Two of the most fundamental parameters any collection creator must make are price and supply. In most cases, there is no non-arbitrary answer for either of them, so either may be decided initially in order to inform the other. For example, a typical creator might decide that they want to create a 10,000 piece collection because that is what many of the most prominent collections of the past have done. A supply of 10,000 is still somewhat arbitrary, but it may be considered less so than many other numbers in that (a.) it is the same as many collections before it, and (b.) it is a nice round number. That said, there is considerable risk in simply defaulting to what has been done before.

Just because collections of 10,000 may have been the most successful to date does not necessarily mean that collections created later on should follow that same standard supply. One practical reason why it might make more sense to build a higher supply collection, for example, is that collections today can be built on blockchains with fees that are orders of magnitude lower than those on Ethereum, which is the blockchain upon which the most successful collections to date have been built. With transaction fees on Ethereum often above $10 and sometimes even $100, the price of each piece needed to be relatively high so that the fees are not non-sensibly higher than the cost of the asset itself. And when the price needs to be relatively high, the supply needs to be relatively low, because relatively fewer people will be interested in buying them, from a relatively smaller universe of people who can even practically afford them. With lower fee blockchains like Base, this is no longer the case, so it is worth thinking about price and supply from first principles rather than simply copying what worked on Ethereum in the past.

In the case of Base Colors, the above described logic for why it might make sense to build significantly higher supply, lower price collections on Base was only applied retroactively. The original idea for creating a collection for every color on the internet came with a non-arbitrary supply decision baked in. There is one universally accepted standard for digital colors, and that's the RGB model. The RGB model consists of exactly 16,777,216 possible colors, so that had to be the supply for the canonical 1/1 onchain colors collection. This was non-arbitrary and non-negotiable. So the price needed to be determined in the context of the supply, not vice versa.

Unlike the supply, there was no obvious and non-arbitrary initial mint price for Base Colors. So the price decision required thoughtful consideration which would culminate in an intentional decision. We sought to make this decision as non-arbitrarily as possible, in alignment with the non-arbitrary spirit of the Base Colors collection at large.

Finding a range

It was helpful to begin by finding a finite range for possible price considerations. Even if the starting point for that range was relatively unhelpfully large, at least it would be finite versus the infinite range of prices that are technically possible. We were able to quickly limit the range to somewhere between $1 and $10. There were a few reasons we did not feel the price should be any lower than $1 per color.

Gas fees

At the time of launch, gas (transaction) fees on Base, especially during spikes, could be in the 10s of cents. Having experienced paying gas fees on Ethereum that cost material percentages of, or even more than, the actual thing that I wanted to buy, we felt strongly that it does not feel good when fees are a material percentage of the price. By having a price no lower than $1, we felt good that the fees would generally be a small percentage of the total price paid, and that they would never exceed or hopefully come anywhere close to exceeding the cost of the color itself (before fees).

Credit card fees

Most people are not accustomed to paying for things in the physical world that cost less than a dollar. Those who are are not accustomed to paying for those things with a credit card. Somewhat subjectively, paying for something less than $1 with a credit card feels sort of silly. For the sake of making Base Colors universally accessible, including the ability to pay with credit card was important to us because the extra requirement of needing to fund a newly created wallet add considerable complexity to the process of creating a wallet and buying a color. We enabled credit card payments via an integration with Crossmint and there is a $0.50 fee (not including gas fees) that comes with that (much of which goes towards credit card fees incurred by Crossmint). So not only would paying for a $1 color with a credit card feel a bit silly and unusual, but it would have created a similar issue to that which was described previously where the fees end up representing a material percentage of the overall transaction, which does not feel good. It feels silly and dumb.

Price sends a message

Independent of any considerations around fees, the price per color can impact people's impressions. As an extreme example, if we set the price per color to just 1 cent, there would have been an implication that if you were interested in the project, you should buy many. No one ever spends $0.01 to get involved with something (independent of all the issues that would have created in regards to fees). That message, implied by the price, which says that someone should buy many colors, is one that we felt was maintained at higher prices than $0.01, such as $0.10, and really any price point up to $1.00. One dollar felt like the lowest price point at which someone could care enough to get involved with the project and also feel comfortable it's okay to buy only one. If the price was going to send a certain message, we wanted to send the message that every color is important, every color has meaning, and buying one is enough. We would rather have many people buy smaller numbers of colors than smaller numbers of people buy many colors, and we would like for people to take the time to thoughtfully select their colors, and to name them.

The top of the range

The top end of the $1 to $10 range was moreso based on a subjective feel that paying more than $10 per color was too expensive. While we wanted people to buy and name colors thoughtfully, we did not want to dissuade people from buying many colors if they loved the project. We did not want collecting colors to feel unnecessarily expensive. Double-digit dollars per color felt unnecessarily expensive, so we somewhat arbitrarily capped our initial range at $10 accordingly.

Narrowing the range

With a finite range of considerations determined, we started narrowing in on what the actual price should be. Because of that same subjective feeling that $10 or more was too expensive, I felt that the bottom half of the range was a better range than the top half. $1 to $5 felt better than $6 to $10.

Unit of Account & Medium of Exchange

On a parallel path to determining the price point in dollar terms, the unit(s) of account we would use to communicate the price also needed to be considered. The three considerations were ETH, USDC, and USD ($). We decided on ETH because accepting USDC as the medium of exchange or keeping a consistent price in dollar terms while accepting ETH as the medium of exchange were both suboptimal for technical and practical reasons.

Arriving at 0.001 ETH

So knowing that we wanted to be in the $1 to $5 range and that we would be showing the price in terms of ETH, 0.001 ETH immediately stood out. It was a clean single unit and happened to fall right in the middle of that range in dollar terms at the time of launch, right around $3, which felt better than $2 or $4 independent of the fact that the ETH amount was a nicer round number, though those would have been my runner up price points in dollar terms. So without over-thinking it too much, though you could argue all of this could be considered that, we arrived at our ultimate price point, 0.001 ETH, or around $3.00 at launch.