Aussie Watches was founded by four friends, Andy, Bob, Carrie and Donna, who wanted to design and sell watches internationally but with a distinctive Australian feel. They set up their business as a corporation to limit liability. They have decided to crowdfund their business with pre-orders and that way they can gauge demand before they start. They have already each invested $5,000 to design and obtain prototypes of their watches. They launched a Kickstarter page 3 weeks ago to showcase their products and take pre-orders. The Kickstarter page runs for 6 weeks and they need to have commitments of $50,000 or the fundraising is cancelled and all the committed money is returned. The commitment numbers for the first three weeks are:

Week..................................Cumulative total commitment
1...................................................$10,000
2...................................................$17,000
3...................................................$24,000

The founders are concerned that they won’t make the minimum commitment and the money will be returned. They have based their requirement for $50,000 as their estimated break-even point but they could adjust before the deadline if needed. They have $20,000 in development costs that they have already paid and there are no additional costs if they proceed. They are charging $450 for each watch with $200 the cost for each watch.
 

What do you think they will reach in terms of commitment? Do you have any suggestions to improve these prospects?

Answer rating: 100% (QA)

The required commitment for the six weeks is 50000 but they have managed to raise only 24000 for the ... View the full answer