So here you are, brewing with a ton of great ideas for your projects, but faced a major dilemma – how do you get funds to support your creative work? You don’t have sponsors and asking for donations seems rather cheap.
Luckily there’s Patreon for creators, a platform that lets you build a loyal audience and gather funds for your projects. The highest-paid creator is said to earn 6 figures per month using this program, but is it just a hype?
This review will elaborate on how Patreon actually works, walking you through the pros and cons so that you’ll have a better understanding of how to use the platform to your advantage.
How Patreon Work for Creators
Established in 2013, Patreon was once a marketplace where people can browse for creators and choose who they want to support. It has since retired from this feature and is now a SaaS (Software as a Service) tool/suite that can be used for building a membership business.
In other words, creators can collect donations from fans (their patrons) on a recurring basis while offering early access or perks to their exclusive content. This relationship is beneficial to both parties – the funds received can help you achieve your goals faster and it provides a unique experience for loyal supporters who want to see more of your work.
Setting up a creator profile on Patreon is free and it only requires a few basic information such as;
- The details of the project that you’re working on.
- An introduction video about your project (not necessary but recommended to have)
- Your membership offering (how many tiers and how much you charge to unlock content)
- Links to your social profiles such as Facebook, Instagram, and YouTube
- Welcome note for your patrons
- What are the goals you want to achieve with the donations
Once this page is complete, you can grab the profile URL and share on social media or link it to a CTA button on a blog. Patreon is largely used to reward fans with creative content such as videos, music and digital downloads. Therefore, individuals who produce YouTube videos, podcasts, digital art or eBooks are the ones who would benefit from this platform the most.
One of my favorite creators, Sonny Side, produces food review videos from all over the world. He has millions of subscribers on YouTube and uses Patreon as one of the means to fund his gastronomic projects. You can check out his elaborate creator profile here on the Best Ever Food Review Show page.
Understanding Your Earnings on Patreon
Technically speaking, donations are considered a form of revenue, but because you’re using Patreon, you’re required to pay some fees before the funds can be fully withdrawn. Here’s a breakdown on what those fees look like;
(1) Platform Fees – This fee is deducted from successfully-processed payments and the percentage depends on the type of creator plans you choose. There are basically 3 plans – Lite, Pro and Premium which charge 5%, 8%, and 12% respectively.
(2) Payment Processing Fees – This fee is calculated based on your membership tier amounts and your patrons’ method of payment. It is used to cover the cost of processing payments from patrons such as recurring billing, recovering declined payments and fighting frauds.
For every pledge that is $3 or less, the fee is 5% + 10cents. For every pledge that is over $3, the fee is 2.9% + 30 cents. To view an example of these calculations, please read the discussion on Reddit here.
(3) Payout Fee – This fee is charged for moving funds from your creator account to your bank, PayPal or Payoneer account. For direct deposit, it costs $0.25 per payout. For PayPal, a $10 minimum is required and the fee ranges between $0.25 to $20 per payout. For Payoneer, a $25 minimum is required and it costs $1 per payout.
Besides that, you should also factor in the expenses that go into your projects like buying gears, paying editors, and such. Any earnings more than $20K is taxable based on US law so make sure you take note of that too.
At the end of the day, you can only count your profit or what you pay yourself AFTER deducting all these fees and expenses. I’m guessing you’re finally seeing the reality of all these but let’s put complicated math aside while we give credit what Patreon is good for.
The Advantages of Using Patreon as a Creator
(1) Setting up a creator’s profile is a breeze and you don’t need to pay anything until you start earning. Anyone can literally use the tool without needing an application review. Fans can view your goals and accumulated funds (if you set it to public mode) so it kind of makes your work more transparent and less awkward when asking for online donations.
(2) With the tiered and scheduled pricing model, you are able to receive recurring funds on a consistent basis. This ensures that projects can be completed on time and is likely to motivate you to be creative and commit to your work in the long run.
(3) When fans pledge to your work, you get to own that relationship because it gives you access to their name and email addresses. This means you can build your own email list and market to a targeted audience in the future for new projects or launches.
The Downsides of Using Patreon
(1) For all that is worth, one of the biggest deterrents to using Patreon as a creator is the fee charges as mentioned earlier. For non-US creators, the fees could actually be higher. This is unavoidable with platforms that let you start for free but keep in mind that it could take a huge bite into your long term revenue.
You may be reluctant but it’s something that must be sacrificed if you’re going to let Patreon manage the membership and payment.
(2) It should also be obvious that Patreon doesn’t do any marketing and you’re entirely on your own in promoting your creator’s profile to grow your membership. Setting up an impressive page doesn’t mean anything unless you can drive traffic and make it convert.
(3) As with anything that uses third-party services, you’re at the mercy of their terms and conditions. Any changes made to the setup or fee structure will eventually affect your fundings and there’s very minimal you can do to switch things around.
Is Patreon a Good Platform to Fund Your Projects?
Overall, Patreon as a tool isn’t a bad idea to grow a loyal fan base. It has a relatively easy and transparent setup and doesn’t cost a thing to get started. You’re basically hands-off on the technical side, but before creating a profile page, you should consider building an audience first.
That’s why it’s common to see successful creators using social channels (YouTube especially) and blogging to show off their work. When you’re constantly creating, it allows people to see your commitment and creativity in action. It gives fans enough proof to offer financial support this way than to blatantly ask without producing anything of significant value.
Essentially, what you’re doing with your project is the same as running an online business. It’s important to learn how to put your work out there and draw targeted visitors who are interested in your content offers. In fact, if you’re good at driving traffic, you can even launch a membership program on your own website without using a third-party service like Patreon.
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