Using customer financing of prototype designs to cover manufacturing costs

A New York Times article (Sept 23, 2011) describes Kickstarter – a crowdsourcing website model to fund designs.  Designs are proposed along with a fundraising goal with an “all or nothing” model – if the minimum is not met, no funding is provided. The article describes furniture, ipad covers, iphone stands etc – all of which started with a design prototype, an appeal for funds with associated products or services based on funding level. Successful projects then had to be produced to satisfy funding sources. Several of the designers claim that fulfillment costs were significant and were underestimated. For which products is such a crowdsourced funding model appropriate ? Should Kickstarter provide additional services such as sourcing or fulfillment or is it better off making the designer absorb these risks ? Given the opportunity for customer feedback to improve designs, should funding customers be given ownership of some of the intellectual property associated with the final design ?

About aviyer2010

Professor
This entry was posted in Collaboration, Operations Management, Supply Chain Issues and tagged , , , , . Bookmark the permalink.

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