How will Pyra production be funded?

[Mr_Loon]

Hi ED,

With the prototype phase for Pyra rapidly approaching and pre ordering to come some time soon after prototyping I was wondering what your thoughts were regarding using an established site such as Kickstarter / Indiegogo etc. for funding?

It's appreciated that there is no right or wrong answer for this, from my understanding crowd funding of some kind will be used and there are significant advantages and disadvantages attached to either using an established crowd funding method or funding it via pre orders direct from Dragonbox shop.

FWIW my gut feeling is that for interested people on these boards it won't matter which method you use but for new customers & media coverage using an established site would generate more sales & media interest.
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A quick supplementary question which might help with the decision regarding what type of crowd funding to use :

Can you give a rough approximation of how many Pyras would you need to sell via pre order for the project to move to the mass production phase
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Edit :

AFAIK he will be going through with the mass production no matter what.

Pretty sure that's not right as a large amount of money will be needed to order the parts for mass production, however I think we'd better let ED answer first (as per the rules of this section )

 

[Swordfish II]

AFAIK he will be going through with the mass production no matter what. He has already made the molds, and has numerous parts on hand.

The cost thread I believe had a generic breakdown of costs, and cost distribution.

 

[EvilDragon]

AFAIK he will be going through with the mass production no matter what. He has already made the molds, and has numerous parts on hand.

I wish that would be the case... but mass production will only happen when we get enough preorders to fund it.

Here's the current status:

• Some parts (like 2000 batteries, 1000 LCDs, 10000 nubs) have already been paid and are lying on stock.
• Molds and development has also been finished and is almost paid (but I got enough money on my account to pay the rest)
• There's not much money left after that, definitely not enough to cover the costs for the mass production.

So, here's my plan:

• Prototypes for the developers and for the videos will be finished and shipped (very soon, in fact, the prototype for the videos is on the way to me!)
• With the videos, I'll show off a bit what it can do while and keep you up to date with the software developments. The preordered prototypes will take a bit longer, as I want to wait for the final keymat and case before I ship those.
  
• As soon as I got the finished case (including Lid, etc.) I'll do a final prototype video and then the preorders will start!
• We need approximately at least 800 preorders (including the 200 we already have) to be able to give green light for the production! So yes, the GPD Win is a danger to us here. I know that a lot of forum members here will preorder the Pyra, but I don't know if those are enough. Additional preorderers might've been affected by the upcoming GPD Win and might want to wait until both system are released - or they will switch to the GPD Win as the preorder-price is pretty low (unfortunately, we can't afford such an early-bird price, we don't have the capital that GPD has).
  I hope those aren't too many and we can at least achieve the 800, though I hope we can get at least 1300 - 1400, as that would mean we could increase the batch to 2000 which will safe production costs and also would make it possible to also have units from stock when we're finished.
• In case we won't get enough, I am thinking about a Kickstarter campaign to get more orders.
• If that also fails, I might approach interested investors or look for other ways to fund everything. With finished and working prototypes, that should be possible.

So yes, the GPD Win could have a huge impact for our production, but that's something we'll see.
At least I can show a working system when the preordering starts!

 

[Mr_Loon]

Many thanks for that detailed response ED.

I'm a bit confused by this bit :

In case we won't get enough, I am thinking about a Kickstarter campaign to get more orders.

Do you mean that if you don't get enough pre orders direct to Dragonbox you'll consider using Kickstarter or you're considering a Kickstater for all pre orders as you think this could lead to more orders?

(very soon, in fact, the prototype for the videos is on the way to me!)

Great news, can't wait to see some videos

 

[EvilDragon]

Well, I planned to use Kickstarter only in case I couldn't get enough orders... with Kickstarter, the price would increase (as they charge 10 - 15% fees), so I'd like to avoid that if possible.

However, if we got preorders and then start the Kickstarter, we wouldn't get a quick start - as all community members would back us on Kickstarter as well.

So the question would be whether we'd simply refund the preorders so that they can back using Kickstarter or whatever...

Is it allowed to take preorders on your own website while Kickstarter is running?
That way, it would spread the word as well but people could decide to either fund the project as preorder or via Kickstarter.

All good questions that I need to think about...

 

[DaMummy]

You should include something in the order page where people can fill out where they heard about the Pyra from. So when you start an advertisement campaign, you'll know what works, and where your customer base lurks.

 

[ible]

i would imagine Kickstarter would get angry if you took preorders outside of their page.

 

[levi]

It's become incredibly common (once people discovered that you were allowed to do it) to offer Kickstarter rewards as preorders after the KS campaign has finished. Who's to say (apart from KS and their lawyers) whether you can do it also before, or during?

 

[Mr_Loon]

Well, I planned to use Kickstarter only in case I couldn't get enough orders... with Kickstarter, the price would increase (as they charge 10 - 15% fees), so I'd like to avoid that if possible.

So just to be clear : If I were to back the project via Kickstarter for $100 then Dragonbox would get $85-$90 after ALL fees were deducted?

Are there any fees associated if the transaction is done direct with Dragonbox? i.e. If I were to back $100 you'd get $100 or is there a banking / currency conversion charge?

I hope those aren't too many and we can at least achieve the 800, though I hope we can get at least 1300 - 1400, as that would mean we could increase the batch to 2000 which will safe production costs and also would make it possible to also have units from stock when we're finished.

Would it save close to 10-15% of production costs to get 1300-1400?
If so then running a Kickstarter based on selling 1300-1400 might well be worth thinking about, say if you then got 700 backers (in addition to the existing 200) you could cancel the kickstarter and give those 700 the chance to back the project via dragonbox for the same cost as their pledge.

Is it allowed to take preorders on your own website while Kickstarter is running?

Doubt that would be allowed by Kickstarter but even if it was think of this : What you you do as a Kickstarter backer if you found out you could get the same reward for 10-15% cheaper by ordering direct from the supplier?

All good questions that I need to think about...

Sure is a tricky decision, anyone else got any thoughts on whether Pyra should be funded by pre orders direct to Dragonbox or whether Kickstarter, or other 3rd party should be used?

 

[EvilDragon]

So just to be clear : If I were to back the project via Kickstarter for $100 then Dragonbox would get $85-$90 after ALL fees were deducted?
Are there any fees associated if the transaction is done direct with Dragonbox? i.e. If I were to back $100 you'd get $100 or is there a banking / currency conversion charge?

Money conversion is being paid by the customer, regardless whether it's backed via Kickstarter or bought at my shop.
The campaign would be run in EUR, not in USD.

As for fees: The usual credit card / PayPal fees... that would be about 2 - 3%
According to the Kickstarter FAQ, Kickstarter fees are 5% but are being put on top of those 2 - 3%.

So for example, let's assume the Pyra has a cost of 500 EUR, the fees via my shop would be roughly 15 EUR and the fees via Kickstarter would be about 65 EUR.

Would it save close to 10-15% of production costs to get 1300-1400?

No, probably save about 0,5 - 1%.
Visible differences wouldn't happen before 5000 or more.

If so then running a Kickstarter based on selling 1300-1400 might well be worth thinking about, say if you then got 700 backers (in addition to the existing 200) you could cancel the kickstarter and give those 700 the chance to back the project via dragonbox for the same cost as their pledge.

Hm, so let it fail and then give everyone who wants it the chance to order it at the shop... would be weird, as suddenly less money would be needed
BTW: I wonder what would happen with the already existing 200 preorders... I would need to handle those at least via my shop or refund them the payment.

 

[el joker]

Hi Ed
I juste have an idea, re open pre oders in DragonBox , me sure i ll take one !
good day to all
peace

 

[Klumpen]

Well, I planned to use Kickstarter only in case I couldn't get enough orders... with Kickstarter, the price would increase (as they charge 10 - 15% fees), so I'd like to avoid that if possible.

However, if we got preorders and then start the Kickstarter, we wouldn't get a quick start - as all community members would back us on Kickstarter as well.

So the question would be whether we'd simply refund the preorders so that they can back using Kickstarter or whatever...

Is it allowed to take preorders on your own website while Kickstarter is running?
That way, it would spread the word as well but people could decide to either fund the project as preorder or via Kickstarter.

All good questions that I need to think about...

You need more pre-orders for the production to happen?
Here I thought that everything is more or less safe already.
I've never pre-ordered anything in my life, but I guess this means you can count me in.
It would be a shame for it not to happen and I hope you can make it without Kickstarter.

The walled garden, small/weird storage and bad stand-by battery life of my current GPD device made me miss my Pandora very much anyway.

 

[Mr_Loon]

So for example, let's assume the Pyra has a cost of 500 EUR, the fees via my shop would be roughly 15 EUR and the fees via Kickstarter would be about 65 EUR.

I think your maths is wrong here, by my calculations for €500 a 5% Kickstarter charge would be €25 with the additional 3% transaction fees that would be €40

Again for the sake of clarity is this correct : If the cost of the Pyra was to be €500 via Dragonbox it would have to be approx €526 via Kickstarter (rounded to the nearest Euro, 5% of €526 is €26.3 giving a total of €499.70 after KS fees)

BTW: I wonder what would happen with the already existing 200 preorders... I would need to handle those at least via my shop or refund them the payment.

If you did go with Kickstarter then I'd recommend handling existing pre orders via your shop but charging 5% less in total than via Kickstarter.

Can anyone see any disadvantages of using Kickstarter other than the 5% additional cost?

 

[EvilDragon]

I think your maths is wrong here, by my calculations for €500 a 5% Kickstarter charge would be €25 with the additional 3% transaction fees that would be €40
Again for the sake of clarity is this correct : If the cost of the Pyra was to be €500 via Dragonbox it would have to be approx €526 via Kickstarter (rounded to the nearest Euro, 5% of €526 is €26.3 giving a total of €499.70 after KS fees)

True, I had some error in my calculation. So Kickstarter would charge approx. 40 EUR and with my shop, it'd be roughly 15 EUR.

Can anyone see any disadvantages of using Kickstarter other than the 5% additional cost?

Well, the delay in getting the money (so everything would start one month later) and everyone would've to pay the full payment upfront whereas with the preorder, it would only be approx. 50% and the rest when the units are ready to be shipped.

 

[rygD]

Well, the delay in getting the money (so everything would start one month later) and everyone would've to pay the full payment upfront whereas with the preorder, it would only be approx. 50% and the rest when the units are ready to be shipped.

Hmmm...so could you do a KS for half of the first run and use the rest of the money to get the entire first run made, then just sell the rest from stock? I suppose that might leave you in a bad place financially for a little while, and you would need to sell the entire first run to break even. The good side is that you can do your preorder first, and if it doesn't work out you use KS to make up the difference. Yes, it delays things, and if you resort to that things are already probably a couple months behind, so then you add the KS duration and the month or so before they give you the funds.

I still think people will be hesitant to pay full price up front, especially if they aren't familiar with the Pyra/Pandora but have seen another recent crowdfunding campaign for another gaming palmtop with a lower cost. (I also have a bad feeling people will claim you are copying them even though you have a functional prototype and years of discussions to show that it has been in progress for a while and is derived from the first of this type of device.)

 

[Swordfish II]

You need more pre-orders for the production to happen?
Here I thought that everything is more or less safe already.

I thought that too, but apparently not.

 

[Blue Shadow]

Hi, I've been watching this project and the forum for a long time, and enjoyed the outstanding transparency here in the Forums, so first to say, great work!

Well, the delay in getting the money (so everything would start one month later) and everyone would've to pay the full payment upfront whereas with the preorder, it would only be approx. 50% and the rest when the units are ready to be shipped.

Actually I think that's a huge point. With preorders in the shop it would be much easier for some people to afford a pyra from the start. Not only because of the 50% payment at first, but with the shop you can use two other money-saving-friendly methods:

- flexible Payment via Klarna (afaik only in Germany)
- Purposeful saving money via puchasing Gift Codes beforehand. (Pretty underestimated method IMHO, and also a way to support Dragonbox before the preorders start)

Personally, I hope it won't be a Kickstarter-only-funding because I already bought some gift cards in the shop (under the assumption the preorders would be normal shop items and therefore combinable with gift cards).
With Kickstarter only I would have the wait till the pyra will be availlable in stock at the shop - wich might take very long if the campaign would be succesful, but not enough to reach the 1300-1400 threshold for the bigger batch.

 

[Mr_Loon]

Personally, I hope it won't be a Kickstarter-only-funding

Hi Blue Shadow, welcome to the forum

I can completely see your reasons for this and it must be a really tough decision for ED.

Just to throw in a few Advantages of Kickstarter/Indiegogo :

Publicity : Many more people browse/use Kickstarter/Indiegogo than view this website.
Use of the Kickstarter/Indiegogo system for communicating with backers.
Ease of producing a clear set of rewards & stretch goals.
Ease of keeping up to date with how much is needed / pledged.
The big one : People unfamiliar with ED/Dragonbox may well feel more comfortable handing over money knowing that if the goal is not reached they will be refunded.

Had a quick look at Indiegogo, they charge 4% (approx €20 extra if the Pyra retails for €500) and allow Fixed funding (if the goal is not met then you get your pledge back as per Kickstarter)

There could also be one significant disadvantage of taking a down payment with the balance to follow : What would happen for customers who do not use the Euro if there is a significant change in exchange rates between the initial payment & the final payment? (a significant majority of Pandora buyers were from UK&US IIRC)

From the perspective of people who follow these boards I can see the obvious appeal of crowd funding done direct Via Dragonbox (saving €20-€25, using vouchers, getting Pyra quicker etc.), but I think that the project as a whole would probably gain more than it lost if an established crowd funding method was used for first batch production.

 

[TeDaDeS]

If the kickstarter campaign would be for 800 units you would bet on two horses.
The pre-orders will probably do 800, and the KS would be at least 800 if successful.
If the KS fails people could might place the pre-order via the shop, and even then the Pyra would have had some publicity that might cause increased future sales.
I also think KS allows special pledges, so you could have regular pledges for a single unit and a pledge for pre-pre-orders from the shop (those would be discounted units, so no need for refunds).
Only disadvantage is that this will probably take Two-Months™ to fulfill the pre-orders. (funny, ™ = TM = Two Months...)

The GPD might be good competition, but hopefully it works both ways and raises some interest in the Pyra to.

 

[iprice]

It'll be interesting to see how much the pound is worth against the Euro after June 23...