Business Model of Kickstarter – How does Kickstarter Make Money?

Launched in the year 2009, Kickstarter is actually an American Public Benefit Corporation. The business model of Kickstarter revolves around maintaining a global crowd-funding platform dedicated to merchandising and creativity.

Different types of projects that have been getting funded by Kickstarter include films, stage shows, music, journalism, comics, video games, publishing, technology, food-related projects and so on.

In simpler terms, the Kickstarter business model can be understood as a mechanism in which artists directly connect with their audiences for funding their work.

When it comes to understanding the Kickstarter business model, you are definitely at the right place for sure. Here we are going to discuss all that you need to know about this highly effective crowdfunding platform and how it can be used in order to make money for the company in the best way.

So, without wasting any more of the precious time of people, let us get started with the introduction of this business model right away –

Introduction to the Business Model of Kickstarter

Kickstarter is involved in creating a marketplace that is completely focused on providing the resources in the best way along with the support as well as the funding to different products and the ideas of the people.

Ever since its existence in the year 2009, the company has been providing the funding and the resources for the different creative and amazing products with the help of crowd-sourcing and crowd-funding services for those who are in the need for it.

Also, there are some amazing and creative ideas that are offered by the community which consists of millions of people in the company.

Two types of users are comprised by Kickstarter business model-

1. Project Owner or the Artist
2. Project Backer who funds the projects

All in all, Kickstarter is a community of highly passionate individuals that are ready to back creative projects in the best possible way. Project backers can find out the best creative minds and fund them to work on their creative ideas, which can later help Project Backers make more returns from those creative projects.

Project owners give the details of their projects along with the amount of funding required for the completion of that project. Details will also include the duration for which the product will be live and outcomes that the project backers would get.

For channelizing the procedures in between Project Owner and Project Backer, Kickstarter plays a key role. The business model of Kickstarter works at the backend in managing the project owner tasks just for the exchange of a small amount of money.

These are some of the most important reasons why the company is able to make money with the help of the business model of Kickstarter.

With the help of the services and the funding options for the people out there, the company has managed to make sure that they are able to provide resources and assistance to about 164725 projects all over the world till date and there are some other projects which are currently awaiting the services of the company too.

Also, the total funds for the projects which have been collected by the company are more than $4.4 billion in total and that is certainly a pretty huge amount.

So, when we are talking about the business model of Kickstarter, this can be said without any doubt that it is definitely a reliable and dependable one for sure.

Elements of the Kickstarter Business Model

Working with Kickstarter is channelized with the help of different elements such as partners, resources, channels, and value propositions. We will be dividing deep into each of these ones by one, so let us start unfolding their hidden layers straight away-

1) Partners of Kickstarter Business Model

Different partners that help in channelization of the business model of Kickstarter are-

• Payment providers
• Business and Entrepreneurship Communities
• Large Organizations

2) Key Resources of Kickstarter Business Model

Resources that play key role in hassle-free channelization of Kickstarter business are-

• Crowd-funding platform
• Marketing and Educational Team
• Online Social Network

3) Channels used by the Business Model of Kickstarter

For the smooth working of the Kickstarter business model, there are some of the channels that inherently used by the company, and they are-

• Word of Mouth
• Crowd-funding platform
• Partner Programs
• Social Media

4) Customers of Kickstarter Business Model

Different customers that are key part of Kickstarter business are-

Project Creators/Owners

• Artists
• Creative types of Social Enterprises
• Nonprofits Startups and Small Businesses

Project Backers

• Family
• Friends
• Networks
• Large Companies
• Philanthropic Organization

5) Value Propositions of Kickstarter Business

Value propositions of Kickstarter are rock-solid in boosting the credibility of the business worldwide, and the key factors that play key role in this are-

• Risk Reduction
• Wellspring of subsidizing for Ventures
• Easy Accessibility
• Risk Reduction
• Solid Execution Track Record
• Security of its Clients
• Performance
• Solid Brand Status

Working of the Business Model of Kickstarter

Now that you know a little bit about the company, it is also important to knowledge about the working of the business model of the Kickstarter as well. So, as discussed above, this marketplace is a location where the creators will be able to easily have some connection with the pledgers/backers in the best way.

There are some other amazing marketplaces such as Amazon which use the same options as well. The buyers will be able to connect with the sellers in the best way.

Hence, it can be said that the business model of Kickstarter which is used by the particular company is the marketplace business model and it is certainly fitting with all the services and options that are provided to the people.

We need to clear one thing out and it is that Kickstarter is not responsible for the owning of the projects or the ideas and neither does the platform set the prices.

So, what does it do exactly?

Well, there is a pretty successful linking connection between the business models of crowd-sourcing and crowd-funding which help in the creation of the platform without any hassle. Kickstarter ensures this for its customers in an apt manner.

There are certain business strategies that are used in the platform and it is important for people to know more and more that they can about it as well. There are some strategies such as the time limitations which are provided on the campaigns which make sure that the campaigns are provided for a certain time limit on the platform.

The company also comes up with important guidelines for creating a project. It also decides the terms and conditions for the backing of the projects.

In case the project is not able to get the desired funding in the right amount of time, it will not be eligible and will fail the entire process as well. There are also some rewards which are provided by the people to the backers and this is one of the most important ways in which the company is able to make the money.

Let us now have a look upon the revenue streams of the Kickstarter business model to understand how it makes money-

How does Kickstarter Make Money?

This business model of Kickstarter will help people understand how the company is able to make the money without any difficulty in the first place. Let us have a look upon different revenue lines of Kickstarter-

1) Commission on every successfully raised Fund

The primary source of Kickstarter’s income is the 5% commission that it takes from each of the funding.

2) Paid Ads

Kickstarter enables project creators running paid ads to attract more project backers and in exchange for that, project creators pay a fixed amount of money to Kickstarter that plays key role in making revenues.

3) Paid Events

Kickstarter comprises a Creative Independent that is an ad-free platform that lets project creators run paid events for educating more people about their creativity.

4) Paid Ads on Kickstarter Magazine

Kickstarter also has a magazine that features the best creators on it for sharing different stories with readers. Creators can run ads in magazines as well.

Wrapping it up!

It can be said without a doubt that the business model of Kickstarter is certainly a very interesting one and it provides some amazing options for the company to make the money in the best way without any hassle for sure.

In addition, it also plays key role in providing the needed funding to that creative mind that is for sure quite inspiring as well.

It also lets passionate entrepreneurs find the right creative people who can be beneficial in effective and unique branding of their brand.

All this helps Kickstarter have an incredible audience base that enables the company to have great revenue lines. Hence, there is no doubt that the company is able to earn revenue with the help of commissions as well.

We hope that the article is helpful to you.

So, what do you consider most inspiring about the business model of Kickstarter? Share your views with us in the comments.