Simply put, the floor price is the price of the lowest-valued NFT in a collection. These floor prices help us to better understand the market and make more educated decisions rather than risky investments. Floor prices give investors the ability to assess the NFT project as a whole and do not include the different traits and rarity that each NFT inside the collection might possess. 

When visiting NFT marketplaces, we can go to NFT collection pages, where only NFTs from this collection are listed. There, almost every marketplace will have a special section where we will be able to see the floor price of this collection. If the marketplace in question does not have this displayed, or you simply can not find it, you can organize the NFTs by “increasing price” and checking the price of the cheapest NFT. 

There are multiple different ways to calculate the floor price of any given NFT collection, but the most simple and easy way is to look at the cheapest NFT listed for sale from the given collection. So for example, there is an NFT collection and the NFT with the lowest listed price is worth 1 ETH. This means that the floor price of this NFT collection is 1 ETH. If, let's say, someone buys this NFT, then the floor price will be the value of the next cheapest NFT in the collection. So for example, if the next cheapest NFT in this collection costs 1.1 ETH, then the floor price will become 1.1 ETH. 

As you can see, this is a very simple metric that can be calculated easily, but if you are someone that is seriously considering investing in NFTs, floor prices take a bit more weight. This time, calculating the floor price this way might be incorrect and there are many different factors that also need to be taken into account. Let’s take a look at them.

Marketplace

When calculating the floor price of an NFT, it’s important to take into account that while the same collection of NFTs can be listed on two or more marketplaces, not every NFT can be listed on both marketplaces. What this means is that there can be a certain NFT that is listed on one marketplace and not on another. Because of this, if you check the floor price of an NFT on one marketplace, another one might have a higher or lower floor price. So if you are someone that’s heavily interested in a project and making a serious investment decision, checking floor prices on multiple marketplaces is a good idea.

Market Manipulations

NFT marketplaces are known for market manipulations. Because of this floor prices can be easily manipulated, intentionally or unintentionally. For example, there are some NFT collections that have intentionally increased or decreased floor prices. This happens when one individual, or multiple individuals working together, buys big quantities of these NFTs and inflates the price, or these individuals buy their own NFTs for increased prices. 

But sometimes the market is being manipulated accidentally. There can be an NFT project that contains NFTs whose price is relatively high, but also contains a few NFTs that have low prices. This automatically sets the floor price of a project low, despite the fact that the majority of the NFTs are not cheap. This makes accessing the market more challenging, as you are not getting the full picture. While it calculates the floor price of the project accurately, it also gives a very incorrect representation of that collection's value. 

Liquidity

Liquidity in crypto trading refers to how fast you can sell and buy cryptocurrencies. In the NFT markets, liquidity basically means almost the same. NFT marketplace liquidity is how often these NFTs are selling and how fast you can sell if you wanted to. This is an important factor to consider when looking at floor prices. A collection might have a high floor price, but very low liquidity and if you were to want to sell yours, you might struggle to find a buyer. While there can be a collection that has a lower floor price, but higher liquidity. With this, you know that if you wanted to sell one, it would be much easier to sell. 

So if you are evaluating a collection, you should always look at liquidity. If you are a long-term investor, you might want to go for a more established collection with a higher floor price. Since you don’t plan on selling your NFT for quite a while, liquidity is of less concern for you. But if you are investing in an NFT for quick profits, you need to consider liquidity in connection to floor prices, and only after this make a decision. 

NFT floor prices are one of the most important factors to consider when evaluating the project. These floor prices basically represent the basic overview of the market, and give us some of the necessary information as well. But simply checking a floor price is not enough to gain a deep understanding of the project. There can be different floor prices across different marketplaces, so you should always check multiple marketplaces. It’s also important to consider NFT liquidity in connection with floor prices, in order to better understand which one would be a better long or short-term investment. 

The NFT market is also a victim of price manipulations. These manipulations can be either intentional or unintentional. Some people artificially increase prices through different means and affect floor prices. There are also collections where only one low-price NFT is enough to devalue the whole project floor price.