CrowdFunding 101: Terminology

These are not all of the crowdfunding 'lingo' you'll hear but it's good to know this terminology as you'll need to know this when planning but you'll hear a lot of them again in other areas particularly terms like ROI.

Above the Line costs: All costs associated with the Writer(s), Producer(s), Director(s), and Actors. These costs are typically fixed costs.

Accounting Costs: All monetary costs associated with a project or activity.

Angle Investor: Don't let the term 'investor' fool you. An Angel Investor  is an investor or investment group that provides financial backing as initial capital (aka seed money) whether it's a one time donation or continued support in cycles or at specific 'times of need.' Angle Investor's are seen as the opposite of a venture capitalist.

Below the Line costs: All costs associated with everyone else of a production after those included in Above The Line costs. These costs are typically variable costs.

Break Even: Point at which costs/expenses equal revenue, resulting in no net loss or gain.

Donation: When a person makes a contribution to your project.

Economic Costs: Economic Cost = Accounting cost + Opportunity cost

Equity: A percentage share/stake of a project.

Funding Goal: The monetary goal for a project.
Funding Goal formula = Above The Line Costs + Below the Line costs + Cost to fulfill perks + Platform Fees

Landing Page: Typically the main page of your project on a particular platform that is usually linked  from social media and other sites.

Perks: An incentive given for donating at a certain level. Ex, if you pay X, you get a digital download of the film.

Perk Fulfillment: The cost and process of fulfilling campaign perks.

Pitch Video: Video used on your crowdfunding landing page to promote and pitch yourself and the project.

Platform: The crowdFunding site you choose to use for your campaign.

Progress Bar: A physical representation to show people that arrive on your landing page how close the project is to it's goal.

ROI: Return on Investment. A method used to determine if investment is worth costs by the amount it will yield. ROI = Gain From Investment - Cost of Investment/Cost of Investment
When you know how much perk fulfillment will cost.
Example -  if we figure out that a certain perk costs $5 per copy, S&H costs $5, then we know the perk will cost $10. If the perk level is $20 and the cost to fulfill the perk is $10, ROI = 1.
$20 - $10/10 = $10/$10 = 1

Tip Jar: A button you put on a site so people can tip you, typically these buttons are link-backed to a PayPal account.

Look for another crowdfunding article next Monday. As always any tips, recommendations and requests just comment at the bottom.

Thanks for reading,

-Dave
http://DaveBullis.Com