How does Kickstarter make money?

Question

Zippia Team · Accepted Answer

Kickstarter makes money by receiving a percentage of the money raised for specific projects on the fundraising platform. Kickstarter's business model enables users to post projects that require funding.

These projects must hit a predetermined threshold for the money to change hands between the donors and creators.

If a project's funding meets or exceeds its specific threshold for donations, Kickstarter takes a 5% cut of the total money raised for the project. If a project does not meet its funding threshold, none of the parties involved give or receive money, including Kickstarter. This process is how Kickstarter generates the majority of its income.

Kickstarter also makes money on processing fees. When a project reaches its specific threshold, and money changes hands from donors to creators, Kickstarter takes a 3% processing fee from its creators' funding raised and an additional $0.20 per pledge of funding for a project.