9 weeks glyph pricing experiment

I have received this research via mail and it's definitely worth publishing. If you don't want to read the whole - very carefully - presented research, I bolded the results for you:

I have been conducting a booking experiment in the profits available from the Glyph market under different pricing scenarios. I got into the glyph industry prior to ever reading your blog however from reading your posts and reader comments I have massively increased my profits and profit per hour. I was always a little unsure as to exactly the pricing strategy that you were using until you recently posted a more in depth discussion. I started the experiment prior to your post on the glyph market and pricing however so haven’t exactly replicated what was in it.

However, here’s how I understand the basics of the wow glyph market and how the various pricing strategies are supposed to work.

In any week there are a certain amount of glyphs used – A
These glyphs are sourced from either
Inscriptors making it for themselves or friends for free – B
Trade channel – C
Auction House – D
A = B + C + D

At a very rough guess this is probably something like 100% = 5% + 5% + 90%
The amount of gold available on the Auction House is total glyphs sold on the AH (D) * price X
As you increase the price X, you will see more people try to buy their glyphs from trade or find guild friends to make them for them.

If you look at the total glyphs sold on the AH your share of those sales will depend on your pricing strategy and the competitors you face, so if D can be split between, any number of sellers, usually a few larger goblins, a few medium sized casual sellers and a few leveling inscription.

First Scenario; Some people believe that you should price high 30g-50g or more, at these prices some will leave the AH for trade or friends but not too many, the total gold generated will be high, so even if you are sharing that gold amongst a number of competitors selling on the AH you will still make a very high profit. So for example, if the total glyph sold on the AH is 5,000 in a week, 3 Goblins compete, taking 25% market share each, average sale 20g-17g profit, each goblin makes 21,250 profit in the week.

Second Scenario; Others believe that you should drive the price very low, ensure that few people leave the AH and more importantly that there are few competitors around to share the total gold generated, hopefully none, by selling a far higher volume, for a lower cost, the total gold generated from glyphs on the AH will be lower than in the first Scenario however your personal share will be higher. So for example, now the price of glyphs on the AH is 8g-5.5g profit, the total sold D increases to 6,000, there is only one goblin seller taking 70% of the market, profit of 23,100.

There has been heated debate over which of these scenarios is the better one for the glyph industry or other gold making businesses on wow. As far as I can tell each of the commenters posted single experiences from individual servers, there were comments of, “that would never work on my server” but no one who said they had tried multiple strategies, or if they did, provided very little detail. My experiment was an attempt to put hard numbers behind the theories. I used two basic pricing styles

Undercutter – Glyphs listed at a small 10s (wanted to avoid socials who though a 1s undercut was nasty) discount to the current – Note this is not camping, I don’t watch to see competitors online or if undercut, just post when I have a spare 5 minutes. Using Quick Auctions 2 this is very easy and very quick. The actual posting of glyphs is almost the smallest proportion of time spent in the production cycle, though collecting unsold ones is almost more of a factor in how often you should ideally post.

Low pricing – Glyphs all listed at a standard fixed price for a minimal level of profit, you list more of them, less often, less time spent posting, may have to spend more time producing glyphs as higher volumes sold, for lower price.

I had presumed from your early posts that you followed a Low pricing strategy, in fact your more recent post on pricing describes your strategy as heavy undercutting. You undercut by a largish amount until the price gets to a very low price and drives competition away, then revert to a high price once they’ve left. Personally, and others have commented the same, I think this is actually almost the same as Undercutting by a small amount and I will explain why later.

Server stats. Herbs sells for around 18-25g a stack, I was mostly picking them up around 20g from AH and some from dedicated suppliers, ink of the sea sells for 2g-3g, snowfall inks for a lousy 12.5g. Very approximate cost of making a single ink glyph is 2g, 4g for two ink glyph (it’s a bit more than this but for simplicity). When I started the experiment there were probably 3 other large volume glyph sellers in the market. I have all glyphs learnt. I am on a medium population server with quite a few well established raiding guilds (Hellfire EU for those interested). Profits shown relate solely to glyphs and not to sale of darkmoon decks/cards or other off hand items etc. Glyphs were selling mostly between 5-25g, with perhaps 15% of the market in the 1-5g range and 10% in the 25g-50g range.

Intention was to run my normal strategy for a few weeks to check profitability accurately then move to a very low cost strategy to see if this did produce the higher profits and also to try see if my competitors would be driven away or not, then return to my original strategy to see what effect there had been. Note while using Low pricing strategy I still sold double ink glyphs even though they were then going for a loss, partly to cover the entire market and drive competitors away and also as I couldn’t be bothered trying to figure out all the ones that were double ink ones and remove them from my stock.

Things to note – while I was reasonably careful in my booking, I wasn’t putting in the time to have this be a perfect accounting analysis, when counting up the number of glyphs I had in stock, some errors may have been made, I used approximate values for herbs, inks, glyphs etc without allowing for weekly price variations, the same applies to hours, I booked all time, auction house buying of glyphs, mail time, milling, making glyphs, listing (not when I was afk at mail or AH) but not to the nearest minute, further I tried to maintain a consistent level of glyphs/inks/herbs but there was some variation and the varying levels of time/cost on the varying levels of stock may cause some small variation in perceived profits as well.

This was by no means a scientific experiment, endless variables were not controlled and my data was not measured by a machine, mistakes could have been made.

Results:

Week	1	2	3	4	5	6	7	8	9
Strategy	Undercut	Undercut	Low pricing	Low pricing	Low pricing	Low pricing	Low pricing	Undercut	Undercut
Auction time	12hr	12hr	24hr	48hr	48hr	48hr	48hr	12hr	48hr
Listing rate	2-3times weekday, 2-4 times weekend	2-3times weekday, 2-4 times weekend, some days missed	once a day	once a day	once a day	once every 1-2 days	once every 2 days	2-3times weekday, 2-4 times weekend	once every 2 days
Price	4-30g	4-30g	6g->4g	4g->3g	3g	6g	8g	4-30g	4-30g
Number of Glyphs listed at each posting	2-3 depending on time of day	2-3 depending on time of day	8	6	4	5	5	2-3 depending on time of day	5
Gold Made	20,161	16,892	11,632	9,490	-2,504	7,730	3,008	15,569	6,965
hours	9.0	7.5	12.0	7.0	6.0	5.0	3.0	9.0	3.0
Gold per hour	2,240	2,252	969	1,356	- 417	1,546	1,003	1,730	2,322
Issues		Realised at end of week was low on some stock, also small issue with QA2	Made too many glyphs as hard to track stock with too many on AH		Too many double ink glyphs sold, or booking not quite right

(note with QA2 listing each day brought the total glyphs listed back to your listing levels, so if you listed 5, 2 sold, 3 still on, list again the next day brings back to 5, not 8)

I was aware that prior to this experiment I had a couple of heavy competitors who were undercutting me regularly and some were posting glyphs as low as 2g! With an initial cost per glyph of approximately 2g I wanted to be able to make a reasonable profit after AH cut. I guessed that I was currently making around 12-15g profit per glyph, if low selling sold 3-5 times as many glyphs I could sell for around 6g which is were I started my first week of “Low pricing”. I listed far more than usual as I was planning not to be reposting as often. 1st Day of this I got a nice mail from one of my main competitors who was concerned that I had recently installed QA2 and hadn’t quite figured out the settings properly yet and how I should change them, thanks! In fact I had been using Quick Auctions in its original non user interface form as well but hey. I wasn’t sure how many of my competitors would follow me to undercut below 6g but I wasn’t surprised to see that by next day 95% of my auctions were undercut, so price war, I each day lowered the price by around 25s to declare my serious intention to lower prices and drive them away (I hoped), price went down to 4g over the first week and I did see some of my competitors move off. I got a nasty email from my one of the other main sellers about I must be an idiot and not know how to make gold etc etc. I also saw increased volume of sales and thus increased hours making glyphs. I also spent a lot of times collecting glyphs from the mail box (at that time I didn’t have the screen refresh macro and would change between alts as each box ran empty). I also had issues with too many glyphs on the AH and difficulties keeping track of how many sold, how many needed to be replaced so ended up making too many of some glyphs that weren’t selling. By week 4 (2nd week of low prices) I was still regularly being undercut and continued to drop my prices hoping to drive competitors away with only limited change. Week 5 I was getting desparate having seen little change in being constantly undercut and moved to my lowest make no profit drive competitors away price of 3g (my booking suggests I made a small loss that week which may be true or may be booking error). I saw little change, a few less undercuts but not that significant. Week 6 I’d given up hope of getting rid of the goblins but hoped some medium/smaller sellers had moved on, moved back to a more relaxed pricing level 6g, and a more relaxed level of booking every few days, sales volumes were OK, thought I would try and a slightly higher gold level the following week 8g. Having had 5 weeks of pricing between 3g-8g I hoped that I might have got rid of some competitors however my observations of the names of those selling indicated that little had changed in fact there appeared to be some new competitors who had joined the market! where perhaps 1 or 2 had left 3 or 4 had now joined, perhaps the knowledge that glyphs = gold was spreading to a wider audience. So back to my original selling pattern for one week for comparison. Finally a week of my original undercutting pricing strategy but this time following the low maintenance post every 2 days to match the theoretical low pricing time at AH strategy.

As you can see, undercutting on my server for me, produces a significantly higher amount of total gold, as well as a better gold per hour, both before and after attempts to drive competitors away and whether I posted 3 times a day or only every 2 days. In fact the highest gold per hour was generated by following an undercutting strategy but with a low post rate.

Looking back at the two original scenarios, why has this result occurred? Well to be honest I can’t absolutely tell you, as I don’t have the complete data, from all the sellers in the market, total glyphs sold, my % share of the market etc etc, I can’t make any hard conclusions. I can only revert to theory (which I was trying to avoid in doing the experiment) and suggest the following, lowering the price was unable to drive enough competitors away, while I did sell more glyphs at the lower prices it wasn’t enough to counter the much lower profit being achieved. Further, the reduced posting time from the low pricing strategy was countered by the increased time required to buy herbs, mill herbs, make inks, make glyphs to supply the increased sales. In fact it seemed that the time spent posting was one of the smaller factors in the total time spent (thanks to QA2!), the actual making of the glyphs taking much longer.

The reason I think that your deep undercutting is nothing more than undercutting is that on my server with heavy competition, the competitors have little regard for if you undercut by 1s or 1g. I personally would never notice that you were doing that, QA2 would be set up to keep undercutting you all the way down to 4g. I would run QA2 which would simply undercut you unless you went below my absolute minimum. My minimum was set at the price of the two ink glyph, I know that some of my competitors, rightly or wrongly were going below this, they would continue to undercut even if you were following a low pricing or heavy undercutting strategy.

I definitely believe that in probably all other wow markets low pricing, where the price is set at a low level of profit above cost, is the ideal way to maximise profit, ensuring you capture the majority of the market, few people go to trade/guild, and you have few if any competitors. I think the very nature of the glyph market, extremely low listing cost (can list and relist often without issue), low total cost (few people go to trade irrespective of high % profit), are exactly the reasons that low pricing is not necessarily the best option. If you have few competitors or more importantly weak competitors who will leave the market and not undercut you at the lower prices it still might work but I suspect that for most servers this is not the case. My observations are obviously not 100% conclusive, it was not a scientific experiment, it was just my scenario, on my server etc etc but I think they do show what many have suggested that there is more profit available from undercutting even where you are 1 of a few goblins, as the higher prices far out weigh the loss of market share and that should you try to push the prices lower you are in no way guaranteed to drive your competitors away.

Irrespective of your or others opinion of the theoretical difference’s or actual results of this experiment here are some key lessons I have learned which will help all to increase their gold making

It’s better to spend time ensuring you restock those glyphs which are selling well and get to the AH less often, than to spend your time reposting at the AH regularly and run out of your top selling glyphs

Keep a reasonable stock of herbs and inks in your bags. Herb prices vary widely, buy when low (use Snatch) and ride out the high weeks (Darkmoon faire week). Further by ensuring that in weeks you have more time you mill herbs, on weeks you have less time, the small time you have can be devoted to making the glyphs that are selling well rather than buying/milling.

If you run QA2 and the first time you set it up you didn’t have a complete set of all glyphs that you sell make sure to go back and update those it sells when you have a full stock in your bags

Possessions/Who has isn’t always perfect, it seems to sometimes get errors recording what you have, so sometimes you think you have stock which you are selling but in fact you don’t. Running the QA2 summary straight after you’ve listed all your glyphs will highlight those glyphs you haven’t posted. If the market price is above your minimum sell price, and you think you are full stocked, the reason you have nothing posted is that Possessions/Who has made a mistake, you probably need to make a few of these glyphs.

Andrew
Hellfire EU – Experiment ran from approximately late July to late September
Main – Aizell, Glyph alts Hazella, Goldmachine, GreedyGoblin, Darkmoon decks/cards/offhands - Bankaboy


I (Gevlon) will write a post about my pricing method to clarify the difference between the different undercutting methods, and can only agree, that posting low regardless competition is a bad idea, and you should have one of the undercutting schemes.