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Sell Before You Make: What Tesla and Kickstarter Have In Common

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Tesla Motors claims to have pre-sold nearly 400,000 Model 3 cars. Within two days of its public unveiling, CEO Elon Musk Tweeted that Tesla pre-sold 276,000 cars worth $9.7 billion at a base price of $35,000 – smashing Audi ’s 2015 202,000 pre-sales record.

Although the sales were in the form of $1,000 refundable deposits; the amount of hype and demand is incredible. Even if you halved the 400,000 units of pre-sales, it’s still a strong indication of demand for a more affordable electric vehicle.

A major risk for any company is making something people won’t buy. It amounts to a lot of sunken time and money lost, not to mention motivation.

Of course to reduce the risk of this happening, often a solid amount of research and planning is done. But when it comes time to sell, the timing may not be right anymore.

An increasingly popular strategy to lower the risk of not selling is pre-sales. If you can convince a customer to pay first or even put down their payment information, with the understanding they would be charged at a later date, that’s a strong signal of demand. Armed with this knowledge, you then have a better idea of how much to produce.

Now, taking deposits for a product is not new. But the mechanisms to pre-sell and market it are changing.

Crowd-funding sites like Kickstarter and IndieGoGo enable creators with wild ideas to raise money through pledges from backers. Most of the time, backers pledge enough to become an early adopter of the product.

Although crowd-funding sites have focused on the pre-launch phase, they are realizing that makers want to capitalize on the demand and continue selling after the campaign is over.

This is the reason why IndieGoGo is strategically partnering with pre-order start-up Celery and will acquire its assets. Celery is a platform that allows companies to take pre-orders in a checkout on their own website. Creators on Celery will be able to grow their community and reach new audiences via InDemand, Indiegogo’s pre-order experience.

One case study of how entrepreneurs use pre-orders to capture real demand and revenue is Bluesmart, the world’s first smart carry on suitcase.

“When we launched on Indiegogo, we had massive success and were able to reach millions of potential customers instantly. After our campaign on Indiegogo ended, we wanted to keep up the momentum so we set out to use both Indiegogo’s InDemand service, which enabled us to take pre-orders on our Indiegogo page, as well as Celery, which enabled us to install a pre-sale option directly on our own website,” said Diego Saez Gil, CEO of Bluesmart. “Between InDemand and Celery, we’ve been able to take more than $1 million in additional pre-sales.”

Getting early buy-in for what you’re offering is a great way to run a more efficient business. When you have a better idea of what people want and how much they want, you can prepare appropriately. Now tools like Celery make this easier to do.