Understanding how to price your product is crucial for it to sell. If you price it too high, you might risk buyers looking away. If you price it too low, you might be risking undervaluing your product. The same thing goes for NFTs. You want to know how to properly price them. Don’t worry though. I got you. Here’s a complete guide on NFT pricing with everything you need to price your non-fungibles.
There’s no fixed way for NFT pricing. You, as the creator, are in full control of how much to price your non-fungible tokens. So how do you do it? Before getting to the actual pricing of the NFTs, there are a few things to consider and understand. Mainly, you must understand yourself, your competition and the market. What does any of that mean? I’ll walk you through it all.
Understanding yourself
I promise this is not some random pep talk. On the other hand, I think it’s the first crucial step in NFT pricing. What usually affects the price of the product besides the product itself? The creator. A drawing of mine won’t sell as much as one of Van Gogh’s. So if I were to sell a piece of art, I would sell it at a much cheaper price than Starry Night, for example.
Same goes for NFTs. For instance, Gary Vee’s VeeFriends NFTs’ pricing is relatively high. Why can he do that? Because he’s Vee. So, people will buy the tokens due to his “status”. In fact, the current floor price of his collection stands at a whopping 5.33 ETH ($7922.22 according to the ETH rate at the time of writing) on OpenSea. So, if you’re joining the NFT world and you’re not an A-list celebrity, don’t price your non-fungibles as if you were one. And vice versa.
However, that doesn’t mean put the lowest price out there. Even if you’re not an Oscar award winner, your collection still holds value and you should price it accordingly. So not only should you know yourself, but also your art. If you’ve created unique pieces of art that come with great utility attached, decide the price accordingly.
One thing to keep in mind is that the price reflects the piece’s value. Valuable pieces are usually more expensive than normal ones. So, if what you have is uniquely valuable and creative, don’t price it so low. A “cheap” price will undervalue your product.
Understanding your competition and the market
Now that you know who you are and what you have, you must know your competition. Let’s say your NFT is art-based, look who’s the top performing NFTs in that collection. This will give you an idea on how this category of NFT is performing. This will also let you know how much this type of non-fungibles is in demand in the market.
Why is any of that important? Well, the whole buying and selling process is based on demand and supply. If something is in demand and you make it, people are likely to buy it. If however something is not in demand, and there’s already a huge supply of it, adding to that not-wanted supply is not the smartest thing to do. Most probably no one or very few people will buy it.
Moreover, knowing your competition helps you stand out. If you want to make ape NFTs, there already is a blown-out BAYC collection with a 69.93 ETH floor price ($103,940.11 according to the ETH rate at the time of writing) on OpenSea. So, if you want to go into that market, you must be sitting on one hell of a genius idea because the competition is literally insane. Not to mention that there already are lots and lots of ape NFTs.
To simplify it to you in one term, research. Research is incredibly important and if you’re already reading this, it means you’re on the right track.
NFT Pricing Basics
Now we get to the juicy part, understanding the basics of NFT pricing. Before you price the non-fungible, you should understand its cost. What factors into the cost of an NFT?
- Gas fees
- Transaction fees
- Royalty fees
Gas fees basically reflect the “fuel” it takes to create the NFT. Here’s how you can figure out your ethereum gas fees. There’s two types, account initialization fee if you’re a first timer. And then there’s the recurring fees. The gas fees vary widely on the blockchain.
There’s also the transaction fees which are the fees that you have to pay per transaction. These also vary depending on the marketplace you’re using. For example, the transaction fee is 2.5% on Opensea. Moreover, there’s also the royalty fee.
The royalty fee is basically the percentage you earn per sold item. The percentage you’re allowed to set varies between 5% and 50% depending on what the marketplace allows. However, you have to keep in mind that the buyer has to pay all of these.
Meaning, you can put a 50% royalty fee but that, on top of gas and transaction fees, is too high and might drive buyers away. So make sure to take all of that into consideration when pricing your NFTs.
Pricing NFTs: How to price an NFT collection?
Let’s roll up our sleeves and start pricing. First thing first, I want you to know how rare your NFT is. Why? Because the rarer it is, the pricier it gets. If you want to make an entire NFT collection, you can generate NFT traits that make each piece unique and rare in its own way.
This is something that I would totally recommend you do. Back to the supply and demand process. Less supply = more demand = higher price. In NFTs, the rarer a non-fungible is, the more it’s wanted, the more expensive it gets. Moreover, the more useful an NFT is, the more expensive you can make it. NFT utility is something you should definitely consider when creating NFTs.
Now, knowing that, you want to price your collection. One thing that you’ll avoid is making all the pieces of your collection have the same price. This reflects that they’re not separately unique. You want to have something called “collection range” which is the difference between the individual NFTs in the collection.
When a buyer checks your collection and sees the price variation, he’s going to think that each group of pieces have a certain value. So, let’s say you have a collection of 1,000 NFTs divided into groups of 50. Each group has a different level of rarity, they’re gonna have different prices with the rarest being the most expensive.
Conclusion
In conclusion, there is no fixed strategy for NFT pricing. You get to price your non-fungibles as low or as high as you wish. However, this was just to guide you on the right route to take to make sure your collection actually sells.
If you want to increase your profit by increasing the price of your NFTs, you should better the collection itself. As already mentioned, make it rarer and useful. Something that creators are doing nowadays to drive up the sales is offering unlockables. This means that when the buyer purchases an NFT, he unlocks “hidden” content that offers him more utility.
Now that you understand how NFT pricing works, here’s a tool to help you calculate your NFT profits. Good luck!