NFTs or Non-Fungible Tokens are a hot commodity at the moment. Especially coming off the hype of the NFT sale heard round the world, the Christie’s auction of their first NFT, Beeple’s Everyday’s— the First 5000 Days, which sold for $69 million. But before you quit your day job, this is not the norm when it comes to the sale of NFTs. The norm is far less exciting.
NFTs are not hard to sell if you know how, meaning if you understand the market and are able to find your niche within it. But you need to set realistic expectations for what you are able to profit from NFTs.
In truth, it’s not a simple yes or no when it comes to the difficulty of selling NFTs. It’s a multi-layered answer that can vary from person to person, one that requires you to look at a few different factors to gauge just how easy or difficult it would be for you.
What Makes Selling an NFT Hard?
When hearing how profitable NFTs are for some, it is tempting to jump on the bandwagon to the ‘next big thing.’ Just like with any new technology, product, or trend, you have to take the stories of wild, quick riches with a grain of salt.
Some interesting numbers to look at: only 25% of NFTs sell for more than $15, and of that 25%, only 1% sell for more than $1,500. This does not include the number of NFTs that sit on the blockchain unsold.
Whether or not an NFT is difficult to sell depends entirely on the creator and their knowledge of this relatively new market. It is also dependent on a few circumstances that apply to any market, including the blockchain:
- Finding your niche
- Demand determines price
- Built-in consumers
Delving into each one of these factors will give a better picture of what selling NFTs is like depending on the circumstance.
Finding Your Niche
Being able to find a niche involves more than just picking something you like to do and are halfway decent at and running with it.
You also have to do your research into the market you are trying to sell your product on. Find what the consumer likes and what sells. This does not mean you become a carbon copy of another seller, especially if you can’t do what they do better. Personally, I’m a digital artist that is good at 2D; there is no way I can step into the ring of an established 3D artist and expect to compete. You can even check out some of my NFTs on Foundation and Rarible.
One of the first things you will want to do is gauge if there is any interest in what you might want to create. If it happens to be similar to what another creator is doing, find a way to make it unique and stand out; otherwise, you might end up looking like a poor man’s version.
You can see for yourself. Go to OpenSea (a popular NFT marketplace), check out a verified artist’s work, and then you will find over a dozen renditions (copy cats) of his/her work throughout the platform. It’s so silly!
Demand Determines Price
If you’re starting off in the NFT market and you aren’t already selling your artwork for large sums of money, it is not recommended that you request 70 ETH (Ethereum is the most widely used cryptocurrency in the world of NFTs) for your first ever NFT. Check out this pricing guide to get a better idea of how much you should list your NFTs for.
Artists who are selling their work for that amount are ones that have an established audience that is already interested in their work and may have been for some time. Think of them as unicorns and understand that they are the exceptions, not the rule.
The rule when looking at sales on a variety of NFT platforms is that the majority of NFTs sell for $200 or less. If you want to get more precise, we are talking about 20% falling between $100-$200 and 33.6% that are $100 or less. That is over 50% of NFT sales.
Now, to some artists, $100-$200 is a reasonable price for one piece of work, but you also have to keep in mind that there are fees associated with the sale of your NFT.
Depending on the platform, you could be looking at minting costs and listing costs, what the site takes, and so on. In fact, if you really want to see some of the fees associated with just the minting process, you have to read this article: How Much Does It Cost to Mint an NFT?
Some sites are so run up with fees that you will turn a negative profit if you sell your NFT for $100. So, your cost may require a delicate balancing act between what you can realistically sell your NFT for and turning an actual profit after fees are deducted.
However, if you have small profit margins on your NFT sales you may have future income with royalties. Yes, that’s right you can bake in a royalty percentage of all future secondary sales. Some NFT creators tack on 5-20% royalty into the smart contract.
Read Do NFT Creators Get Royalties? 8 Things to Know to learn more about royalty profits and how to get rid of the middle man.
Like with any product you sell, marketing plays a vital factor in the success of sales. We live in an era when taking out an ad in the paper is no longer necessary.
Nowadays, all you need is a healthy following on social media, and you can carry a lot of those numbers from one platform to the next; these are called built-in consumers. If you have a lack of built-in consumers you may want to consider showing off your NFTs on these strictly NFT showcase platforms.
It’s not impossible to successfully sell NFTs without having a large social media audience. Still, we’re looking at commonalities when it comes to making the sale of NFTs easy or difficult.
Having an established and engaged audience on social media to promote your NFTs guarantees more traffic to your work, and traffic equals sales. Otherwise, you have to rely on algorithms and explore pages to keep your work from being lost in the sea of other NFTs on the blockchain.
Recently I wrote a guide on how to get your NFTs noticed. The guide is specific to marketing and selling NFTs, so you do not want to miss reading it, especially if you are just starting out.
NFTs may be profitable as a side-hustle when getting your feet wet, at least until your spot on the blockchain garners enough traffic to equal significant sales.
For most people, NFTs are not a means to overnight success and wealth. Like any other business venture, most creators will have to work from the ground up and stick to the grind until it pays off. I mean, look at Beeple; he has been creating a piece of artwork every single day for around the past 14-15 years.
Those who have experienced rapid riches from NFTs are the exception and most likely already had a large following before delving into NFTs.
Selling NFTs is not hard, but selling them for thousands of dollars and turning a significant profit is extremely difficult. Finding a platform that won’t eat away at your profit, leaving you in the negative, may also prove challenging. If you’re trying to make those profit margins a little better, you’ll want to read these two articles:
Still, none of the above factors are impossible hurdles to overcome if you don’t treat it like a ‘get rich quick’ scheme and you do the work.