The concept of a preorder is relatively simple: you come up with an idea for your product and market that idea. People can pay for their subscription or purchase before you even start production, usually benefiting with a lower purchase price or faster ship time than a customer who buys once the product is more readily available.
The essential mechanism Kickstarter runs on is pre-orders: more often than not, the results of whatever project is being funded is the reward. It’s most obvious within Kickstarter campaigns that are funding the development of new software or hardware (though the principle holds true for funding everything from documentaries to books). The preorder model isn’t necessarily something Kickstarter wants to be known for: the company built its platform to help more ideas become reality, and just managing preorders isn’t enough to live up to that lofty goal. Don’t be surprised if more crowdfunding platforms evolve specifically for managing preorders while Kickstarter evolves away from that model.
From a crowdfunding perspective, preorders make sense because you can get the cash to manufacture your product — hardware in particular takes money to even prototype. But for software developers, who are likely investing more time than anything else in to creating our products, a preorder isn’t exactly necessary to actually get a product to the point where it’s saleable. Instead, the value is in seeing if there’s interest in the application you want to build. You can get hard numbers on your most interested customers — the ones with a need for your software so extreme that they’ll slap down cash long before they can actually use the product. And if you get a lackluster response to your preorder, you the opportunity to shut down the process and return any money to prospective buyers, so that you aren’t committed to a product that won’t sell.
Testing your offer can go further than just seeing if the customers you expect want to purchase the software you plan to develop. You can guarantee yourself a bunch of committed beta testers who clearly need what you’re creating.
Of course, you’ll need a way to get your preorder offer in front of potential customers, just as you need a marketing plan for any product you’re considering developing. Customers tend to respond better to preorders if they already know you and consider you to have a well-established track record: after all, they’re giving you money for something that doesn’t yet exist and need to be able to trust that you’ll come through on it. There are a wealth of ways to create a responsive audience before you launch your preorder, as well as ways to combine a preorder with other testing methods to make sure you really do have a product that will sell.
Image by Flickr user David Bleasdale
