Product pricing, whether it’s in the context of pricing a new NFT collection, or pricing something completely different, is part art and part science. There is no single magical formula that will lead you to the perfect price point for your drop, but selecting a price at random is not exactly a great strategy either.
In this article we will explore how you can create a data-informed NFT pricing strategy for your next drop.
Why you need a data-informed NFT pricing strategy
Research and data can help inform pricing and lead us closer to what we’ll refer to as the “Goldilocks zone” of NFT pricing, and validation can help us confirm a price point is just right for our product, for the market, and for our audience.
Investing time and effort into crafting a data-driven pricing strategy and testing it properly has several benefits.
- Maximizing your revenue: A data-driven pricing strategy can help brands determine the optimal price for their NFTs based on the market demand, scarcity, and other factors. This can help them maximize their revenue potential and avoid leaving money on the table.
- Avoiding overpricing: Setting prices too high can deter potential buyers and lead to drops that flop. A data-driven approach can help brands avoid overpricing their NFTs and ensure they are priced in line with the market.
- Fostering trust: Web3 communities value transparency, authenticity, and open communication. Brands that take a people-centric approach to pricing by truly understanding their fans and communities can build trust with their audience and maintain a good reputation.
How to set a data-driven pricing strategy for your next NFT drop
Getting pricing right is tricky, but taking steps to maximize your likelihood of getting it right is time well spent. Here are some steps you can take, questions you can ask, and considerations to make as you create a data-informed NFT pricing strategy.
Not sure where to search for the data to answer some of these questions? Mnemonic's suite of data and insights capabilities for brands were tailor made to enable you to answer these questions and others to inform your Web3 strategy.
Start with a quick inventory
Pricing is (usually) not arbitrary and will be influenced by various internal factors that you should consider before diving into external research.
Take a quick inventory of your planned drop and examine these key elements that can influence how you price your NFTs:
- Brand reputation: The reputation of your brand plays a significant role in the perceived value of your NFTs. Well-known and trusted brands may have the ability to command higher prices for their offerings.
- Scarcity: Supply is a crucial factor that can impact the value of an NFT. If there is a limited number of NFTs available in your collection, each one may hold higher value.
- Utility: Consider whether your NFTs offer any additional utility beyond their collectible value. NFTs that provide access to exclusive content or events may warrant higher pricing based on the added utility they provide.
By carefully evaluating these factors, you start your research with a foundational understanding of your unique collection and its potential value in relation to others on the market.
Explore the market
Market trends have a significant influence over purchase activity and spending. Kick off your NFT drop pricing research by grabbing a ten-thousand foot view of the market, and exploring some trends such as:
- Which collections are gaining popularity right now? How are they similar or different to your drop?
- Which collections are selling for high prices? What is unique about them? What utility do they have?
- Which collections are experiencing increases in sales activity?
Research the competition
From there, you can start zooming in and looking at collections or assets similar to yours for signals such as:
- What are their average prices?
- What is the range of prices?
- What kind of sales volume is there?
- How does their audience spend?
Gaining a solid understanding of the market at the beginning of this process will help you understand where your NFT collection stands in the grand scheme of things. Having a clear understanding of your product and positioning in the market is important going into this.
Understand your audience’s NFT spending behavior
If you have an existing community, perhaps from a previously-dropped collection, you can extract a great deal of insights from their activity and spending habits. If you don’t have an existing cohort of fans you can analyze, you can dive into the behavior and spending of holders of a similar collection to yours, or combination of collections like yours, to learn from them.
Key questions to consider:
- How much do they spend on average per NFT?
- How often do they purchase NFTs?
To add another layer of depth to your analysis, you can consider looking at the spending habits and behaviors of smaller segments of your audience. You may find that some segments have significantly different spending behavior than others.
For example, if you’re trying to attract newbies to dip their toes into web3 for the first time, you will want to look more closely at how this category of wallet typically spends. On the other hand, perhaps you’re targeting more experienced collector-types with your drop – your best bet would be to explore their typical spending.
Get feedback from your community
While looking at your audience’s spending behavior certainly will give you a better idea of what price points they typically purchase at, data alone won’t give you a foolproof pricing strategy.
This is where feedback and testing come into play. Feel free to get creative with the tactics you use to test your hypothesis, a few obvious options include:
- Ask your community for feedback directly. This works best if you have an existing, highly-engaged community you can tap into to share feedback via a survey.
- Test with a waitlist. If you’re pretty confident already about your price point, you can publish it and enable waitlist sign ups to see how responsive people are to your drop. Just be careful, because pricing is only one of many factors that will influence people’s interest in signing up for your waitlist.
A word to the wise, don't be afraid to experiment with different pricing strategies over time, or to go back to the drawing board if your initial testing indicates you may not have found the right NFT pricing for your audience just yet. Test out different price points and see how they perform. Analyze the data from each experiment to inform future pricing strategies. Remember, pricing is art and science.
Take the guesswork out of your NFT pricing strategy
Ready to price your next drop? From understanding market trends and keeping tabs on the competition, to segmenting and analyzing your own audience to hone in on the pricing sweet spot, Mnemonic provides all the data and insights you need to answer critical questions as you create a data-informed NFT pricing strategy.
Start exploring today with our interactive brand insights dashboards, which help you explore without any code, or get direct access to our data via our APIs. Reach out to our team to request access to our dashboards, or jump right in and get an API key today.