To answer let's see how can someone gain gold (not items)?
- killing monsters and they drop gold
- killing monsters or farming ores/herbs/skins/clouds for items and sell them to players or NPCs (vendortrash)
- doing quests or daily quests for the gold reward
- doing (mostly crafting) services for a fee
- trading on the AH for profit
The AH goblin does mostly point 5, often coupled with 4. I mean the profit from the glyph industry comes from proper pricing of glyphs, however you need glyphs first. If you craft them, you have to include your salary into the glyph price. You wouldn't mill, craft, list for 1c, right?
Tradeskill services in WoW can be done with a single click, and (besides cooldowns) they can be done in masses and also lot of players level professions anyway, so competition is high. Theoretically there can be just a minimal profit here.
The AH trading is a zero sum action. When two goblins clash for a market, prices (and profit margins) go down. Intuition says that every market tolerates only one goblin.
I always thought its wrong and the market could sustain much more goblins. I would guess, about 50-60% of the server population could be goblins. Considering that the profit of the goblin comes from M&S, it seems a wild guess. With the GDP calculation I can prove it.
The main point is that the NPC is an M&S. He is completely unresponsive to the market. For example a quest giver always pays the same fee for wolf pelts. Common sense would say that he should lower his prices when there is large supply of pelts, yet he pays full price for the 1000000th pelt he gets this week. He also wants the same fee for his wares despite market prices. The ilvl 200 BoE item prices were very high in November and December as newly dinged lvl80-es wanted some starter gear. Now they are below material prices as everyone walks around in badge gear. However the NPCs sold their ilvl200 stuff cheap when they could get 10x more gold for it.
They also stupidly pricing the luxury stuff. They could sell some smaller Mammoth for 20K and a larger one for 100K. Market segmentation. Or they could forcibly make obsolete their last month wares by lowering their price and introducing some new color. If the Mammoth would be sold for 1K and a new purple Mammoth would be introduced, the old one would be no longer "cool" and players would grind for the new one again.
The NPCs are stupid for a reason. It's Blizzards genius move to allow every player to become rich. No matter how stupid you are, the NPC is more stupid so you can make gold. The character's bills are also so smartly set that the average player spends 80-90% of his income on NPC stuff, so if the goblins triple the price of the player-made stuff, the expenses of the player would grow only by 20-40%.
If we assume that goblins collect gold for their own expenses and not for e-peen, they will not fight that much over the honey-pot. I mean what I did with glyphs was extreme and was only for the blog. I did not need that money. I could cover all my expenses and pay a tourist payment to a guild every expansion from 1/10 of my income. So I could limit my glyph industry to druid glyphs giving all other glyphs to others.
An average player can support a goblin as long as there are NPCs to support him. So I'd say half of the server goblin population would run pretty fine.
The AH trading is a zero sum action. When two goblins clash for a market, prices (and profit margins) go down. Intuition says that every market tolerates only one goblin.
I always thought its wrong and the market could sustain much more goblins. I would guess, about 50-60% of the server population could be goblins. Considering that the profit of the goblin comes from M&S, it seems a wild guess. With the GDP calculation I can prove it.
The main point is that the NPC is an M&S. He is completely unresponsive to the market. For example a quest giver always pays the same fee for wolf pelts. Common sense would say that he should lower his prices when there is large supply of pelts, yet he pays full price for the 1000000th pelt he gets this week. He also wants the same fee for his wares despite market prices. The ilvl 200 BoE item prices were very high in November and December as newly dinged lvl80-es wanted some starter gear. Now they are below material prices as everyone walks around in badge gear. However the NPCs sold their ilvl200 stuff cheap when they could get 10x more gold for it.
They also stupidly pricing the luxury stuff. They could sell some smaller Mammoth for 20K and a larger one for 100K. Market segmentation. Or they could forcibly make obsolete their last month wares by lowering their price and introducing some new color. If the Mammoth would be sold for 1K and a new purple Mammoth would be introduced, the old one would be no longer "cool" and players would grind for the new one again.
The NPCs are stupid for a reason. It's Blizzards genius move to allow every player to become rich. No matter how stupid you are, the NPC is more stupid so you can make gold. The character's bills are also so smartly set that the average player spends 80-90% of his income on NPC stuff, so if the goblins triple the price of the player-made stuff, the expenses of the player would grow only by 20-40%.
If we assume that goblins collect gold for their own expenses and not for e-peen, they will not fight that much over the honey-pot. I mean what I did with glyphs was extreme and was only for the blog. I did not need that money. I could cover all my expenses and pay a tourist payment to a guild every expansion from 1/10 of my income. So I could limit my glyph industry to druid glyphs giving all other glyphs to others.
An average player can support a goblin as long as there are NPCs to support him. So I'd say half of the server goblin population would run pretty fine.
52 comments:
About the Stupid NPC point,
I recall an pretty old article on Ultima Online
The NPC in UO was designed as intelligent shopkeepers. But yet player complaining enough to make them change it. (The NPC is too smart for those player I guess)
So, I guess in the twlight of the MMORPG, they tried that already...
http://www.mine-control.com/zack/uoecon/uoecon.html
Notice under
Failure of NPC Shopkeeper Economy
This depends on what you consider to be a 'Goblin'.
Someone who does the 'Flavor of the month' profession is just following the trends... much like 90% of the people that 'invest' in the Stock Market. It's hard to consider that a 'Goblin'.
Someone who adopts a strategy from a blog without comprehending it or adapting it through innovation can hardly be considered a 'Goblin'.
Someone who spends an inordinate amount of time tending to their craft without including that time is their cost analysis would, as well, be difficult to call a 'goblin'.
I don't think it matters how many Goblins a server can support... there will never be enough of them to meet that limit simply because the vast majority of people aren't capable of the task.
I wonder how things would work out if they could combine all the auction houses across all the servers (so all the servers would use the same, huge, auction house).
TBH, there is a limit to goblins per server, especially in the glyph market. Two goblins moved in on my server and they do exactly what I do. They buy herbs grind them, selling each for 2-3 gold then selling the snowfall ink.
There could be more than one goblins in other fields, but with glyphs, where the costs to produce glyphs are so cheap and the very little risk, low AH deposit, more than one goblin will really fuck up your business.
I'm really surprised that you still stay afloat on your server by glyphs, I don't get why no other person on your server started thinking straight and took your goblin philosophy to mind.
If you have an established glyph seller on your realm, who more than likely also reads this site and who has a reasonable bank balance it is hard to compete.
I see a particular selection of say 30 glyphs going for 12-40g. I place mine on, in groups of 2-3, at 3-5g being the bare minimum to turn a profit and those with the established glyph business undercut me at a loss to cut me out of the market.
Do you just persevere and keep posting or turn into an AH camper or be satisified with those that do sell and accept that only 1 in 3 of your glyphs sell?
Good to see, that Gevlon realised, there is unlimited amount of gold in peoples' pockets. The next step for him is to realise, that there is no real reason to sell something cheap. With same effort, high prices, you can get more money, it's hard to believe, I know.
One's possibility to get rich is restricted by the lack of his imagination. As I can see, most people can't imagine, that players are extremely rich, and they buy any glyphs at any reasonable price. For example, on my realm I sell glyphs around 100-120g, and people buy them like charm. So why would I sell them for 5g? Such a waste of time.
I think that most servers can support a lot of goblins if they are truly goblins. Lately, a few people have actually made the bag business competitive. I actually like that, but it means that instead of selling 15 bags a day at 6g profit, I'm selling 20-25 at 3g profit. If I don't get undercut by the campers(cloth supplies keep this in check to a point).
My solution has been to diversify into other things. I still sell bags, but I have figured out a couple other things to do to make even more money faster. (and I won't say what specifically, because my competition is reading).
My point being that if people are truly goblins, they will find opprtunities to make money. In keeping with economic and efficient markets theory, the more goblins there are on a server the greater the efficiency of the market with respect to price determination, and the better served the economy will be overall as more products come to market at better prices. Best of all, the goblins will still find market distortions and take advantage of them.
This is highly dependent upon the economy and age of the server. There are plenty of opportunities on a new server. This is due to huge population that shows up to experience "classic WoW" before server matures and usually no xfers allowed so huge amount of AH activity.
On mature servers, with falling populations (common these days with WoW) where 95% of game is vacant, opportunties for Goblins is low.
@Spinkesville
Probably you would need 2 Hours to scan the Auction house and by the time the scan finished it would be already be outdated
What i wonder is how much gold is generated every day per Player.
Since the only Gold sources i can think of are vendoring and Quests i guess for an average Player thats not that much.
I probably loose more to AH fees than an average player earns through Quests + Vendoring after he reached 80.
I remember back when UO first started and the NPCs would change their price depending on supply and demand (at least on items you sold them).
Once my brother found a huge library of books out in some hedge maze...so he took them all and sold them for huge profits at the nearest city. Eventually, due to him repeating and possibly others doing it too, the NPCs would keep lowernig the price they would buy them at until it wa sno longer worth it.
Anonymous says:
"I see a particular selection of say 30 glyphs going for 12-40g. I place mine on, in groups of 2-3, at 3-5g being the bare minimum to turn a profit"
There's you're problem right there. If glyphs are selling for 12 to 40, don't post them for 3 to 5! You'll just be mercilessly undercut to get you off the market. Any glyphs you DO sell will be for so cheap, that all you'll be doing is crafting more to replace them.
That is NOT the Goblin way! The Goblin way is to extract as much profit from each sold unit as possible while maintaining as much gold /time as possible.
High volume at low price is only effective if the can fold the cost of labor into the cost. You can't do that in game because YOU have to provide the labor.
That's like a Dentist thinking "Oh! If I drop the price of cleaning teeth to 5 bucks, I can crush the competition!" without realizing that he can only clean so many teeth. Perhaps if he hires more dentists... ones that can't get their own practice and will work cheap...
You can't do that. You can't hire another Scribe to make glyphs, post them, and then split the profit with you, can you?
"With same effort, high prices, you can get more money, it's hard to believe, I know."
This presumes that the rate at which an item sells remains constant regardless of price, which obviously is not true.
@Iiene of Kul Tiras:
If that's the goblin's way ("The Goblin way is to extract as much profit from each sold unit as possible while maintaining as much gold /time as possible"), then Gevlon definitely doesn't understand that way.
Anonymous says:
"If that's the goblin's way ("The Goblin way is to extract as much profit from each sold unit as possible while maintaining as much gold /time as possible"), then Gevlon definitely doesn't understand that way."
No. Gevlon understands it perfectly in his implementation of his glyph business. Do you think he just throws them out at the lowest price possible, hoping for 'volume' to pick up the slack? No! He undercuts by 60s, eventually pushing the price to a stable point where his glyphs are in charge.
It's a good strategy, but will only work if there aren't too many people actively undercutting, or if they're easily scared off.
What would happen if some guy loads the entire field with 3 to 5 gold glyphs? There would be a price war and blood will be spilled. As the established player with reserves (garnered from NOT selling glyphs at the minimum possible price) Gevlon can wait the guy out, with his 60s undercuts every 48 hours mercilessly grinding him down. The other guy HAS to make a profit. Gevlon does not. Fighting off wanna bes is part of the game, the profits will come later.
Where Gevlon doesn't get it, is when he posts "Morons of the week" from people immediately dropping the price to the noise floor and destroying profitability.
People are not smart, and will latch onto that simple mechanic and mimic it. When the environment adapts to them and crushes them, they have no idea why.
A goblin knows that you don't make your profit off the cheap glyphs. You make your profit off the ones you manage to sell for higher.
A Goblin knows that there is no "I Win" button, a simple strategy that always maximizes your profit. You must constantly adapt to the environment.
"You can't do that. You can't hire another Scribe to make glyphs, post them, and then split the profit with you, can you?"
yeah you can. work out your costs, lets say its 2g per glyph (time and materials), watch for morons who think they are goblins posting glyphs below this price. when they post lower than your cost buy them.
i try and limit my stock of each glyph to 20. but buying moron wannabe goblin's cheap glyphs means i spend less time crafting.
@Iiene
You're confusing Goblins with Ferengi again. One actually considers lowering profits to be an option. /shudder
@Iiene of Kul Tiras
I hate to say it, but you're starting to sound like one of the disgruntled 'victims' of goblins on your server. (see motw)
"What would happen if some guy loads the entire field with 3 to 5 gold glyphs? There would be a price war and blood will be spilled."
Nonsense. There have been a lot of posts on this subject - in this circumstance, people either attempt to buy up the cheap glyphs or move they on to something more profitable.
I'm not advocating undercutting to a tiny margin but as Gevlon has continuously shown, dominating the volume end of the market can be as profitable as sharing the value end.
This comment list is very illuminating. People have asked Gevlon 'If you're so rational, why are you helping the competition?'. Based on the amount of disagreement here on just what 'the goblin way' is, it's pretty clear that he isn't helping the competition all that much.
To address the question, it seems to me that a server can support 100% goblins - it's just that at that point, not all of them will be playing the AH anymore, because they can get just as much profit by doing dailies.
I am assuming here that goblins intrinsically enjoy playing WoW. Due to the difficulty of exporting wealth out of WoW, it seems unlikely that a goblin who didn't enjoy it would play, when they could make so much more money at MacDonalds.
In that environment, prices on the auction house would drop to reduce goblin profits by about 1/5 (obviously dependent on just where they are now - I'm going off an estimated goblin profit of 1000/hr currently, and an estimated daily profit of 200/hr). If glyphs go for 15G currently, and cost 3G to make, this would drop prices to about 6G. (This would finally get me to pay attention to the difference between 1 ink and 2 ink glyphs).
I think you overestimate how much gold the average player produces. Some players perhaps produce enough gold to support a goblin with their waste, but I think it's more like 4-5 regular players per goblin. (and the very casual, like the 20-30% of the population who never reach 80 and don't twink, don't produce much at all)
One thing to note is that most 80s are reasonably happy to make 300+g/hour with no risk doing daily quests and selling things that drop or get mined/herbed while doing them.
And it took me a while of learning, and a fairly decent capital stash to be able to make that much per hour on trading and craft arbitrage. The whole reason I learned it is because I wanted gold at a low level and because I am an economy geek.
The point is, it's not worth the thought for most people, when dailies make it so easy to make a decent amount of g.
As a gnome (or in your case goblin) I want more than that of course. But the point is, even if a server can only support 10% of us, there is no problem because 75% of the population (maybe 95%?) simply does not have the math and econ chops to do what I do. They can mimic my strategies, but they can't find new ones fast -- I change markets (or fuck with them to get them back) all the time when I need to.
Of the ones who could do what I do, a large number are top shelf raiders and make enough from their raiding to pay their costs. Others have the gear and skill to run through dailies like nothing, and don't bother to spend the hours and risk the cash necessary to do better than that in my realm.
All that considered, I have no fear of ever seeing a server that I couldn't find a way to make lots of money on. I've already gone from scratch to enough for an epic flyer on three different servers, and working on the fourth (rolled hordeside on my home server 2 weeks ago -- Tauren of zurich doesn't have that same ring to it though)
yawn...
Gevlon - I have liked your blog a lot in the past, and have read it pretty much every day, however it really has gotten boring in the last couple of weeks.
@Tonus: "This presumes that the rate at which an item sells remains constant regardless of price, which obviously is not true."
Can you prove this or is it just your gut feeling?
@Iiene of Kul Tiras:
"No. Gevlon understands it perfectly in his implementation of his glyph business. Do you think he just throws them out at the lowest price possible, hoping for 'volume' to pick up the slack? No! He undercuts by 60s, eventually pushing the price to a stable point where his glyphs are in charge."
Do you want me to prove that this is not the way Gevlon sells glyphs with screenshots? Many of his glyphs are even below 3g.
Chris says:
"I hate to say it, but you're starting to sound like one of the disgruntled 'victims' of goblins on your server. (see motw)"
Guess again! I make more gold than I know what to do with. I am no one's victim.
I'm railing against "I win" strategies. Strategies that are easily defeated by people with the wherewithal to adapt.
When it comes to glyphs, there are 2 predominately solipsistic strategies, the Monopolist and the Profit Minimizer.
These strategies are 'solipsistic' because they rely only on the inward analysis of the individual.
They are successful only when the other sellers don't adapt.
Monopolist: Step 1: "Buy them all and repost them higher!" Step 2: Profit!
Profit Minimizer: Step 1: "Post tons of glyphs at the minimum price!" Step 2: Profit!
Notice that neither strategy takes market conditions, supply vs demand, or the strategies of the other participants into consideration.
I just hold 'Goblins' to higher standards. Any idiot can be a script kiddie.
Anonymous says:
"Do you want me to prove that this is not the way Gevlon sells glyphs with screenshots? Many of his glyphs are even below 3g."
Well of course they are! But those aren't the ones he's making his profit on. Those are the ones undercutting the other chumps out of the market. Why do you think he undercuts by 60 silver? That's a small percentage at 20 gold, but a giant one at 3 gold.
It takes Gevlon just as long to craft a glyph that sells for 3 gold as it does for him to craft a glyph that sells for 15.
Someone running the solipsistic strategy of the Profit Minimizer (see previous post) is facing down an undercut of 60 silver every 2 days. His profits are near zero, whereas Gevlon still profits on the other glyphs.
But! By placing the Profit Minimizer on a pedestal in the MOTW, Gevlon is reducing his overall profits (in gold / hour) by having to fight off the new ones with sub 3 gold glyphs.
@Iiene of Kul Tiras:
>>Profit Minimizer: Step 1: "Post tons of glyphs at the minimum price!" Step 2: Profit!<<
According to my experience, on an average day (don't count in patch days with talent changes), the number of glyphs bought is constant, 1 - 2 usually of the same glyph (on a medium populated realm). The Profit Minimizer way can't work really because of this.
It is worth considering the following:
1, people have infinite amount of money; according to Gevlon's post, the average daily GDP of an individual (not counting the daily quests!) is 30g. Let's say he plays 3 days a week, 12 days a month, he can make 360g monthly.
If you sell your glyphs around 100g, the guy can buy 3 glyphs in a month, which means one respec per month. Since there is dual talent specialization, it seems to be enough.
2, Most people, when they want something, they want it in that moment. If I respec, I need those 3- 6 glyphs right at the moment. This behavior is suggested from the media, other people's behavior, advertisements, etc.
So when they come to the Auction House, they buy what they want, no matter how much it costs.
Because of 1, they can do it, because they have got an infinite amount of money.
No doubt the Profit Minimizer way of making money works. There is just no point to get rich that way because of 1, and 2, above.
@liene. What about some who posts every single glyph at a low profit margin.
Gevlon's strategy would not work on my server where there's a guy camping the AH 24/7 and undercuts every glyph.
@Iiene of Kul Tiras
As I hear more of your reasoning I begin to think we're more on the same page than I originally thought.
For me, posting items at @ 15% below market value works, so that's what I do for the markets I'm currently in. That being said I don't do this blindly - If I don't pay attention to the market, then blindly following one strategy will lead me to a lot of returned items.
15% below market average is a starting point for me - not an end-all be-all.
Comradvic says:
"@liene. What about some who posts every single glyph at a low profit margin.
Gevlon's strategy would not work on my server where there's a guy camping the AH 24/7 and undercuts every glyph."
Actually, Gevlon's strategy would probably crush this guy like a bug, depending on the guy's tenacity and fanaticism. But it would make no profit doing it.
Making gold uncontested is a luxury. A luxury you don't get in a developed economy.
Let's take the absolute, worst possible case and pit Gevlon's strategy against it.
A guy plays 12 hours a day, mindlessly farming herbs and milling them. He then makes a Scribe and makes glyphs. Lots of glyphs. In his mind, these glyphs are all made for 'free' because his sales of the unwanted inks offset the cost of the parchments and the posting costs.
Every 30 minutes he posts a huge stack of glyphs, undercutting everyone. His minimum price threshold is 10 silver.
This guy will absolutely, completely, and utterly dominate the market. He will supply every demand. In the immortal words of Paul Mor'Dib, "He who can destroy a thing, controls a thing"
But the cost is huge. He has to work constantly. If noone has a strategy that opposes him, he will make gargantuan profits once everyone else quits and prices go up.
Enter Gevlon, logging in once every 2 days and setting up a 9 glyph demand buffer 60 silvers below the lowest bidder. Fanatic undercutter undercuts him. Still gets all sales.
Gevlon makes no profit, but incurs little loss, either. After all, he has tons of time to make gold elsewhere. every 48 hours, the glyph prices drop by at least 60 silver.
Eventually, the prices hit as close to zero as they can get. Gevlon still sells no glyphs, but is cockblocking the fanatic from being able to raise his prices simply by logging in every 2 days and creating a demand barrier with almost no effort. Now we're beyond Paul Mor'Dib... now we're at "He who can destroy a thing with the least effort, controls even the other people that can destroy a thing". Note that this requires Gevlon to post unprofitable glyphs. If he won't do that, someone else will. or... we segue directly to End game scenario 2.
End game Scenario 1: Fanatic switches gears. Buys all of Gevlon's cheap glyphs and posts them higher, essentially becoming a Monopolist. Other people enter the market and start undercutting him. This is fine with Gevlon, because those glyphs can now make some profit.
End game Scenario 2: Lots of people see that same strategy, buy the cheap glyphs of both parties and repost, thus restoring the 'undercut, repost' dance. This is also fine with Gevlon, for the same reason as scenario 1.
End game Scenario 3: Fanatic will not quit. Well.. that's the same as scenario 2, isn't it?
End game Scenario 4: Fanatic goes insane and says "If I cannot have a thing, no one will have a thing." And just logs in every day posting a demand buffer big enough so it cannot be absorbed. Bad news! That's harassment. A TOS violation that will get his account banned. As soon as he says "I'm just doing this to crush you" he's cooked.
The only viable endgame of a mature glyph market is the "undercut, repost" cycle. It doesn't matter if you undercut every half hour or every 2 days, the crucial component is that the prices oscillate in a saw tooth pattern over time. Profits come from the higher priced glyphs, the low priced ones are the overhead of continuing the cycle.
Pretty easy to make a rough estimate - just consider the total gold generated by comparison to the total gold consumed by goblins:
Definition:
Goldsink: NPC vendor purchases - reduce total gold supply
Not goldsink: Player transactions, including auction house
Gold generation:
60 gold/player/day generated per day (generous...but alts probably generate more)
Goblin income:
1000 g/day (less than that and you aren't really a goblin)
Player->goldsink:
50% of gold generated (reasonable - consider mounts, tabards, etc)
Goblin->goldsink: 50% (roughly in line with my history...10 alts...)
So, each player has 60*0.5=30 gold/day to spend on goblins.
Each goblin takes about 1000*0.5 gold/day out of the economy.
So, each goblin needs a minimum of 500/30=17 players to support him/her.
So, assuming these conditions, the WOW economy can not support much more than 5% goblin population.
@Anonymous (the ones that keep saying undercutting is bad for everyone and demanding proof whenever someone says something you don't like, while offering no information that discredits the strategies mentioned in this blog or the comments)
Kindly point out which screenshot on this site featured you. I'd like to know if I LOL'ed, /facepalmed, or simply shrugged at your behavior.
I work with 2 Bankchars and i keep undercutting myself, they are allways behind each other...if i run out of stock the other one sells..if someone undercutts me i undercut with my other alt and so on...works fine.
Started new char on a new server and made in 2 weeks now 12.5k gold....and yes parchment and herbbags(25s at the vendor) really sell for 12g buyout......
Dk72 and hunter 43
everyone assume that other people are like 24 campers or w/e, what if they all work exactly like gevlon, log in every few days and just post like 400 glyphs, it doesn't matter if they profit, cause they get their money back from snowfall inks also.
edit to my post above.....i allready took over the bagmarket...which mean i sell 30-40bags each day others luckely 1 or 2 .what the real money comes are reciepes like soup ala undermine which sound very rare and i sell each day them for 24g or reciepes like chilicrab, also running the petmarket i am lucky i found some goblin on the other faction so we trade pets one to one...so the profit each pet is like 20g and i sell the in masses...sorry for the wall of text ;)
Selling at a reasonable profit that you are happy with and selling purely to make the maximum price available are two separate things. If you do the goblin thing you are selling at a reasonable profit and making the average person look at the market and stay the hell out. The goblin way is a real world application in the game, while the M&S way is simply believing everyone has an endless bankroll and will buy everything regardless of the price.
Andrew Carnegie used to drive people out of business through the goblin way. Why? He was quoted as saying, "I know my costs, do you know your costs?" He then made it up on volume and became the wealthiest man in the world for his time. In WoW, this makes selling easier because you can simply make it up in volume over time, whereas the others are all looking to get rich quick.
Two goblins on the same server simply means that both will be working against one another, and unfortunately it will become a battle of endurance as to who can stand making glyphs at slim margins the longest. I don't mind it because my mods let me do it easily and quickly. In that situation you may also want to form an agreement with the other person and create territories so you don't continue crushing each other's margins.
"Can you prove this or is it just your gut feeling?"
I guess you can call it gut feeling, though the idea that a commodity will sell more quickly when it is priced lower strikes me as obvious. Do you have evidence to the contrary?
I guess you can call it gut feeling, though the idea that a commodity will sell more quickly when it is priced lower strikes me as obvious. Do you have evidence to the contrary?
In the real world this is often true, but in WoW, where gold is easy to make exactly, because people do not care, I doubt somebody would not respecc just because the glyph costs 39g instead of 29g.
"everyone assume that other people are like 24 campers or w/e, what if they all work exactly like gevlon, log in every few days and just post like 400 glyphs, it doesn't matter if they profit, cause they get their money back from snowfall inks also."
Been accused of camping myself because of volume, and post only once a day using batch post. Posting glyphs takes me about 20 minutes total including running back and forth to the guild bank for the next batch of glyphs.
Circumstances are different server to server, but whether you are "mercilessly" undercut at 20 gold or 3 gold... the result is the same. I sell at 3 gold because far fewer people ae willing to undercut and my total daily gold intake easily doubled when doing so. Still takes just as long to click "Batch Post" as well.
Implying anyone who posts high volume is screwing up is naive at best.
I'll add something I missed with that last post.
If you are posting glyphs at zero profit you ARE screwing up. Just sell the inks then, time is money and you are spending a lot of time making glyphs for zero profits. Sell Inks, let others charge what they want, and watch Ink Prices rise.
Making a 2 gold and 50 silver glyph "just because" is silly.5 mins to sell 100 inks is 200 gold. Spending 30 minutes making 100 glyphs to sell at no profit just means your 200 gold took took 35 minues to make instead of 5. Don't do that :P
Idletime:
Andrew Carnegie has something business owners in game do not: Employees.
For Andrew Carnagie, making one widget is the same as making a thousand, or a million. The cost of the widgets is numbers on a spreadsheet, not per widget sweat and blood on his part. For him, a million widgets at 2 dollars profit each is the same as 2 widgets at a million dollars profit each.
Everytime you buy an item from the AH, craft an item, or post an item TO the AH, you spend time. That time is your principal gating factor.
People like Andrew Carnegie know the difference between a Type 'S' corporation where the sole proprietor is the Cook, Chef, and Chief bottle washer, and a type 'C' corporation where effort is scalable through the hiring of employees.
If my system makes 20 gold on average for each glyph sold, and yours makes 4, I spend 1/5 the time making glyphs as you for the same profit. We both use automated addons to post / cancel / get mail, so it comes down to the time spent making glyphs. I'm more efficient because I'm not operating under the delusion of "Making it up on volume" and have constructed my strategies accordingly.
That doesn't mean I don't post boatloads of glyphs... I do. Most just don't sell and are caught up in the post / cancel / repost cycle.
I know what my costs are, and the highest one is the time spent making glyphs. Something Andrew Carnegie didn't have to worry about.
Meh. There's a small disconnect here.
Many posters are raising the perfectly valid point that the demand vs price curve for glyphs is flat. This is true - the difference between 5 and 30 g for a 1 time purchase is miniscule. From this standpoint, undercutting significantly simply reduces profits for all.
These posters are missing the fact that the _supply_ vs price curve for glyphs varies pretty sharply.
Here's some imaginary price points:
120 g: every M+S is making glyphs.
30 g: many M+S make glyphs
10 g: only worth doing with addon installation. Goblin and leveller only.
3 g: Stubborn goblin, 500-1k g/hr for single posting
1.5 g: Don't bother...make decks.
Long-term - undercutting lowers glyph prices and reduces the glyph supply - this increases the market share for people still in the industry. The optimal average price is highly dependent on the number of stubborn goblins on your particular server.
Oh yah...
TL'DR: Undercutting is a valid strategy used to drive the competition out of business. It doesn't do much to glyph demand.
However, depending on your server and the competition, the optimum price point can vary pretty widely. There isn't a one-size-fit all solution.
The optimal solution even depends on your personal tradeoff of gold/time vs gold/day.
My experience is that aiming for an average glyph price a bit below 10 gold is pretty optimal for a 48 hour posting strategy that maximizes gold/time.
If I cared about gold/day, I'd switch to an average closer to 5 g/glyph and make most of my gold selling decks.
@Anonymous
You do make a very good point, but it seems that lately with the popularization of QA2, there has been a large influx of glyph sellers on my server (and probably others). The supply side is now much larger than the demand.
Where there used to be maybe 5 consistent glyph sellers, there's now at least 15 or more AND the glyph prices are even lower (5-10g, previously 15-25g).
Competition is much fiercer than it was before, and when glyphs are already this cheap, I don't think it's even possible to drive all the other sellers out. There will always be new ones incoming to replace the ones that leave. In this scenario, I don't believe that deep undercutting is a worthwhile strategy, and instead I just undercut 1s and hope for some sales. I'm still making decent profit 500-1000g/day but not the 1500-2000g I was making before.
William,
I'm noticing the same thing, and it's causing me to modify my strategies.
On my server, the problem arises when the prices hit the noise floor... somewhere south of 4 gold. THAT'S when you need the 'deep undercut' of 50 or 60 silver. it takes a few days, but the glyphs time out and the logjam can be cleared. What's essential is that your threshold is set at near zero profit.
You want the logjam to clear and the prices to float back up so the undercut / post cycle can continue.
You still have random people that think Auctioneer's 'market value' is somehow relevant and post glyphs at wacky prices, and others that think the Proles should get cheap glyphs and put their glyphs out at set prices. Usually, there's not much you can do about that.
If I could set it to undercut by 50 silver when the price is below 10 gold, and 10 copper when it's above, I would.
Clearly, though... anyone still using a dinosaur like Auctioneer to do their undercut / post cycle is hurting simply due to the posting time.
Regarding QA2 - it still takes a fair bit of time...
I experienced the same influx of new sellers and cut my prices in half (10 g -> 5 g) with a 20% undercut.
This triggered a gigantic undercutting war and, about a month later, led to most of the competition exiting the market.
Frankly, I plan to 'activate massive undercut' whenever my market share goes noticably below 20%.
@liene
Sorry, I didn't mean to say that you were being M&S, just that your early posts seem to suggest that the 'deep undercut' is a weak move which kills the market and reduces gold/hour.
This is the primary complaint of every poster in MOTW. "Why can't we share the market? GG" they sing in unison.
However in later posts you go on to acknowledge that this is viable and indeed necessary:
"[Gevlon's lower priced glyphs] are the ones undercutting the other chumps out of the market."
Chris,
Let me be clear.
I don't care if people 'share' the market. I can't stop people from posting glyphs.
Time is money, whatever strategy converts the time needed to make and sell glyphs into the highest per-time profit is the one I'm going to try to use.
If that strategy also lets other people sell glyphs, fine. but I don't care about that.
Where I DO care is when someone ELSE'S strategy prevents me from making money.
Let's clarify a few terms:
"deep Undercut". This is Gevlon's term, not mine. It means an undercut of 60 silver. That's really not very deep. I think it's misleading and suggests what is actually the Profit Minimalist Strategy. I would have called it the "Step Undercut" to differentiate it from the "Penny Undercut"
"Profit Minimalist Strategy". This is my term for the practice of just outright selling glyphs at rock bottom prices. This is a failed strategy as it ignores market forces on both the supply and demand sides. It doesn't matter what your set price is, once there is enough competition, you will either be mercilessly undercut (5g and above) or make little profit for time invested (less than 5 gold) Look at the comment above yours... you don't "Cut your price in half" unless you think you're actually setting the price.
The market sets the price. You can nudge the market to place your glyphs in the best position, but you should not try to dictate to it.
Tip: QA2 posts faster if you have empty bag slots for it to use. I use 4 32 slot glyph bags and an empty backpack. I have no more than 115 slots filled with glyphs. That gives QA2 29 slots to play with. Don't keep junk in your trunk!
Gevlon:
You may need to add levels of goblins to the 'Goblin' label.
I can see that by the cleanest definition, anyone who looks to his own devices and makes his own money, always prioritizing themselves first, is a Goblin.
By that definition, the Goblin / M&S ration can be 1 to 1.
This allows a wide range of Goblins. Some can't think beyond the profitable auction of the month, another group focuses on a single aspect of a single industry, and others use positively hair brained strategies that sometimes result in profit... sometimes get the Goblin killed. A few are Moriarty grade masterminds capable of dominating entire industries.
Your original thinking was that there could be only one Goblin per industry. However, that would assume that the one Goblin was a Moriarty.
Clearly... you've softened on that and are accepting the rank and file Goblin into the fold.
Heh. I might need to start my OWN blog.
A few minutes ago, I completed a cancel and post pass of my glyphs on (US) Kul Tiras. Mostly uneventful, took less than 10 minutes to process all 3 vendors (They're not fully populated yet... I only recently was forced by market forces to cover every glyph)
But a new data point stood out. One of my competitors has decided to change their strategy!
Roxalt has, historically, only posted on glyphs above 20 gold. But has now switched to 12 gold as the 'set price'.
This strategy is full of fail. Of course, I simply let my tools undercut the price as I would any other...
But there was nothing wrong with the previous price. If someone wanted a glyph in that range, they would have bought it. If Roxalt had undercut me by 1c, 10s, or 60s, it would not have mattered. I would have still slapped the price down another 10 silver. (10 silver is my current undercut.. strategies change)
Even the 12 gold set price doesn't matter... I undercut it by 10 silver.
What Roxalt isn't getting, is you CAN'T SET THE PRICE. The market sets the price. In this case, the market just walked right in and set the price at 11 gold 90 silver for every glyph I saw Roxalt set at 12 gold.
While I am certainly responsible for the new price on those glyphs being 11 gold 90 silver, I did not set that price. I did not sit down and think: "Hmm. 11 gold 90 silver would be a GREAT price for these glyphs!" No, I simply reacted to Roxalt's unilateral assertion that 12 gold would be good.
What is the 'market'? The Market is the aggregate response of all of it's participants. You must be cogent and respectful of that.
Time is money, friend. Adapt to the market, don't try to set it.
@liene
A few final thoughts:
-Everyone can set their own price for glyphs.
-You have an approach of undercutting by up to 60s in order to sell the most at the best possible price.
-Other people undercut deeper in order to drive away intense competition and the need for frequent re-posting
"Where I DO care is when someone ELSE'S strategy prevents me from making money."
-All they're doing is reducing your gold/time.
Adapt to the market, don't try to set it.
Liene I am the very first anonymous that you responded to.
I asked what to do when i post at the lowest sum i can but still make a profit and the goblin with the bigger pool of gold can effectively undercut me at a loss to drive me out of the market. I don't think that question has been answered, but i'm not writing about that right this second. Just letting you know that the other annon are not me. For the sake of clarity i'll give myself a name in this post.
The 'deep undercut' is not a 60s reduction.
It is whatever price you can price your glyphs at to completely beat the competition and still profit.
Gevlon has talked about setting his glyphs around 40-60% lower than the comp and still making decent profit.
I appreciate that 300 glyphs at 5 gold each with 2.5g profit on each is little and that not all might sell due to lack of interest in particular glyphs after a certain patch or just a bad weekend, but it is the only was to completely dominate the competition.
If the average price for glyphs is 12g on the realm and i post at 10g i could very well beat the average price and get a lot of sales, but someone will go below me by 1c or 60s or whatever. So instead of camping the AH to re-post i can simply dominate the market by posting 2-3 of each profitable glyph slightly above make cost. If i did it twice a week with 2-3 glyphs it doesn't bother me if they are bought up and sold for more immediately because i can craft re-post, make my share of the profits and let someone else risk putting them higher and being undercut.
I'm probably acting like what someone might think of as an M&S but i rather have many quick small profit sales than an average spread of slightly more profitable sales and have to repost many.
I accept that AH campers have a much better chance of making more gold of the course of a day, but they have to sit outside the AH to do it rather than doing something else.
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