Initial Coin Offering ( ICO ) Setup Cost Analysis
Initial coin offering (ICO) can be a great way to raise funds for a new cryptocurrency. But did you know that launching an ICO can be an extremely costly affair? Yes, it can cost more than $ 100,000 to run an initial coin offering project. Without budgeting accordingly beforehand, it is easy to run short of money before launching a project successfully.
The Primary ICO Costing Factors
1. The Technical Aspect($11,000 - 21,000)
One of the most important cost factors to consider when it comes to ICO costing estimation is the technical aspect of the project. You are going to need a team of developers and testers to handle a lot of technical areas. These may include developing tokens, smart contracts, a website, and blockchain and testing everything. FYI, smart contracts are simply digital contracts that enable you to exchange anything of value whether it be money, property or shares in a transparent, conflict-free way without needing the services of an attorney or a notary.
Most professional token developers charge around $80 dollars per hour and will require at least 4-5 days to create a secure ERC20 compatible token. Since many developers tend to work long hours up to 15 hours a day, you should expect to pay about $6000 i.e $(15*5*80), for token development and testing alone. Other developers will charge between $5000 and $ 15,000 for creating and testing a website, smart contract, and blockchain system. The technical aspect alone will cost at least $11,000.
2. Security $10,000 - $50,000
Once the project has been developed and successfully tested to ensure it is working perfectly without bugs, you will need a trustworthy security audit team to test and ensure nobody is able to hack it and sabotage you in any way possible. The cost of security software and tools plus manpower can range between $10, 000 and $ 50,000, depending on the nature of your project.
3. Whitepaper $100 - $1,000
The next step will be to look for an agency or a stand-alone freelancer to help write a document known as "whitepaper". In layman's language, a whitepaper is a document whose purpose is to provide potential investors with a thorough introduction to a project. The document outlines the technological aspects in an in-depth manner so as to highlight the benefits of investing in the project.
A well-written whitepaper can help you make a good first impression on your potential investors, making them want to be part of your project. Quality depends on your budget hence you can be confident that $1000 will fetch you a better paper than $100.
4. Legal Fees $5000-$50,000
Legal is another important aspect that will have an impact on the total cost of the project. You will need to create the right legal conditions before running an ICO. Otherwise, you may run into legal problems and end up being sued for several damages by some crafty or malicious individuals. You will need to represent yourself as an entity by providing terms and conditions, compliance and disclaimers, etc.
Besides avoiding potential legal troubles in the future, laying down some T&Cs, compliances, and disclaimers backed with legal representation will make you look credible to investors.
Many attorneys offer ICO legal consultancy at a price of between $5,000-U$50,000, depending on a number of factors. These include the complexity of your project, the caliber of the attorney, etc.
5. Marketing $1000 - $50,000
The final ICO costing factor is marketing. You will need to market your upcoming ICO project to not only make potential investors aware but also persuade them to invest. Many ICO marketing agencies will charge between $1000 and $50, 000, depending on a number of factors, including the marketing strategy selected. There are a lot of marketing strategies these entities offer to promote ICO projects and bring clients onboard, including content, paid media advertising, social media marketing, etc.
ICO projects can be very costly, costing up to more than $100,000. But with proper budgeting, which entails keeping these primary ICO costing factors at the bare minimum, you can run a successful initial coin offering project for less than $30,000-$50,000.