(See cross-post on BackerClub forums here)
"If you don't get at least $79 in savings each month, we'll credit the shortfall toward your next month's membership fee. So, you are sure to come out ahead. Actually, the idea is that you'll come out WAY ahead of your $79 membership fee."I was curious - scam, opportunity, or somewhere in the middle? So I crunched the numbers, and came out with a few insights. Below is the analysis I posted on the BackerClub forums.
It looks like this program will result in breaking even for a user if they expect to pledge for at least around $200 worth of (pre-discount) rewards within one month (totaling $40 when discounted).
This can also happen over multiple months, but the total required pre-discount value will grow higher by $79 for each month it takes (~$16 discounted).
Breaking it down:
With the info from the second email, if a backer spends less than $79, their credit is$79-(discounts)
In other words, they will directly pay back any discounts with membership fees.
If a backer gains exactly $79 in discounts, they reach the maximum equilibrium: they will pay the full membership fee the next month. So anything <= $79 in a month produces a net sum of 0, meaning a total cost over the entire subscription of $79.
As they mention, the game changes when a backer receives a discount of over $79.
Once this threshold is broken, the net savings in a given month becomes
$(discounts)-79
A discount of $80 means a savings of $1 for that month.
Because the initial cost was $79, the total cost of the subscription becomes
$((monthly savings) - 79) - 79
At the best case scenario, if a backer makes $158 in savings in one month, they will break even immediately: ( (158-79) -79) = 0. If a discount is 80% the reward value, this is 158/0.8 = $197.50 worth of pre-discount pledges (for which they paid $39.50 - pretty good!).
At the worst case scenario, a backer making $80 of savings per month would need (79*80) = $6,320 in discounts over ~6.5 years to break even. (That's a $7,900 pledge value for $1,580 - good if you can actually manage it)
It's important to note that we can't count any months with savings at/under $79, since these neither contribute to or subtract from lifetime subscription cost. Any month like this just pushes the lifetime cost forward with no change.
In between the two extreme examples, we can show that the amount of money it takes to break even will always be
$((79*#months)+79).
This makes sense - every month you'd have to exceed $79 to make any progress, and the amount you exceed goes toward the original $79 that started the subscription. Once you've broken even, you'll start seeing benefits from any month with discounts >$79.
What does this mean? (tl;dr)
Pros- Lifetime cost caps at $79.
- Benefits [i]do[/i] exist under specific circumstances.
- Any month with [i]less[/i] than $79 discount is essentially a [i]$0[/i] discount.
- No guarantee there will be enough projects you like to reach $79 in a month.
- Breaking even takes a big month or a long time.[/list]
If you back a lot (a LOT), or you get lucky with many interesting/expensive projects in one month, you'll likely see benefits from this program. Otherwise, you will probably be out somewhere between 0-$79 for quite a while, gradually chipping away at the initial fee. You aren't "sure to come out ahead" -- you're just guaranteed not to slide backward.
I'm not sure I would call this a scam - or at least, not necessarily an intentional one. There are benefits for the right kind of backer, and as long as they keep to that "credit" promise nobody will be out more than $79. Payment is through PayPal, which generally does well with fraud reports where necessary.
It's certainly oversold, the homepage looks sketchy and unfinished, and it will probably end up with more than a few people getting less out of it than they expect. That said, I've signed up in the interest of science, investigation, and just plain curiosity. I'm adding a "BackerX" tag, and will post anything significant I learn or experience under it.
Wish me luck.
