I've run two crowdfunding campaigns with Kickstarter over the last two and a half years for Computer Engineering for Babies, and Computer Engineering for Big Babies. Both were wildly more successful than I expected. I was then asked to try Indiegogo and I almost went through with it.
How Kickstarter Works
A bit of background about how Kickstarter works: Creators can create a campaign on Kickstarter for a project idea. In my case, Computer Engineering for Big Babies. The creator sets a funding goal of what the project needs to happen, and also typically sets up rewards for backers, IE, pledge $30 and you get a copy of Computer Engineering for Babies. The campaign runs for a set amount of time, usually 30 days. And then at the end, if the project raised the goal amount, then everyone's credit card is charged, Kickstarter takes their fee, and funding is released to the creator to make the project happen. If the project doesn't make it's goal, then no one is charged, and the project doesn't happen, and no one gets any rewards. It's an all or nothing deal. Kickstarter also does a good job of helping to drive traffic to your campaign (assuming you move first and drive traffic to your own campaign). And for all this, Kickstarter takes a fee of 5% of all the money raised.
So before the 30 days were up with the Big Babies campaign on Kickstarter, Ani at Indiegogo reached out to me about Indiegogo Indemand. The cool thing about Indemand was that it gave the illusion of crowdfunding, but was really just offering pre-sales. No funding goals, no all-or-nothing bits. When Ani first reached out to me, she boasted about how some campaigns raised more with Indemand than they did on their initial crowdfunding campaign. So my initial questions were:
1) What are the fees?
2) How many more backers can indiegogo drive to the campaign, above and beyond my own efforts.
My experience was coming from Kickstarter where the fee was 5% and I knew that Kickstarter would drive about 15-20% of the pledges. The answer I received from Ani was:
The Indemand fee is 5-8%. It depends on your project.
And I didn't get a very straight answer about how much Indiegogo could drive to the campaign, but I can understand why they would be hesitant to make any such promises. I decided to start working on creating the Indiegogo campaign. But then the first thing I found was a get started page, which said:
Any funds driven by Indiegogo’s platform channels (i.e. newsletters, search/explore, home page, etc.) will carry a 15% fee.
I emailed back Ani, and got a clarification:
Platform fees in InDemand are 5% if you run your funding campaign on Indiegogo. The InDemand fee for campaigns that did not originally run on Indiegogo is an 8% platform fee, with a 15% (total) fee on any funds driven by Indiegogo's platform marketing channels. Third-party payment processing fees also apply.
Okay, so the fees are a bit higher, and then I pay much higher fees on any leads that Indiegogo attributes to themselves. At this point, I was kind of feeling disenchanted with them, but I did the math, and decided that if Indiegogo brought in more than about 10% of the backers, then it would still be worth it to me. So I proceeded with setting up the campaign.
Tipping the Platform
It took a day or two, but I got the campaign ready to go, and then I went to preview my campaign, and tried clicking on one of the "perks" and saw this:
Somehow my $29 with free shipping comes to a total of $36! Indiegogo, by default, has added a 25% tip! And that tip doesn't go to the creator, it goes to Indiegogo! And if you click on the dropdown, to remove the tip, you get this:
Where you can change your tip to 20% or 30%, but to remove the tip you have to then click Other Amount, and manually change it to 0.
Maybe I'm heartless, but I hate tipping culture. And I could be wrong, but even if I didn't hate tipping culture, I would consider this a dark pattern by Indiegogo. Why is it that the most common option (a safe assumption I'm sure), to not leave a tip, is hidden behind 3 additional button clicks?
I brought this issue up with Ani,
I was just reviewing the campaign to make sure it was ready for launch. Going through the backing flow, and I noticed there is a default $7 tip to Indiegogo. I find this super distasteful. Is there any way to remove this?
The response I received:
The Tips for Indiegogo feature gives backers the choice to add a tip for Indiegogo to their contribution during checkout. Tips do not negatively impact your campaign performance and are held separately from your Reserved Funds. Since tips don't count towards your Funds Raised, backer tips will not impact your numbers.
Indiegogo will use backer tips to improve our platform and the user experience for both backers and campaign owners. By providing your backer community with the option to add a tip for Indiegogo at checkout, we can continue to work together to enhance the Indiegogo experience for everyone. You can see some of our initiatives here.
Thank you for your support and understanding, and best of luck with your campaign.
The Not Paying Attention Fee
I wasn't buying it. These initiatives aren't special, the first one is "we hired a guy." The second one is "we have a board!" The third one? "we talk to people at GoFundMe." I'm sorry, this doesn't justify a 25% I-wasn't-paying-enough-attention fee for my backers. I responded:
I know backers can change the tip to be $0, but I don't want a 15% tip to be a preselected default for my backers. It feels like a dark pattern to me. If there isn't a way to remove it for my campaign, I would prefer to not run the campaign through Indiegogo. I'm sorry, I think this is a deal breaker for me.
Thirty six days later I received this response:
Thank you for your patience while we looked into this and we apologize for any delay. Unfortunately, our teams have confirmed we are unable to opt the campaign out of tipping as it is a standard feature on the contributions now. We apologize for the inconvenience and wish you continued luck on your project and campaign.
Somehow Kickstarter is able to run a very awesome platform, enabling hundreds of thousands of projects, all with a straightforward fee of 5%, while Indiegogo is shaking down both creators and backers for as much as they can get. Until this changes, I won't be running an Indiegogo campaign. And if you've backed an Indiegogo campaign recently, I would suggest you request a tip refund as per their policy.