Kickstarter Pen Project

Darren Wright

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Since I don't make pens and don't know additional costs involved, I thought I'd post this question to see if the profit I came up with was about right.

Here is the project:
http://www.kickstarter.com/projects...-pens-made-from-exotic-woods?ref=home_popular

His project pledge was for $500, he's up to $3125 with 77 backers with 20 hours left. The backers pledge for the type of pen they are wanting, so nicer pen = higher pledge.

Kickstarter takes 5% of the total pledge for their cut. So $3125 * 5% = $156.25

$3125 - $156.25 = $2968.75

$2968.75 / 77 = $38.56 each pen

Figure that $5.30 each for flat rate padded envelope

$38.56 - $5.30 = $33.26

This looks to be similar to the pen kit: http://www.beartoothwoods.com/catalog/product_info.php?cPath=21_23&products_id=264

So buying in bulk for 50+ he's probably getting them for $7.75 each and pen blanks can vary, but $.50 should cover most since many can come out of a board foot

$33.26 - $7.75 - $.50 = $25.01 profit each pen

So around $1925.77 total profit...Correct? What other significant costs are there?
 
For starters, the pen kit you found is about twice the price that kit sells for elsewhere:

http://www.a1penkits.com/store/pen-kits/sierra-pen-kits.html

Shipping will be less that $5.30 Flat Rate. First Class parcel price for 8 ounces sent NY to CA is about $2.80.

His profits will be higher than your estimate, although there are a few additional expenses like bushings and a mandrel.

As an aside, his "French Polish" finish for the pens will look good for about long enough to ship the pens. A shellac wax finish won't hold up well if the pen is used much at all. ;)
 
...So how long does one spend making a pen like that?

Including the blank preparation, finishing, and assembly, it'd take a penmaking rookie like me about an hour per pen. I'd guess someone who turns a lot of pens could likely cut that time in half or more.
 
Including the blank preparation, finishing, and assembly, it'd take a penmaking rookie like me about an hour per pen. I'd guess someone who turns a lot of pens could likely cut that time in half or more.

Sounds like it could be profitable then. He also got his funding up-front and knew what he had to make rather than make a bunch and hope they sell. His initial pledge was $500, so broke down to about 12-13 pens. Profit would have been around $350, good enough to buy materials for other projects or groceries for the week.

Anyone see where I'm going with this? ;)
 
i would say your trying to tell folks that making pens can be profitable and some folks should look harder at a lathe to replenish there funding they now have which is withdrawls:)
 
after looking this over, those are the same basic sierra pen kits that i get from berea hardwoods. if he's buying 50+, they are pricing out at $5.50 per kit, with a not mentioned price for over 200. he has 74/80 backers. so far his costs for the 80 pen kits is $440, with any lumber or acrylic blanks sending him well over the $500 that he was looking to raise. even his math is off. the total should have been $3160, he may have counted the total of the $25 pens twice, as he is off by $125. what a scam! i'm kind of leery of the fact that the $25 ones are sold out. reminds me of the bait and switch my brother pulled when he was 10, selling the medium sized pumpkins for $1 each, while using my $5 pumpkin (this was when $5 bought a rather large pumpkin), with a small sold sign on it. people would feel so guilty about trying to cheat this kid, that they would buy 2-3 of the smaller ones. this guy is smooth.
 
after looking this over, those are the same basic sierra pen kits that i get from berea hardwoods. if he's buying 50+, they are pricing out at $5.50 per kit, with a not mentioned price for over 200. he has 74/80 backers. so far his costs for the 80 pen kits is $440, with any lumber or acrylic blanks sending him well over the $500 that he was looking to raise. even his math is off. the total should have been $3160, he may have counted the total of the $25 pens twice, as he is off by $125. what a scam! i'm kind of leery of the fact that the $25 ones are sold out. reminds me of the bait and switch my brother pulled when he was 10, selling the medium sized pumpkins for $1 each, while using my $5 pumpkin (this was when $5 bought a rather large pumpkin), with a small sold sign on it. people would feel so guilty about trying to cheat this kid, that they would buy 2-3 of the smaller ones. this guy is smooth.

Sorry didn't mean to confuse the point, he asked for $500, he raised well over that and is being backed by 77 folks making $3125 before costs.
 
his minimal costs for pen kits alone would be around $550, let alone blanks. if he hadn't gotten anyone to sign on, he would be on the hook for 80 pen kits. let alone the costs of the blanks, and setting up that site. call me cynical, but cynical i am.
 
his minimal costs for pen kits alone would be around $550, let alone blanks. if he hadn't gotten anyone to sign on, he would be on the hook for 80 pen kits. let alone the costs of the blanks, and setting up that site. call me cynical, but cynical i am.

No, that's not the way it works, either they meet or exceed the funding or the project doesn't get funding and nothing is owed to backers...

http://www.kickstarter.com/help/faq/kickstarter basics#WhyIsFundAllo

Personally I think the kickstarter idea is a great way to get started, just figure out your costs and add for what kickstarter and amazon are going to take out in fees to cover, tack on what profit you need and put it out there.

You set the prices for each tier of backer and how many you want to do for that price. I don't see that you have anything to lose.
 
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i still think that something is off, and not just his math. he says he has 81 backers, but when you add up the number of people(backers) buying pens, it only adds up to 75. he says he's doing it to build his shop, but in order to do this, he would need at least a table/band saw, drill press, lathe plus about $100 of turning tools, dust collection, etc. one other thing, he doesn't pay the shipping, or any associated sales tax, as those items are passed along to the customer.
 
I don't know where the number of backers shown at the top of the page comes from, but I'm pretty sure it's automatically put there by the Kickstarter software, not by the guy who's making the pens. As far as doing it to build his shop, maybe he wants a bigger compressor or a DC system or something besides a basic mini lathe and a couple of Easy Wood tools. ;)

I'm still not understanding how you see it as a scam, Dan. When he set up the Kickstarter page, he decided he wanted to offer the first five people a discount price. Sounds reasonable to me. All the others are paying $35 per pen (plus shipping), which isn't a bad price in most markets. For an extra $10 he lets the customer pick their wood and metal finish. And for $20 on top of that he'll get it laser engraved. Where's the scam?

Like Darren said, I see this as a way for a small-scale production woodworker (like you, Dan) to get a promise from X number of people that they will buy a certain item. By doing it that way, the woodworker doesn't need to buy more materials than necessary, and he can also get a good idea how well certain items will sell - before going into production. Poke around the Kickstarter site and you'll see all sorts of other startup endeavors that are seeking the promise of sales before going into full production.
 
As far as producing them, He may have access to tools through a community maker shed, or tool library of sorts.

The whole Kickstarter thing is intriguing. There's been a few electronic related projects I've been seriously tempted to back.
 
i still think that something is off, and not just his math. he says he has 81 backers, but when you add up the number of people(backers) buying pens, it only adds up to 75.

I agree the site's calculations are off, the calculations of the backers adds up to 77 and the header says 83 now (still 12 hours left), but the concept and reason for using it is still good.

Like I said earlier, there's not a lot to loose from what I can tell, you don't get enough backers to make your pledge, then no one is out anything. If you do, you get your funding (maybe more than you expected, but at least what you asked for), you've got capital to make your goods/product, backers receive what they invested for, kickstarter gets their cut (5%), and the CC companies get their cut (typically 2.9% of transaction + $.30). Yes they do charge a significant fees, but nothing like the 50/50 split that groupon or 60/40 split that living social charges, and they still charge you the CC transaction fees.

I think that guy was a genius for using it. :dunno:
 
I agree the site's calculations are off, the calculations of the backers adds up to 77 and the header says 83 now (still 12 hours left), but the concept and reason for using it is still good.

Like I said earlier, there's not a lot to loose from what I can tell, you don't get enough backers to make your pledge, then no one is out anything. If you do, you get your funding (maybe more than you expected, but at least what you asked for), you've got capital to make your goods/product, backers receive what they invested for, kickstarter gets their cut (5%), and the CC companies get their cut (typically 2.9% of transaction + $.30). Yes they do charge a significant fees, but nothing like the 50/50 split that groupon or 60/40 split that living social charges, and they still charge you the CC transaction fees.

I think that guy was a genius for using it. :dunno:

I agree, Darren. And I DO sell pens. Both on my website (or I did when I had enough stock, but I'm building that back up) and locally. Regardless of the math, he isn't making a killing and this is a one time shot as far as I can tell. Also, someone mentioned a cost of $.50 per blank. I can tell you that most pen turners do not by wood by the board and cut it into blanks. I do only when the board has the kind of figure I am looking for in sufficient quantity. That means the turner pays $3 to $5 per blank and that is just for the basic stuff. Burls will cost more. And some acrylics go even higher. And we won't even talk laser cut or the segmented blanks that some sell (since they got for $24 and I've seen them as high as $150).

But he did exercise a smart way of getting his sales up. I actually wish I'd thought of it. From experience, I can tell you that if he is providing a good product and customer support, at least 10% of those 80 will seek him out and buy from him again. And all that really just lets the turner replenish stock and buy a new tool here and there.
 
Like I said earlier, there's not a lot to loose from what I can tell, you don't get enough backers to make your pledge, then no one is out anything.
(snip)
I think that guy was a genius for using it. :dunno:

I'd agree in principal that its a good idea. The biggest risk I can see is that some kickstarter projects are ridiculously successful. Imagine if you got funded to make 10,000 pens :eek:

:lurk:
 
I wish he'd charge a little more for those pens:(. Sierra/EB hedge around $60-75 range. Makes it tough for the rest of us to get a fair price and believe me...pens are a crazy expensive habit to have:eek:. I was going to start doing crack because it's cheaper:rofl::rofl::rofl:;)
Vaughn is right on the $$ about the finish, it's basically Mylands friction polish. A cheeseburger and fries lasts longer in my house than that finish will.
 
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Depending on the blank cost (I calculate a minimum of $5.00 for blanks), I would retail that pen for about $35.00.
However, the whole Kickstart thing just isn't digesting right for me. "backers" and "projects" are vague terms. Without an established foundation backing raising of funds for grants to the arts, pen making included, I would not support it.
 
Frank, have you read the info on the Kickstarter site? The "backers" are individuals who are willing to commit to buying something if the maker reaches a specific goal of pre-orders. The whole idea is to bypass the corporate foundations and other large entities, and allow small startups to get a "kickstart" from individual people. Those backers are out no money unless the pre-orders reach the set goal, and the Kickstarter site ensures they pay as as they pledge. The Kickstarter site is the "established foundation" that ensures everything happens as promised.
 
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