Indiegogo is trying to answer crowdfunding’s biggest question: How do you get your money back if the product never materializes? Called Perk Insurance, the optional coverage will allow backers to receive a full refund — minus the cost of the insurance — if the perk is not delivered within a specified period of time after the estimated delivery date.
The coverage is expensive and currently only available on three projects. It costs between 10-20 percent of the pledge amount. On the Sondors Electric Bike, it costs $120 to insure the $600 perk level. On the Bluewire Bluetooth headset call recorder, it’s $20 on the $170 perk. The program just launched for these two campaigns and as of writing, zero out of the 366 backers for the ebike opted for the insurance; just five have done so for the Bluetooth headset.
The Olive wearable stress monitor was the first product to offer this insurance. Just three people paid for the $15 optional insurance prior to the project ending its campaign.
CEO Slava Rubin explained to TechCrunch that the company regularly develops and tests new product features. The pricing is part of that test. Indiegogo will provide the insurance itself. The company set aside $500,000 for the fund.
Crowdfunding is still a relativity new device. Consumers seemingly love helping realize a person’s dream while getting in on something early. Yet crowdfunding hardware projects have so far left many backers feeling victimized when products fail to be delivered. Indiegogo’s Perk Insurance is a good first step towards addressing concerns but simply costs too much to be widely adopted.
Hopefully the next generation of crowdfunding sees more guarantees built-in from the start and not a pricey option.