Revenue Management in Crowdfunding

62 Pages Posted: 7 Nov 2017

See all articles by Jiding Zhang

Jiding Zhang

University of Pennsylvania - The Wharton School

Sergei Savin

Columbia University - Columbia Business School; University of Pennsylvania - Operations & Information Management Department

Senthil K. Veeraraghavan

University of Pennsylvania - The Wharton School - Operations, Information and Decisions

Date Written: November 3, 2017

Abstract

We develop a model of crowdfunding dynamics that maximizes revenue for a given fundraising campaign by optimizing both the pledge level sought from donors or backers and the duration of the campaign. Our model aligns with the patterns of backer/donor arrival and pledging observed on crowdfunding platforms, such as Kickstarter. Using our model, we calibrate the revenue lost from using pre-specified pledge levels or campaign durations. We show that under the optimal design, the pledge level sought decreases as the goal of a campaign increases, with a more pronounced effect for both very low and very high campaign goals. We further demonstrate how uncertainty in pledge accumulation improves campaign revenue and aids campaign success. In particular, we show that campaigns with high goals benefit from highly uncertain environments more than campaigns with low goals.

Keywords: Crowdfunding, Revenue Management, Platforms, Innovation, Dynamics, Diffusion, Operations

Suggested Citation

Zhang, Jiding and Savin, Sergei and Veeraraghavan, Senthil K., Revenue Management in Crowdfunding (November 3, 2017). Available at SSRN: https://ssrn.com/abstract=3065267 or http://dx.doi.org/10.2139/ssrn.3065267

Jiding Zhang

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

Sergei Savin

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

University of Pennsylvania - Operations & Information Management Department

Philadelphia, PA 19104
United States

Senthil K. Veeraraghavan (Contact Author)

University of Pennsylvania - The Wharton School - Operations, Information and Decisions ( email )

Philadelphia, PA 19104
United States

HOME PAGE: http://https://oid.wharton.upenn.edu/profile/senthilv/

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