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The financial side of building a badge

So what is the monetary cost of making a badge? Even just a SAO? To make a badge it took lots of hours, and in the end, we spent $393.15. Indeed not the quickest way to get rich.

If you are thinking about making a badge and want to know how even the littlest project hits your wallet, let’s go!

Here is our google spreadsheet to show our work. All of the data in this article is coming from there. Red isn’t showing a loss its just how we confirmed costs after receiving the receipt.

Making the boards

First, let us start with the actual board costs. Board fabrication has an economy of scale, and I begin to estimate how this phenomenon manifests as we produce. 1 badge is around $25. However, I knew my low end was around 100 boards and estimated a high end of 190. Estimates take in a 10% board fail rate (produce more boards) and a 20% discount (thanks Macrofab!).

So the price per board estimates look like this:

My actual cost is a little higher because I didn’t take into account shipping or taxes. However, we are still relatively close.

The cost of components

Components added another $0.82 per badge.

Which isn’t too bad. The most significant cost being the additional battery holder and a battery pack. Opting to go with something smaller was more costly allowed people to mount the badge as they saw fit.

In hindsight, we could have reduced costs further if we just didn’t include the battery. Alternatively, we could have redesigned the board not to meet the SAO spec opting for a larger and less expensive coin battery.

One time fees

One time expenses Added another $.74 to the cost and included essentials like buying the artwork, prototyping costs, and solder. High-level backers also received copies of my book.

Fees/taxes for the project

  • 8% Kickstarter claims $1.05
  • 30% Taxes took $4.16

That’s right $5.16 of the badges are taken up in fees which were almost the cost of the board itself. It almost seems like a hidden cost because it doesn’t add anything to the actual board. Instead its just the cost of doing business.

Yeah, but you got money right?

Yep! The Kickstarter campaign raised $2,358.00, DC713 purchased badges during a meeting, and cPanel sponsored us on Kickstarter with $400. Also, we received $300 back after a manufacturing error on the silkscreen. We received in total $3,211.00 for the project.

Extras

For the project, we were always planning on stickers and included those into the cost. Unfortunately, we did not expect to see the manufacturing error. So we decided to go out and buy these pins. They are more expensive than the money we received, but we felt we owed it to the backers for our oversight.

The profit

We lost around $1.87 per badge.

Then how could we have gotten closer to closing that delta? Probably the most enlightening information is over the breakdown of costs. 1. 87 is a 10% difference that we want to close.

  1. Increase Price– Well, of course, We could charge more. The chances are that if we raised the price by $2, we wouldn’t have seen a considerable decrease in purchases. However, this is about Houston pride! We needed to get them for everyone we could.
  2.  Drop the extras– Having extra for higher Kickstarter tiers makes sense. That is why we bundled the book with the purchase of multiple boards. However, maybe we shouldn’t have included the pins for everyone but instead had them for high-level backers. If we took out the cost expensive we would have moved right into the black. Let the cool lapel pins be a separate purchase to preserve costs.
  3.  Board prices– There are two ways we can adjust board price. Get more purchases for the economy of scale or negotiate a better deal. Moving to a different board house than Macrofab might have gotten us a better deal, but I wasn’t willing to move out of Houston due to the theme. Also, we think we would have to at least double production to reduce costs by 10%. A strategy for expansion would be somewhat tricky and presents a significant risk of overbuying. After all, even 3 unsold boards would have eaten up the advantage
  4.  Fees– Besides boards fees are the most considerable proportion of the project expense. Especially taxes. Kickstarter had a significant cost of 8%. Other groups use Tindie for this exact reason. Using something like Tindie can help lowers cost, but you have to determine the demand for your boards more accurately. Overproduction could quickly eat up the cost savings of a misestimation.
  5. No battery– We point out above that batteries was super expensive; however, it seems we may be exaggerating a bit because $0.65 wouldn’t have made it over the gap. What might have been better is to create some totems like other groups which would hold multiple SAOs. In that way, instead of 210 battery holders, we could have had maybe 100. Plus another product to sell!

Starting point

From a budgetary side, we hope this gives you some insight on the funding you should consider as you are building out your badge. Proper pricing is a difficult thing to figure out when it is your first go around and impacts a significant amount of your marketing, design, and financials. That amount of the learning experience only cost us a fraction of what we would have spent for college courses covering the same subjects.

Despite the difficulties, it is a great way to put together a small entrepreneurial project!