‍What is an NFT?

An NFT is a non-fungible token, a unique digital asset that is verified on a blockchain and cannot be replicated or exchanged for other tokens on a one-to-one basis. Examples of NFTs include digital art, collectible items, and in-game assets.

Knowing how to create NFTs can be an invaluable skill in the toolkit of content creators on web3 - the most expensive NFT ever sold was a digital art piece called “The Merge”, which was bought for $91.8 million! The NFT space experienced meteoric growth in 2021, increasing 7200% in value between 2020 to 2021. Although the NFT market has slowed since its recent peak in October 2021, NFTs as a technology and product class are still evolving and have a unique value proposition for creators and their fans.

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What are the costs of creating and managing NFT(s)?

If you’ve decided to create your own NFTs, it’s important to first understand all the associated costs. The cost of creating an NFT can vary depending on a variety of factors, including the type of NFT being created, the tools and technologies being used, and the complexity of the minting process.

Below, we will explore some of the key costs associated with creating an NFT, including the costs of the different tools and technologies that are used in the process.

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Blockchain gas fees: The first step in creating an NFT is to create and verify the digital asset on a blockchain protocol. This typically involves using a blockchain protocol such as Ethereum, which charges a small amount of Ether (the native token for the Ethereum blockchain) for verifying transactions on the network, called gas fees. Other blockchains have their own native tokens but the concept is applicable across different chains. These gas fees can vary depending on the complexity and size of the transaction, as well as the current demand for processing power on the network. 

For example, a simple NFT minting transaction with low complexity and a small size may cost around $1 in Ethereum gas fees, while a more complex NFT transaction with a larger size may cost closer to $10 in gas fees, especially during a time when there are a lot of other transaction demands on the same network. Keep in mind that different smart contract enabled blockchain protocols have different gas fees - for example, Ethereum has higher gas fees in general compared to Polygon even though both protocols are popular for minting NFTs. 

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Marketplace fees: Once the NFT has been minted, the next step is to make it available for purchase or trade on a marketplace. This typically involves listing the NFT on a marketplace and setting a price for it. Once the NFT has been listed on the marketplace, it can be bought or sold by other users. Marketplace fees are typically paid by the seller and can vary depending on the marketplace and the specific terms of the sale. 

For example, a popular NFT marketplace may charge a fee of around 5% of the sale price for each NFT sold on the platform. Some NFT marketplaces may charge listing fees, which will be an additional cost on top of gas fees.

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Fees related to sales: After you’ve minted your NFT, there may be additional costs associated with managing your NFTs. Non-custodial wallets like MetaMask don’t require fees to help you hold your NFTs, but if you sell or transfer your NFT to other users that will require gas fees. Remember, the less times you need to write a new transaction on the blockchain, the less in fees you have to pay! If you day trade NFTs, you will need to pay more gas fees compared to someone else who holds their NFTs for the long term.

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Non-blockchain related fees: outside of the minting process, there are non-blockchain related fees. If you’re launching a new NFT project you may want to pay for promoted marketing, such as partnering with a social media influencer, buying paid ads on Google or taking the IRL route by attending an industry conference. All of this will add to the total cost of launching your NFT project, even if they’re paid in fiat instead of cryptocurrencies.

Considerations for reducing the cost of creating your own NFTs

• Consider all blockchain options: although the most popular blockchain for NFTs is the Ethereum network, other blockchains also support NFT minting and have significantly lower gas fees (ex. Polygon, Solana). Choosing an alternative blockchain to Ethereum can lower the gas fees you need to pay in creating your NFTs, especially if you are creating multiple NFTs.
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• Use the “lazy minting” method: using platforms such as OpenSea allow you to create your NFTs for free (i.e. there are no upfront costs for minting NFTs) using the Polygon network and a method called “lazy minting”. This will allow you to keep your costs low until you’re ready to list your NFT(s) for sale.
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• Use ready-made NFT minting tools: consider using DIY tools available to create your NFTs at the lowest cost. Although you can create your own NFTs by hiring a developer, there are now plenty of platforms that will allow you to mint NFTs yourself in a few clicks (ex. OpenSea, Rarible).
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• Have a plan in advance: to reduce the cost of creating and selling your NFT(s), plan ahead to reduce the number of times you need to interact with a blockchain. Remember that every time a transaction is done through a blockchain, you will need to pay gas fees. Before you list an NFT for sale, check the prices of similar NFTs that recently sold to understand the reasonable market price you can expect for your NFT. Rather than listing your NFT at an unrealistic price point and having to pay gas fees again to relist, you’ll save on gas fees if you successfully sell on the first listing. 

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Select Fees List

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• Lazy minting on OpenSea using Polygon: $0
• Minting on the Ethereum (or another) blockchain: price varies depending on the complexity of the transaction and other demands on the network. It’s a good idea to check the gas price estimates before minting to avoid paying high gas fees when the network is congested.
  Price estimates in USD: $50-150/NFT on Ethereum, $0.01/NFT on Solana, up to $8/NFT on Tezos and up to $1.15/NFT on Cardano. 
• OpenSea platform fee: 2.5% of NFT sale price
• Rarible platform fee: 2.5% of NFT sale price

Summary

The total cost associated with creating and managing your NFT(s) depends on how you plan on using these NFTs. For power users who need a high number of mint, sale and purchase transactions, that will require a high amount paid in gas fees. 

For NFT enthusiasts who buy and hold a small number of NFTs, this will substantially reduce the amount paid in gas fees because they are interfacing less frequently with the blockchain. It’s a best practice to make a plan in advance, determine what type of NFT owner you fall under and try to streamline as much of your process as possible to avoid overpaying gas fees and platform fees. All of these fees will reduce the revenue that you can generate from the sale of an NFT and conversely, increase the amount you have to pay to purchase an NFT.