The word NFT is coming up more and more often in the news. Even big businesses like Taco Bell are getting in on the hype. But it’s more than just a passing fad, and experts don’t think they are going away anytime soon.
Thankfully, with new trends and growth, there are new opportunities for turning a profit. If you aren’t that creative or just want to earn more of a profit than just selling your NFTs, building an NFT marketplace might be a solution to try.
Keep reading to learn if NFT marketplaces are profitable and what to keep in mind if you are looking to build one.
How Much Does it Cost to Build an NFT Marketplace?
It isn’t easy determining the price of an NFT market. There are so many options and designs. Plus, it is still a relatively new field and has no standard or average costs at the moment.
For something relatively simple, you are looking at around 20 to 30 thousand dollars just to start. For any specific or advanced features, the price is likely only to go up. There are also many presets for more basic marketplaces, which might up your costs, but make it easier to start if you don’t know how to handle certain features and programs.
This means the initial cost can be pretty high. If you were just hoping to make a quick marketplace, you will be sorely disappointed.
Some questions to ask yourself. Is it worth it to make an NFT Marketplace? What if Amazon makes an NFT platform? Is there too much competition? Despite the heavy costs to start the marketplace, is it possible to start turning a profit?
Like starting any business, there is aways a healthy risk involved to get a proper reward, and the positive success stats are against you.
What Do You Need to Know Before Building a Marketplace?
There is a broad spectrum of different types of NFT Marketplaces available. The two opposing sides are streamlined and augmented.
Streamlined is a service that is for everyone. They will take any kind of NFT, have an efficient transaction, and accept most different types of cryptocurrency. However, they tend not to have as many features, such as allowing minting and selling all on one marketplace. This means that users often have to use several different companies for every process of creating and selling their NFTs.
Augmented, on the other side, focuses on more specific types of customers. It isn’t made to accept the vast majority of people and just wants to bring in specific customers. To make up for the narrowness, they usually offer more services that allow the whole process of minting NFTs to be in one area. They also typically include more fees or higher costs for using their program.
Before building a marketplace, it is a good idea to determine where on this spectrum you want to be. Do you want to be a site that caters to everyone, like OpenSea and Rarible, or do you want something more of a niche, like NBA’s Top Shot?
If you don’t decide this before going in, you may find you have to change a lot of the platform late into the development and waste a lot of time and money to do so.
Major NFT Marketplaces
It’s always good to observe the competition. While there is still room in the system to grow and accept more marketplaces for selling and creating NFTs, there is already some hefty competition out there that is making a significant profit.
By performing research on these competitors, you can get a better idea of what programs and features you like, as well as how to make your marketplace stand out. By filling in an area of the market that is lacking, you increase the chance of your business taking off and being used instead of overshadowed by these already-established marketplaces.
Some of the big NFT marketplaces are:
Opensea and Rarible are definitely at the top of the list and are the most common two people talk about when discussing NFT markets.
While they are worth checking out to get an idea of features, looks, and designs that work well for people, they may not be the best model to follow.
Instead, if you are looking for more of a niche section to get into with your NFT marketplace, it is worth checking out ones like NBA Top Shot. Or even Axie Market if you are looking to incorporate gaming into your marketplace.
What to Include in Your Marketplace
- Rating system. Having a rating system allows people to pick NFTs and NFT creators that have been well-reviewed by other users. This gives people peace of mind when making purchases. It also adds a safety feature. If there is an unreliable seller on your platform, other customers can review them and let people know that they back out of transactions or don’t do what they say they will.
- Current wallet integration. Many people that are in the NFT world already have crypto wallets and are pretty strict with security. Instead of having people make a wallet exclusive to your marketplace, allow them to use their existing wallets to make purchases and sell NFTs. This will convince more people to give your platform a chance as they can have peace of mind.
- Buying and auctioning. Setting up your marketplace to be able to handle options for auctions isn’t easy. It needs to be able to handle a lot of real-time information and to be accurate and constantly up-to-date with prices and auction info. However, it is one of the easiest ways to entice NFT artists to your marketplace, as it is where they often make the most money. Of course, having a standard buying and selling option is a good idea as well.
- Searches. Having an easy way to search for NFTs based on name, artist, or description is a great feature and makes your platform much easier to use and entices people due to the ease.
- Filters. In addition to a basic search, being able to filter search results by specific features or types is a helpful tool that can bring people in. For example, if people didn’t want GIFs in their NFT search, they could filter those out. Or maybe they want to stay within a certain price range.
- Storefront. When someone clicks on your marketplace, you want that first page to entice people in. That means well-written details about the website, easy-to-use features, and something that isn’t cluttered.
- Listing status. When someone lists an NFT, they want it to be an easy and painless process. By having a listing page that is easy, clear, and makes sense, people will be excited to use your platform. Since listings will often take a little while to upload as well, it may be worth including a feature that lets people check on how their listing is doing and what stage of the process it is in.
- Useful tracking and a monitoring dashboard. For artists and creators, having a dashboard that lets them keep track of their profits, all of their art on the market, their items up for auction, and more.
- Security. Ensuring your platform is properly secured and safe for both your customers and artists is important for your marketplace to have a lot of usability.
- Simple design. Adding more features and pages, and options may sound like a good idea. However, making a website too hard to navigate around and that looks complicated is one surefire way to turn people off of your marketplace.
What Fees Should I Charge on an NFT Marketplace?
There are many ways you can make a profit on your NFT Marketplace, as there are many places you can charge a fee.
Some possible fees you can charge on your platform include:
- Listing Fee. The fee is associated with listing an item on the marketplace.
- Transaction Fee. When an NFT is bought, you can take a portion of that profit.
- Minting Fee. If you allow for minting on your marketplace, you can charge artists a fee for a certain number or every minted copy of an NFT.
- Bidding Charge. If you set up the ability for auctions to run on your marketplace, you can also charge a fee for those that bid in an auction.
- Commission Fees. Sometimes, people want personal work done by a specific artist. If you allow artists to accept commissions, that is another common area where companies charge a fee.
- Royalties. You could probably attach a royalty fee in the smart contract when a creator mints an NFT on your platform but that kind of goes against the liberating idea of artists being able to charge their own royalties for secondary sales. While possible, I don’t suggest this route.
While there are many ways to charge fees and make a profit, it isn’t wise to use every one of them. Finding a balance between making a profit and enticing customers is key.
With too many fees, people will not want to use your platform and will look for better marketplaces. But with too few fees, you may not be able to turn a profit.
On top of which fees to charge, you also have to decide on a percentage or flat fee to charge for each one. Looking around at competitors is also a good idea for this, so you can get an idea of the ballpark you want to be in.
If other people will be working under you, it is worth taking their income into account when deciding how much you need to earn in profit.
Can I Make A Profit From My Marketplace?
Yes, it is possible to make a profit from your own NFT marketplace. There are other marketplaces out there, and some have already established their place. However, there are still many areas of the market available that need to be filled.
If you can get yourself into one of these areas, you can turn a profit. Like with every business group, there will be some businesses that do not do well, there are some that make just enough profit to stay afloat, and there are some that grow and turn a huge profit every year.
Also, NFTs are market-based, so naturally, it’s a rollercoaster of ups and downs. In fact, many NFTs lose value, and very few actually go up in value or retain value. Some people even believe NFTs will die out.
NFT marketplaces are the same way. Thankfully, there is a bit of an advantage for everyone that starts now, as it is still a relatively new area of business, and there are still plenty of areas that need to be filled.
How to Make Extra Money From Your Marketplace?
If you want to make a little extra money from your marketplace without upping fees or adding additional costs, it may be worth selling your own NFTs on your marketplace. This allows you to make a profit on two sides, as an artist and as a marketplace owner.
Many people make their marketplaces to sell their NFTs so that they don’t have to pay nearly as much to sell their work.
Like with any business, you aren’t guaranteed to turn a profit. It depends a lot on finding a specific niche area to fill, making your company stand out from competitors, having passion, and a little luck.
With the high initial costs of setting up the marketplace, some people never turn a profit and lose money. Some just break even. Some will make profits, but even the amount of profit is variable.
If you can fill the right niche and you become one of the well-known businesses, though, you do have the ability to earn quite a lot of money by creating an NFT marketplace. Currently, OpenSea is reaching between $8 million and $95.2 million in sales every month. Obviously, it is a large company, and they have a lot of people to pay and fees of their own, but still, no one can doubt that they are making quite a profit.
Also, if you already were planning on selling your own NFTs, making a marketplace will allow you two sources of income as you are both selling and providing a service.
If you are willing to take a risk and put a lot of money into something, it is well worth trying your hand at making an NFT marketplace. Perhaps you want to be a creator of NFTs. If that’s the case, you can mint NFTs and list them for sale on your own website.
Either way, education is critical, and I suggest you check out these viral articles:
- NFT Vs DeFi: The Differences Explained
- Is It Possible to Sell NFTs on Amazon?
- Why Do So Many NFTs Look the Same?
DeFi all the way!