NFT onboarding for artists: Pricing your NFTs (Part 2)
October 27, 2022
Welcome back to onboarding for artists! This article is the second in a three part series for artists who are new to the community and looking to fast track your NFT knowledge base. In the first article, Types of NFTs and Platforms, you guessed it, we talked about the plethora of different types of NFT art that exists. We also looked at your options of NFT platforms and weighed the pros and cons of those different platforms.
In this article we’ll tackle the number one question that NFT newbies have. How should you price your NFT? We’ll discuss how the rarity, quality and uniqueness of your art; along with the strength of your community (strength of your brand), and utility impact the price people are willing to pay for your NFT art. We’ll also talk about how the blockchain you mint (the way you get your NFTs on the blockchain) impacts price, especially if you are new to NFTs. Be patient and be willing to the possibilities that the technology has to offer. Considering all of the factors this article outlines will help you to put a fair price on your work.
If you are looking for more specific info now, jump on our discord discord.umbadaima.com, or search “Umba Daima” in the Discord search, to engage with your new community. It’s important to take care on Discord, so we published the Best Practices For Discord: How To Avoid Scams And Preserve Your Sanity article. It’s worth a read. At Umba Daima discord you can ask specific questions and connect with people, to learn and find people to collaborate with. Umba Daima community wants to see you win!
One frequent question new NFT creators ask is, how do I price my NFT? This can be a tricky thing for creators to determine. It's not as simple as just pricing your art at the same price point as a comparable work. That can be a start, but the price of an NFT is impacted by a number of factors. Not least of which is the rarity of the NFT.
Controlling the rarity of your artwork is one way to influence the value of your work. The one of one, also known as 1/1,being the most rare NFT. One of one means there is only one unique original minted on the blockchain. The blockchain ensures that a minted NFT token is verifiably authentic, so only one person can own a one of one NFT. One of ones may provide an opportunity to increase the value of your NFTs but there is still a place for collections, also known as a series.
An NFT collection, or series, is a grouping of art that relates to one another. While grouping your art in a series lets you tell a broader story and express a common style or theme, it also can affect sales. These relations can incentivize collectors to buy more pieces if they really love the work. Whether you create one of ones or collections, it’s important to be patient. Play around with different pricing and edition configurations and see what works for you! It can take time for the right collector to find you and it can take time to find the right configuration of what’s outlined in this publication.
It should be obvious, the quality of your art will impact how people value your work. This is subjective nevertheless true. If you are an experienced artist who produces meaningful work you have a good argument for a higher price, as is the case in the traditional art world. Quality is valued in NFTs.
Another thing that you can do to help you price your NFT art is to let the buyer decide. You might informally poll potential collectors, or you could put your art up for auction! In the first case you’ll get an idea of what people are willing to pay and then you can set your price from an informed perspective. In the second case, where you auction off your artwork, you’ll let the buyers decide the price with a little healthy competition. Either way you’ll get a sense of what potential collectors are willing to pay for your NFTs.
What isn’t often apparent to new artists in the NFT space is that community is key. Being an active community member impacts upon how your art is perceived and valued. Another way to look at community is through the strength of your brand. Now don’t get us wrong, we’re not saying to have a dry business minded approach to community. Think of this ideal approach as, if you give then you will receive. You may want to build a community from scratch, but it’s a lot of work. Fortunately, you’re a part of the Umba Daima family so you’ll enjoy all the perks that our community has to offer. Communities do give you access to channels to promote your art. That’s crucial, but communities are also places where you make friends. You help others and they support you. People want to support those who help build positive and supportive NFT communities.
Everyone likes perks! The NFT community is no exception. Adding extra utility, or function, as an added value for your collectors is a proven way to augment the value of your art. Some examples of utility that have been offered to collectors of NFTs are, behind the scenes or bonus footage, special access to the artist such as office hours, and the right to call upon the artist for a commissioned work. Musicians have even offered backstage passes at physical shows, to holders of their NFT. The only limit is your imagination. Artists are constantly coming up with novel ways to add value for collectors. All of this said, the beauty, meaning and impact embodied in the art itself, is a fundamental “utility”. Some artists choose to reject the temptation to invest time to plot new ways of adding utility to their artwork. That is absolutely OK!
Presumably your main love and focus is art. You are an artist. You do not have to add utility outside of your artistic creation. It is however a tangible way to add value to your work and reward your collectors. Utility can be a mechanism to raise the perceived value of your NFT.
Without getting too deep into the weeds, it is worth mentioning that the NFT marketplace and the blockchain upon which it operates impacts on the value of your NFTs. There is a reason some artists and collectors are “Maxis”, meaning they are unwaveringly loyal to particular markets. Some marketplaces attract the eyes of high end passionate collectors.
Just as Ethereum is the dominant blockchain, NFT markets on Ethereum also dominate. Despite environmental concerns and high gas fees, people choose to mint on Ethereum. There are good reasons. Ethereum is the most mature blockchain and so not only are there more collectors and more marketplace options, it has the most currency flowing through it. Minting your art on the Ethereum blockchain has an impact on the potential value of your NFT. NFTs on the Ethereum blockchain are likely to sell at a higher price.
Another pricing concern that should be understood is that Ethereum, as well as any other blockchain you may choose to mint on, is volatile. The value of the crypto currency your collectors use to buy your art bounces up and down frequently. This means if you price your art today and the value of the crypto currency drops, then your NFT could take a huge price cut just because of the volatility of the crypto market. There are monetary mechanisms that you can use to reduce the risk of your NFT dropping in value due to the market volatility but that is beyond the scope of this article. Just keep in mind that you should have an eye on the crypto market. It does impact on the value of your NFTs too.
Lastly, but not least importantly, understand that gas — the network fee on the blockchain — does have a psychological effect on your collectors. They can be deterred from purchasing art when the gas fee is too high in comparison to the price of the artwork. This is particularly the case on Ethereum blockchain due to its high gas fees. It’s a good idea to consider this when pricing your NFT art. People are not comfortable with paying for art when gas fees are comparable to the cost of the NFT art.
It’s worth considering that NFTs offer digital artists the ability to earn from secondary sales into perpetuity. You have the ability to set both the price as well as the royalties. This price to royalty ratio is something you can tweek and experiment with. It's important to get your artwork into the world at a fair and reasonable price. You don’t want to under value your work. You also don’t want to over price it. As you build your canon of work people will be interested in collecting your previous creations, earning you royalties, so you can try lowering the sale price and raising your earnings in royalties, or vice versa. When people purchase your work on the secondary market, you’ll get your cut of the resale. Price your artwork appropriately to the stage you are at in your art journey.
When you do find the right price for your NFT artwork, based on carefully calibrating all of the above, you’ll want to steadily increase the price of your work over time. Doing so will raise the floor price of your art. Your existing collectors will appreciate that the value of the art they purchased from you is increasing in value. Potential buyers will notice the trend and will want to buy in before your art goes to the moon!
I’m sure you’ve noticed, we’ve outlined a range of items that can impact the price of your artwork. Yet, we haven’t told you what price you should set for your NFT artwork. You may be saddened to hear that we are not going to tell you what price to set for your art. That’s your job! But, we can suggest you consider all of the above when setting your pricing. It's more intricate than mimicking the prices of other artists, consider the rarity of your artwork, the quality and uniqueness of the particular creation, weigh the strength of your community and also factor in the utility enshrined in the project, if in fact there is a utility outside of the beautiful work itself. This all together with knowledge of the blockchain and market you select will inform you. Most of all, getting busy, minting and exploring the process will determine an appropriate price for your NFT artwork.
How should you price your work. You’ll factor in how many copies of the work are minted, one of ones being the most rare and valuable, your skill and experience, the strength of your following, in basic sense your community, as well as if your NFT has additional utility. Of course, you don’t need to distract yourself with utility if you aren’t inclined. Good art holds its own intrinsic value. With creation of art, finding the appropriate market and pricing all become more clear with practice and exploration. It’s OK to make mistakes, so long as you learn from them. You can minimize the cost of errors by learning on altChains. That experience will help you build confidence and knowledge. Go and create art. Be sure to share it with your Umba Daima family!
If you’ve minted your work to the blockchain, great job! But you're not done yet. Now you need to connect with people, spread the word and build community. Onboarding for Artists Part 3 will dive into the topic of marketing and branding. There are a range of tools at your disposal to help you to build your brand, spread the word and connect with community. We’ll also look at securing and protecting your crypto assets. Web3 cuts out the middlemen. That means it’s your job to protect yourself. But don’t worry, your Umba Daima community is here to support you!
Sources
https://editorial.mintable.app/2022/02/21/creators-101-how-to-price-your-nfts/
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