Common Crowdfunding Platform Fee Structures

It’s 2023 and there are a literal bajillion (totally real number) of Crowdfunding platforms out there. All of them charge different prices from one another but most share common pricing structures. In this here article we’re going to break down what some of these popular platforms charge and how they structure their fees.

Platform Fees

Platform fees are a necessary part of the revenue model for crowdfunding platforms. These fees are collected to cover the operational costs of the platform, including technology infrastructure, customer support, marketing, and other administrative expenses. They are essential for maintaining the platform’s functionality, security, and user-friendly experience. The fee also contributes to the ongoing development and improvement of the platform, ensuring that it remains a reliable and effective tool for fundraising.

Here’s a breakdown of platform fees across four popular crowdfunding platforms:

1. Kickstarter:
   • Platform Fee: 5% of the total funds raised.
   • Payment Processing Fee: Between 3% and 5%, plus $0.20 per pledge​. Link​.
2. Indiegogo:
   • Platform Fee: 5% of the total funds raised.
   • Payment Processing Fee: 2.9% plus $0.30 for USD payouts, with additional third-party fees possibly applying​. Link.
3. GoFundMe:
   • GoFundMe does not charge a platform fee for starting or managing a fundraiser.
   • Transaction Fee: 2.9% plus $0.30 per donation, which includes debit and credit charges​. Link.
4. StartEngine:
   StartEngine is a popular equity crowdfunding platform. This style of Crowdfunding allows companies to raise capital by selling equity to both accredited and non-accredited investors. Unlike traditional crowdfunding platforms where backers receive products or rewards, equity crowdfunding platforms like StartEngine enable backers to receive equity shares in the companies they support. So their fees are more complex and go beyond just a standard per campaign/amount-based fee structure.
   
   Here’s a breakdown of the fee structure on StartEngine:
   • Standard Platform Service Fees:
     • Companies are charged a 7% service fee based on the total amount raised during their campaign.
     • This fee is utilized for the operation, marketing, and upgrading of the StartEngine platform.
     • The service fee is paid to StartEngine upon the successful completion of a campaign​. Link​.
   • Equity-Related Fees:
     • Besides the service fee, companies are required to pay a 2% equity fee based on the total fundraising amount.
     • This fee is paid in the form of equity shares in the company to StartEngine.
     • The equity fee aligns the interests of StartEngine with those of the investors and the company, providing StartEngine with an upside potential if the company turns out to be successful. Link.
   • Deferred Revenue Fees:
     • In addition to the service and equity fees, companies will pay an additional $10,000 in deferred revenue upon the successful completion of the offering. Link.

Payment Processing Fees for Crowdfunding Platforms

Payment processing fees are a critical aspect of crowdfunding platforms, as they cover the costs incurred when handling monetary transactions. These fees are generally borne by the campaign creator, and sometimes by the backers depending on the platform’s policy.

Here’s a breakdown of the payment processing fees on five popular crowdfunding platforms:

1. Kickstarter: Payment processing fees range between 3% and 5%, plus $0.20 per pledge. Link.
2. Indiegogo: For USD payouts, a third-party credit card fee of 2.9% plus $0.30 is charged. Additional third-party fees may apply for other currencies and contributions coming from outside the campaign owner’s country. Link
3. GoFundMe: A transaction fee of 2.9% plus $0.30 is automatically deducted from each donation, covering both debit and credit charges. Link.
4. Patreon: Payment processing fees vary by currency and pledge amount, generally being 2.9% plus $0.30 for pledges over $3, and 5% plus $0.10 for pledges of $3 or less. For PayPal payments from non-US patrons, an extra 1% fee is applied. Link.

Crowdfunding Fees and IgnitionDeck

If you’re reading this, then you probably know IgnitionDeck is a self-hosted Crowdfunding Platform. You, as the platform owner are able to set your own platform fees for Campaign Creators so you can build a revenue stream from your platform. As with any platform that’s self-hosted or managed, there are always fees and IgnitionDeck is no exception.

Standard Fees

• Free – $349/yr – IgnitionDeck has a free tier, with essential Crowdfunding options. There’s a $149 per year option and then finally an option at $349/yr. The flexibility in price ensures platform owners utilize the license that’s right for their platform.

Unique Fees

• Fee Modifications: Charge custom fees on a per-project basis, enable checkout donations, and allow project supporters to cover creator fees. This is a feature that’s unique to IgnitionDeck and makes it a compelling offering for platform owners to incentivize their campaign creators.

Transaction Fees

• These fees are about what you’d expect, depending on your chosen processor. IgnitionDeck supports Paytm, PayPal, Stripe, and more.

Final thoughts

The fee structures across crowdfunding platforms vary significantly to cater to different fundraising needs. Platforms like Kickstarter and Indiegogo charge a 5% platform fee, while GoFundMe waives this, only charging a transaction fee of 2.9% plus $0.30 per donation. Patreon, catering to recurring creator support, implements a tiered platform fee alongside varying payment processing fees. On the equity crowdfunding front, StartEngine lays down a 7% service fee and a 2% equity fee, while IgnitionDeck offers self-hosted crowdfunding solutions with customizable fees for platform owners.

Each platform’s fee structure is tailored to its operational needs and the value it offers to its users, illustrating the adaptability of the crowdfunding model.

For ultimate flexibility (and this may come as no surprise) we happen to think our product, IgnitionDeck, provides the lowest and most flexible fee structures around given the features our product provides. Check us out if you haven’t already.