# Defining Token Supply and Pricing Strategy
Issuers must **carefully define both the number of tokens to be issued and the price per token, as these two variables determine the offering’s valuation, fundraising capacity, investor onboarding experience, and alignment with market expectations**.
This article outlines best practices for calculating token supply, choosing pricing models, and aligning fundraising targets with your tokenization and business model.
***
### Objective
Ensure that the token supply, price per token, and fundraising goal align with the total asset value, investor expectations, and the issuer's strategic intent.
**This includes:**
* Setting a logical, intuitive token price (e.g., $0.10 or $1.00)
* Calculating total token supply based on valuation
* Aligning with the percentage of ownership offered
* Defining issuance mechanics (e.g., pre-minted vs. dynamic minting)
***
### Token Supply Strategy
**Key Inputs:**
* Total asset/project valuation (e.g., $10M real estate or funding round)
* % of the value being tokenized (e.g., 60% of project equity)
* Target price per token (e.g., $0.10, $1, 1 sqft per token)
* Issuance structure (e.g., mint all upfront or mint-on-demand)
***
### Common Token Supply Models
| Token Pricing Model | Token Price | Example Calculation |
| ---------------------- | ------------------------- | --------------------------------------------------------------- |
| Standardized Low-Value | $0.10 per token | $10 million fundraising → 100 million tokens issued |
| 1-to-1 Dollar Model | $1.00 per token | $10 million fundraising → 10 million tokens issued |
| Asset-Backed Model | 1 token = 1 unit of asset | 50,000 sqft → 50,000 tokens (e.g., 1 token = 1 sqft or 1g gold) |
Select a pricing model that strikes a balance between clarity for investors and technical feasibility for the token standard and applicable jurisdiction.
***
### Fundraising Target Determination
The total number of tokens should reflect your funding needs and capital structure strategy. Consider:
| Factor | Impact |
| -------------------------- | --------------------------------------------------------------------------- |
| Total Asset Cost / Value | The baseline for maximum capital raised |
| Ownership Percentage Sold | Determines how much of the asset is fractionalized via tokens |
| Operational Capital Needed | If issuing to raise working capital, include development or business runway |
| Issuer Retained Ownership | Balance between dilution and capital injection |
For example, a $20M real estate project tokenizing 60% equity at $1 per token = 12 million tokens issued = $12M fundraising target.
***
### Issuance Mechanics: Pre-Mint vs. Dynamic Minting
| Mechanism | Mechanism Description |
| ------------------ | -------------------------------------------------------------------------------- |
| Pre-Minted Supply | Full token supply is minted at once and distributed based on purchases |
| Mint-on-Investment | Tokens are created dynamically as investors commit capital (e.g., Reg A+, Reg D) |
Pre-minting is suitable for fixed-asset fractionalization (e.g., real estate), while dynamic minting works well for rolling raises or revenue-based models.
***
### Best Practices Summary
* Keep token pricing intuitive ($0.10 or $1.00) for investor accessibility
* Align token supply with your asset value and fundraising goal
* Choose a supply model based on transparency, investor comprehension, and automation
* Use clear economic logic: total tokens x price = capital raised
* Document your supply and pricing logic in the whitepaper, metadata, and investor disclosures
***
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