THIS IS AN ARCHIVE POST FROM 2015
Now that Indiegogo has changed the fee for both fixed and flexible funding campaigns to 5%, making it the same as Kickstarter’s fee, it’s worth taking another look at when it makes sense to choose one version over the other.
First of all, it’s worth clarifying when each type of campaign can actually be useful.
Fixed funding campaign
If a project definitely needs the full amount stated in the campaign and it simply isn’t possible to make the product or realize the project without that money, then you should definitely choose a fixed campaign.
Of course, this also means that if you don’t raise enough money, the product or project may never make it to market. But it can save you from a lot of problems later on.
Everyone is a little disappointed when a campaign doesn’t reach its goal, but the backers get their money back and you can start thinking again about how to bring the project to market.
Flexible funding campaign
If the project can be started with less money, and the amount stated in the campaign is more about what you ideally need to make the best possible version of the product, then a flexible campaign can make sense.
For example, perhaps the full amount would allow you to manufacture a larger quantity, offer more colour versions or include more features. But if you can still launch the product in a smaller quantity or in a less developed form, then flexible funding is an option.
It isn’t necessarily the only option, though.
There is also the question of whether the fixed campaign format, which people are already familiar with from Kickstarter, adds something to the message of the campaign.
Does a fixed campaign look more serious? Are people more likely to support a fixed campaign than a flexible one?
Unfortunately, the answer seems to be yes.
With a flexible campaign, people may start wondering: if the project can actually be made with less money, then why is there a campaign goal at all?
A backer can also feel a little uncertain about what will happen to their money, when the project will actually happen and what exactly they will receive in return.
But the question isn’t quite as simple as saying that everyone should therefore launch a fixed campaign.
If you dig a little deeper into Indiegogo’s rules, it becomes clear that a fixed campaign isn’t necessarily the best choice for every project.
PayPal
The reason is payment.
Different payment rules apply to fixed and flexible campaigns. With fixed campaigns, payment is only possible through PayPal, including credit or debit card payments processed through PayPal. With flexible campaigns, direct credit or debit card payments are also available.
PayPal is a very widespread and popular payment method and is used in much of the world. One of the reasons for its popularity is probably that it gives buyers a strong feeling of security.
Customers know that if they don’t receive the product or service they paid for, or if they are unhappy with it, they can generally seek a refund through PayPal’s buyer protection system.
Of course, there are also more and more people taking advantage of this system, but that’s another story.
The problem with PayPal starts when PayPal doesn’t allow guest checkout in a particular country. Guest checkout means that customers can pay through PayPal without having to create a PayPal account. Unfortunately, Germany is one of those countries.
If Germany is an important market for our campaign, it’s worth thinking about how many potential backers might be discouraged by having to register for PayPal first.
The registration process can be relatively complicated in Germany because a bank account or payment card may need to be verified. At the time, this could involve a small verification charge being made to the card or bank account, together with a verification code that then had to be entered into PayPal.
When you also consider that Germans tend to be particularly cautious about personal data and online payment methods, this could potentially discourage some less tech-savvy customers from backing a campaign. Of course, this depends very much on the target audience.
There is another problem: PayPal verification can take several days, depending on when and how the verification is initiated. Not everyone has a payment card that can be used for online purchases either.
This means that someone discovering your campaign near the deadline could potentially run out of time simply because they cannot complete the PayPal registration quickly enough.
I’ve already encountered several German customers through Virivee, where we also only accept PayPal payments, who needed several days to complete the verification because they chose to verify their bank account instead of using a card.
Fixed or flexible campaign?
So, if we specifically want to attract German backers, it may be worth enabling direct card payments. And on Indiegogo, that means choosing a flexible campaign.
If we do choose the flexible option, I think it’s a good idea to explain somewhere in the campaign why we chose flexible funding instead of fixed funding. That way, we can address any concerns potential backers might have about flexible campaigns and make it clear that there is a specific reason behind the choice.
There is an interesting irony when it comes to German backers, too. For campaigns using euros as their currency, which presumably tend to target European audiences and therefore potentially include Germany as an important market, payment is only possible through PayPal.
So the payment method can actually become an important factor when deciding which type of Indiegogo campaign makes sense for your project.
Indiegogo’s information about international PayPal restrictions, account setup and receiving funds can be found in the related support pages.
