How Much Does It Cost to Start a Crowdfunding Website? [Spoiler: Not So Pricey]

3 Things to Know Before Calculating Crowdfunding Costs

Before we answer the questions of how to start a crowdfunding platform and how much it will cost, let's take a look at the basics. We'll examine three essential things that will make it easier for you to enter and thrive in your new field.

1. Define the Idea of Your Future Product

To successfully start your own crowdfunding platform, the very first thing you should do is to get a clear idea of your new brainchild. Here's a simple checklist to help you get started:

• Who do I create a crowdfunding platform for?
• What is my target market?
• What will my product do?
• Why should a user choose my service over a competitor's?
• What is my unique value proposition?

After answering all these questions, inform your development team about the specifics of your fundraising platform. 

One effective practice to explain your vision for the site is to describe its essence in a few simple words, as well-known crowdfunding services do. For example, Patreon is a creator-focused platform, while GoFundMe is all about personal fundraising. This way, it will be easier for designers to create a style that matches the goal of the future website. Meanwhile, thoroughly describe to the developers what functionality you want to add. If your project is intended for nonprofits, it will have entirely different features than a crowdfunding site for SMBs. 

2. Stand in Line with Legal Regulations

Each country has its laws regarding the operation of crowdfunding platforms. And if someone violates these rules, they will face severe consequences. So, how to build a crowdfunding website and stay within the law?

You can go a few ways: hire a compliance team, collaborate with a law firm, or consult someone who is well-versed in the rules of the crowdfunding monetization model.

3. Allocate a Marketing Budget

Many people assume that they can just create a crowdfunding website, and the money will start rolling in. The truth is that a profitable project doesn't just happen. It takes a lot of hard work, planning, and yes, money. You need to devote money for things like social media ads, PR, and email marketing. And if you don't have a budget for marketing, your project is likely to fail.

Is there a formula for calculating how much money you need? Yes. Try to allocate twice as much as you plan to spend on product development. But don't freak out — that's enough for a year, not a month.

How Much Does It Cost to Start a Crowdfunding Site?

We're getting to the crux of the matter: the actual cost of crowdfunding website development. What factors determine it?

1) Project Niche

The amount of money you have to invest depends directly on the competition in the chosen niche. The higher the competition, the more you will need to pay.

If you want to compete with the top crowdfunding platforms like Patreon, Kickstarter, or Indiegogo, you should offer a solution that is on par or even superior to these leaders. But how to create a crowdfunding website like this?

Your platform should be unique not only in terms of design, but also in terms of functionality. Therefore, you should either launch a best-in-class crowdfunding site, or invent a highly useful and eye-catching feature to entice users. The cost of developing such a project will start at several tens of thousands of dollars.

But there is a simpler way: choose a niche where the competition is minimal, evolve in it, and expand your reach. Think this won't work? How did Patreon make it to the top of the crowdfunding market? It just got into the business of supporting YouTube channels at the right time.

2) Fundraising Model

Another essential factor affecting the cost of development is the crowdfunding model you choose. There are several models, each with distinct characteristics. You need to carefully consider which one is right for your project before budgeting for development costs. Let's take a look at the most popular ones:

• Donation model. This option allows people to donate money to existing campaigns without expecting anything in return. Great for businesses or projects philanthropic in nature. The donation model is the easiest to implement — all you need is a payment solution to contribute directly to the project account, with parallel counting of the money raised.

Example: GoFundMe.

• Reward model. In exchange for a donation, backers receive a reward. It can be a thank-you letter, a discount on a service, or early access to a product, depending on the amount they've pledged. This model is as simple as the donation-based one. But here you'll need a special system that grants access to hidden content after users invest money.

Example: Patreon.

• Debt model. Debt-based crowdfunding allows supporters to loan money to a business or individual in exchange for interest payments over a set period of time. This model can be a great way to raise money for a business idea without giving up capital. Launching debt-based online platforms requires thorough preparation. You will need tools that simultaneously collect money, accrue interest, and make payments on it. In addition, you must provide guarantees for the debt repayment, which means you should get the appropriate government license.

Example: Lending Club.

• Equity model. In equity crowdfunding, backers get a stake in the company or project they support. This means they can potentially earn a return of their investment if the venture succeeds, and lose their money if it fails.

Example: Crowdfunder.

3) Platform Design and Features

Crowdfunding website design and functionality play a key role in determining the final cost of development. A simple crowdfunding site with basic features will cost less than a site with more complex tools and multiple integrations. Similarly, a web app with a lot of custom design work will be pricier than one with a basic template.

Remember the $500 we mentioned at the beginning of the article? If you decide to build a simple website using WordPress, you'll spend between $500 and $5,000.

Want to rival the market leaders and create a solution with high-tech features to launch crowdfunding campaigns? Then be ready for project funding measured in thousands of dollars.

4) Marketing Strategy

Having a well-thought-out marketing strategy can make the difference between a flourishing crowdfunding platform and one that falls flat. If you want your website to go up in the world, you have to invest in marketing and promotion. It will increase the cost of development, but it is worth it if you want to reach the goals of your crowdfunding campaign.

So, what promotion channels can you include in your marketing strategy?

• Search engine optimization (SEO);
• Social media marketing (SMM);
• Pay per click (PPC);
• Content marketing;
• Affiliate and partner programs;
• Email marketing;
• In-app advertising.

The final cost of the work will vary depending on how many channels you decide to use in your marketing campaign.

5) Web Development Team

Of all the factors affecting the cost, the most crucial is the team you choose for website development. What options do you have?

First, let's decide on the team type. Do you want to keep things in-house and use your development team? Would you like to bring in a freelancer or two to handle specific tasks? Or are you going to outsource the entire project to a web development company?

• In-house team. If you have the internal resources and expertise, developing your crowdfunding website in-house can be a suitable option. You'll have full control over the project and will be able to ensure it meets your requirements. However, this variant can be costly and time-consuming.
• Freelancer. If you need a more affordable option, you can hire a freelancer to develop your site. This will give you more flexibility in terms of cost and deadlines, but you should be careful to find a reputable and skilled specialist.
• Outsourcing. Finally, you can delegate all the work to an experienced development team. This option is the most convenient and self-driven. When you outsource your crowdfunding platform development, you'll get a team of professionals working on your project around the clock, ensuring it meets all of your specifications and requirements.

Who knows best how to build a crowdfunding platform? We believe that outsourcing is the top-ranking option for most projects. With the right contractor, you can drive great results while staying within your budget and timeline.

Team types:

Along with the type of team, another factor to consider is its location. As a rule, prices in the US, Western Europe, and Australia are notably higher than in Eastern Europe and Asia. However, this doesn't greatly affect the results of crowdfunding website development process. Labor laws and the cost of living can fundamentally vary from country to country.

Our advice here is to choose a team that understands your market and can help you reach your target audience.

Team location:

There is always something that can keep you from taking on a new endeavor, whether it's the cost or the risk of failure. But none of that is worth the emotions you'll feel if the project pays off and you raise funds.

How Much Will You Spend on Running a Crowdfunding Platform?

Alright, we've got the theory sorted out. It's time to move on to practice. In the table below, we've tried to calculate the average cost of developing crowdfunding sites, based on the approximate price of its components in the US, Canada, and Western Europe.

Software

Team Salaries

Marketing

Related Expenses

What's the bottom line? Every crowdfunding solution is unique, and you can't just quote a final price. “So, what are all these tables for?” you may ask. With them, we can crunch the numbers to give you a general idea of the costs.

Drumroll…

You'll need between $30K and $70K, depending on the complexity of your commercial project.

Crowdfunding Website? Wrap it up!

Did you know that a crowdfunding campaign requires 11 days to prepare and maximize results? Fortunately, you have much more time to create a crowdfunding website and engage project creators for raising funds and promoting your product.

But can you afford this venture within your budget?

The cost of starting crowdfunding websites is not as prohibitive as you might think. It's possible to build a unique platform for less than $1,000. But keep in mind the following: even a small-scale project that seems simple may contain some traps, so think twice before building such a site on your own.

If you plan to rival the giants of the crowdfunding industry, you should strive to create an enterprise-level website with unique and robust functionally. If your team lacks the appropriate expertise or key specialists, it’s always better to entrust this endeavor to a dedicated team of experts. Whether it’s in-house or outsourced is up to you. But if you want to save time, energy, and budget, outsourcing is the way to go.

Building a website is a big investment, but it will pay off in the long run. With the right team, a clear vision, and competent management, you’ll get a site designed for the specific needs of your business and capable of scaling as your company grows.

Looking for a trusted tech partner? Contact us and share your vision for the ideal crowdfunding platform you're eager to build. We'll look at it through your eyes and together create a tailor-made solution that meets all your expectations.