Wednesday, January 5, 2011

Payments: How they work

You probably knew this was coming eventually. Being a development blog we've actually been fairly quiet around here while we've tinkered away on the website. It's coming along quite nicely, in case you were wondering.

Anyway, seeing as how the primary of this website is so that you can raise money for your game, you're probably just a little interested in how you'll go about receiving said money and what's in it for us.

If you're at all familiar with other crowdfunding websites you should know that there is typically a percentage fee involved with working with them and their community. This nominal fee helps pay for things like hosting, web development and of course food and rent, so we can both eat and live.

8-Bit Funding will operate in a similar manner. Currently, in the beginning, we will use PayPal exclusively as a means to accept payments. I can hear your collective groans now. Unfortunately, as a start-up PayPal just makes it way easier for us to get up and running really fast. As soon as we are able we plan to add additional payment methods including direct credit card payments.

Here are the fees we will be charging initially:

  • 5% of the total contributions will be charged by us.
  • 2.9% + $0.30 of each transaction will be kept by PayPal.

You'll recognize these figures as being the exact same as the ones offered by Kickstarter. After much pondering and debating, we decided to follow in their footsteps given their obvious success. Although they use Amazon and not PayPal, Amazon charges the same 2.9% + $0.30 transaction fee.

Where we will differ from Kickstarter is in their mantra of "all or nothing funding." On Kickstarter if you don't meet your goal, you don't get any money. Personally, I don't like this method, especially when workng with relative abstracts like game development. Just because you could only raise $700 instead of $1000 doesn't mean you won't be able to complete your project.

As such, upon completion of your project, no matter if you have reached your goal or not, we will release what funds you have raised to you. In order to encourage people to not abuse the system however, for all projects that have not reached their funding goal we will be retaining a 10% fee, in addition to PayPal's fees.

Finally, when it comes time to deliver the money we plan on offering two ways to receive your money:

  • PayPal instant transaction.
  • Check, if you live in the USA.

PayPal will be the defacto payment for international projects. 

Upon completion of your project, we will email you to confirm your project and payment. From there you should have the money in your PayPal account within a couple business days. If you request a check, your check will be mailed out within a couple business days (allow up to a week for delivery).

I hope this has been informative. We plan on reviewing all payment fees and methods moving forward to best adapt to both our project starters and our project funders. If we come across a better plan, idea, etc. we will most certainly implement it as soon as possible.


  1. This sounds good.

    Have you considered the social aspect of "all or nothing funding"? I haven't, but there might be some effect of such a policy that encourages people to invest, or something like that.

    It's correct that partial funding can still be useful. My project has several potential stages post-release, each costing more than the last.

  2. We did look into the "all or nothing" type deal. One of the bigger problems with it, however, is that at that point your kind of stuck with the Amazon payment system. PayPal, credit card, even mailed in checks all make it pretty much impossible to use that method. Not that Amazon is bad, it's just limiting, especially in that international developers would be left out in the cold as they are with Kickstarter.

  3. Erm, my previous comment failed D:

    Anywya, I liked the model, even if the punishment is small, punishing non-targets are good, to avoid people setting unrealistically high targets in attempts to get more money than necessary.

  4. This is the same payment/incentive system that Indiegogo uses.

    Seems to work fine for them.

  5. I think the "all or nothing" deal has a very good reason behind it.

    Let's say you are trying to raise $5,000 but you can only get $200, that's useless for you to develop your project. You may end canceling it. And the ones who donated those $200 will feel ripped off.

    Also people will be more hesitant about donating because there's a chance the developer won't get as much as he wants and that may lead to him canceling or delaying the game.

    I think that when you make a project you should ask for the MINIMUM you need to make that project possible (but I believe most ask for what's ideal, not the minimum) and there's no limit on how much more than that you can raise, in theory the more founds the better your project will be, but reversing this logic will just render worst results.

    What can I expect from a developer who's asking $5000 to make with just $200? Seriously. He now has to make a game for the few people who donated? He's ruining his reputation for not making the game? He's gotta return the money (at his own expense)?

    I can see how this would be good business for you. But I'm not sure it will be good for the developers or the people donating. No offense or anything, just think about it.

  6. Johan,

    We have thought about it and we are going to put into plan a way for a developer to request to have funds returned (not at their own expense) should they feel they can't use it.

    Once a project is finished, we email the developer to ask how they would want payment served or if they would prefer to cancel their project outright, in which case all money is returned.

    Our reasoning for this is because, as somebody whose worked with many developers in the past, I know how flexible you guys can be with money. Sure $2000 might be ideal for what you need and might be how much you need to complete the project, but should only $1000 go through does that mean it's impossible to complete a project. I've seen developers work with less...

    We are very organic at this point, however, and we want to be as flexible as possible. If more people come out and agree with your point we'll look into switching prior to launch.

    Thanks for the feedback.