Moses
Staff Writer: Rebecca Moses is a creative writer who can't keep from meddling in the real world. While living in Colorado, she developed a particular interest in small business production. She loves a writing challenge, dabbles in illustration, and reads to figure out how all things work and grow. Find her at RebeccaMosesWriting.com

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Staff Writer: Rebecca Moses is a creative writer who can't keep from meddling in the real world. While living in Colorado, she developed a particular interest in small business production. She loves a writing challenge, dabbles in illustration, and reads to figure out how all things work and grow. Find her at RebeccaMosesWriting.com

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