Monthly Archives: November 2013

Crowdfunding cost-benefit analysis

I am participating in a crowdfunding project: The making of a new album by The Men They Couldn’t Hang. Was this a wise investment? I identified five possible outcomes to try and answer that question:

A) It’s all a scam, they spend the money on Nintendo and Vodka, and I  find out about it.

B) Three possiblities with  the same end result.

  1. It’s all a scam, they spend the money on Nintendo and Vodka but I don’t find out about it.
  2. The project fails and they don’t manage to produce a record.
  3. They produce a crap record.

C) They produce a record with one or two decent songs.

D) The record is really good

E) The record is a magnificient masterpiece.

So now all that remains is to put a probability and a value for each outcome.

A) 1% | -100 €

B) 40% | 0 €

C) 40% | 20 €

D) 18% | 200 €

E) 1% | 2000 €

So I should contribute 63€ to the project.

There are some perks that could have a value in themselves, but stuff like a signed banjo or curry in Manchester doesn’t really appeal to me.

Q: Couldn’t I just free ride on the others and get the benefits anyway?

A: Don’t be ridiculous