There is generally some confusion in how to charge backers shipping, and which one will best serve a specific campaign. I will propose three solutions that are most commonly used.
1. “Free” Shipping
Free Shipping as advertised in a campaign is anything but. However, backers enjoy seeing this not just for the perceived savings, but that they will be charged once, they see the final price, and their lives are made simple in the transaction, the goal of many campaigns.
This shipping method is arguably the riskiest and most difficult to get right due to a number of reasons. Firstly, you are gambling with your production timeline as shipping rates do adjust over time. What is true about your shipping estimate today may not be true tomorrow. Secondly, you are sacrificing a percentage of the shipping costs to the platform, arguably not making the most profit per backer you could be by using other shipping charge methods. Thirdly, you are technically subsidizing shipping costs into your MSRP this way, usually unevenly. This means that even though shipping goods to the Philippines is sometimes more costly than to the US, for example, customers are paying the same cost.
I say all this because I do want to highlight at least one company that has made it work, at least partially so.
Good Games USA has prided itself on establishing direct connections to fulfillment partners in the US, UK, Canada, New Zealand, and Australia. For the Guild Master campaign, this allowed them to more easily bake the shipping cost into the cost of a pledge. Thinking about the margins they would otherwise lose in traditional distribution (50-60%), plus the marketing allure of “free” shipping, I imagine this is a net positive for their debut of new products via crowdfunding.
2. Separate Shipping in the Campaign
Another common way to charge shipping is via the crowdfunding site’s native tools. You can build a shipping chart per pledge level that, at least on Kickstarter, will be a secondary dropdown shown to backers when they click on a given pledge.
Early in the days of crowdfunding, this was accepted as the default way to charge shipping and people used it without a lot of thought into alternative methods. Since then, thought leadership has progressed the conversation to cite this as the worst method of the three options listed here. While you maintain the benefit of charging once for each backer within the campaign, you still have to deal with sales and logistics problems around the method.
As mentioned in the method above, you will play a timeline game if you charge for shipping within the campaign. Shipping rates adjust periodically each year and you will potentially lose a lot of money as the rates adjust. Secondly, a lot of backers today will feel tricked by a pricepoint advertised when a different price is shown to them after shipping is automatically added to the pledge right as they are backing. Lastly, you are still being charged the percentage by the platform, increasing your shipping costs or eating into your profits per backer.
There are companies today who make this method work. I think this option is best used by small-box games, where a $15-20 pledge and the additional $5-10 in shipping still feels like an inexpensive buy overall.
3. Off-Platform Secondary Charge
In recent years, the focus for most publishers has shifted away from barely funding a project to thriving in a crowdfunding environment.
Today, numerous pledge management services exist, such as BackerKit, PledgeManager, CrowdOx, and Gamefound, to name a few. These services allow for robust custom order forms for backers beyond what native platforms offer, so backers can more easily buy add-ons and secondary products post-campaign. Pledge management services also allow backers to pay as they are able within a much longer timeframe for the items they want.
While a publisher’s products are being finalized and manufactured, they can continue to make sales of that product. Depending on the platform you use, you might actually save costs per sale on the shipping amount charged to backers, compared to crowdfunding platform native percentages.
Whichever option you choose, just make sure to do as much research as possible when it comes to internal shipping costs. It is one of the more difficult things to properly plan in a crowdfunding campaign.