Monday, October 26, 2009

Finding out intentions

A Gnome's conquest introduced an addon. It's the weirdest thing I've ever heard (besides "Age of Conan sex"). This addon tries to figure out which characters on your friend list belong to the same person. Obviously you know your friends, so it is used to extend a strange habit: put your competitors to your friend list, to see when they are online.

It helps you win the Auction house PvP, aka to show the others that you own this market.

I've never put any competitor to my friend list. I've never been aware of their existence (except for the one I used as example of bad trading actions). I never checked any names on the AH, I couldn't care less.

I respond to market situations. It doesn't matter who created the situation, it exist now on its own. The market is flooded because someone wants to put competition out? Or is it flooded because some punk dumped the stuff he "farmed for free"? Maybe he was an investor who is now cutting his losses and gets rid of the damn things?

Doesn't matter. The real situation is the same. The price, the quantity and the quality of the item does not change with the intention of the seller.

The essential advice is simple: ignore others and react only to the market situation.

Easy for me, you can say. Being anti-social, I couldn't care less about the people behind the avatars. However social (or "normal" if you prefer) people do. There are several studies, that show that the same person, in the same game experienced more "fun", involvement and stronger feeling of achievement upon victory when they believed to play against people (of course they all played the same game).

If you have even a little bit of "social" in you, you naturally want to find out the intentions of the "opponent", and want to win against him. This behavior is good for one thing: losing money. I can only repeat: the price, the quantity and the quality of the item does not change with the intention of the seller.

Mind only on the measurable market factors and you'll make good business or at least can walk away without losses. If you get into a personal "I must win" situation, you may do, at the cost of losing lot of gold and getting to the Morons of the week.

KevMar written about the same topic recently, check it out if you want to!

30 comments:

Spitt said...

I recently did one of those stupid things which will make everyone pissed at me. Instead of undercutting everyone by 1-2 percent, I dropped my prices in 1/2 of what they had up there. It probably pissed everyone off, especially on some very competitive markets, on the other hand I got rid of a long standing supply that I couldn't sell at 99% of what the market price was.

This would probably be considered one of those stupid moves you just mentioned, but for me it was a great move, as it emptied out my mailbox of unsold AH items.

Anonymous said...

i actually added my main competitors to my friends list just for one reason that served me well. i wanted to know if they were 24 hour AH campers. as it turns out, 1 of them only logs on a few times a day, while the other logs off and back on every 15 minutes of so all hours of the day. as such rather than my normal under cutting, i dropped my prices quite a bit more and now they don't post nearly as often.

came in handy as the deposit fees on gems are high up there even at 12 hour posting. now i don't have nearly my entire stock being returned and they're losing money from deposits (they are selling below cost of mats usually now).

Inquisitor said...

Come now, Gevlon - it's true that you can do reasonably well by acting dispassionately (although once in a while, someone will hurt themselves to hurt you, and you won't see why) - but you can do better by understanding people.

If you know their intentions, you can predict their behaviour better. If you can predict their behaviour better, you can make more money (either from them, or simply by avoiding their interference).

Knowing how they think helps you. Thinking like them... well, maybe that hurts you. But they really aren't the same.

Anti said...

if someone is dumping "free" items below cost i buy them.

if someone is manufacturing items below my cost i work out how.

if someone has decided to take the mass market approach on a niche market i take the premium market (on 90% of availiable markets) instead.

the premium market idea is to not bother with a particular market unless i can make 300% profit over mats. you would be surprised how many people buy low level enchant scrolls for 300% markup on materials cost for example. my customers pay premium prices for convenience.

Gevlon said...

@Inquisitor: you cannot know another people's intentions, trying to find it out only gives you headache.

There is no way to discriminate between the sellers who sell below material cost because:
* he wants to push me out of the market
* he wants to get revenge by making it impossible to make anyone money
* he is an idiot who farmed his materials for free

There is also no NEED to discriminate them in order to formulate the appropriate response. It is always: lowering prices to material + expected work costs and not lower. If he cuts even lower, it's his, until he gets bored of working his ass off for nothing.

You can't see into his head. You can't even use his communications as they can easily be lies. It's merely a waste of time.

I'd like to emphasize that I've reached goldcap without EVER checking the names of other sellers. I have absolutely no idea who and why operated on the glyph market. I just undercutted them every 48 hours by 40s until they got too low.

Ephemeron said...

Psychological tricks are neither all-powerful nor completely useless. They are a mighty yet situational weapon.

The 'flask ownage' situation quoted in your post is a good example of its power. With just a couple of friendly lies, you've managed to grab control of the market and avoid a price war, allowing you to sell your stockpiles at a much higher profit.

Of course, psychological warfare is not entirely foolproof; in fact, it can be downright risky. Sometimes, you'll completely misread your competition's intent. Sometimes, you'll telegraph your own instead.

As such, it might be a suboptimal choice for an adept of goblin philosophy. For a dreadlord, however, it is a weapon like no other.

Shiko said...

@gevlon

"I'd like to emphasize that I've reached goldcap without EVER checking the names of other sellers. I have absolutely no idea who and why operated on the glyph market. I just undercutted them every 48 hours by 40s until they got too low."

Of course your argument suffers from a very basic flaw. If your competitors took the time to study when and how often you usually post glyphs they could use that information to undercut you/ cancel before you post and sell. I could give a whole dozen optimal strategies on how to best compete with you just by knowing your posting pattern.

Kevmar @
http://wowbanker.blogspot.com/2009/10/competition.html
wrote a very interesting post on the same topic.

Archangel said...

I think you pronounced the magic word: inscription. It's so very true what you posted in this article and applies very well to the inscription market: mats available, high volume, low AH fee; who cares about the competition? I don't need to know their behavior. If I want to be more competitive, I need to only work on my costs and thresholds. Very true.

But as first Anonymous said, I strongly believe that without a good knowledge of my competition habits, I could hardly make a living on the JC market. The cheap ore for epic gems is hard to find, prospecting gives random types of gems, raw gem sellers require time to spot, the AH fee is high enough that 2-3 gems returned is sometimes a certain loss. I could make a deeper analysis, but this is not the place. Not necessarily their intentions, but the habits of the competition, help me greatly in the JC market. I would really like to know your view on this, Gevlon.


But as first Anonymous said, I strongly believe that without a good knowledge of my competition habits, I could hardly make a living on the JC market. The cheap ore for epic gems is hard to find, prospecting gives random types of gems, raw gem sellers require time to spot, the AH fee is high enough that 2-3 gems returned is sometimes a certain loss. I could make a deeper analysis, but this is not the place.

Anonymous said...

I found it useful once, just to see if I was seeing what I thought I was seeing.

On the glyph market on Gilneas US we have a person who is logged from about 9 in the morning till after I go to bed at night.

On a day off I posted and relisted the same stacks of gyphs all day and he would undercut within the hour. The glyphs hit 2.5 gold before he stopped.

I don't know I could have found his stop point without knowing I was competing with a single person. How long of 60s 24h undercuts would it have taken to reach this level?

Right now I'm trying to decide whether to keep going. I figure I can sustain my sales with a minimum price of 2.2 gold per glyph. At that level and with the price of herbs and snowfall ink, I'd have a profit of 29g per 100 glyphs sold, any lower and I'm taking a loss.

Might be better to move on to something else and let him have the glyph market.

Nim said...

I use the friends list for a few things - undercut the competition the second they log out. The alternatives are either to dump prices (no sense doing that on the scrolls market, especially not now when mats prices have crashed) or enter a QA war. The latter is just a waste of time, and we all know time is money. You do have a point though - most of the time it doesn't matter what name it says on the auction.

I'm also playing the flask market, and when I see one of the "big" flaskers come online I know it's time to keep an eye on my flasks.

/Nim

Anonymous said...

Great post!

Generally any time spent nitpicking who's responsible for market changes, simply lowers your gold per hour.

All that matters is how we react and adapt to the market.

csdx said...

But if you understand why things are the way they are, you can anticipate future market moves better. Knowing how you 'opponent' is playing the game makes you better able to win. It almost sounds like you're advocating purposefully being blind to the way the market will move. Maybe it doesn't matter so much in WoW, but in real life you need to consider how the economy and market will move in order to do well. Part of that is trying to understand why people are acting like they are.

Knowing if someone's flooded the market can let you know if it's a temporary thing or the permanent price. Then you can plan out accordingly and invest in the right direction. Not knowing that is just blinding yourself to many potential oppertunities.

Nathan said...

Couldn't knowing names and mains be useful if you were camping the AH?

I know if I were cutting by coppers and relisting, I would very much like to know if my competition was online or not.

Nick said...

Gevlon, you are whole-heartedly wrong.

Having knowledge of the login and logout patterns of your competition, you are able to spend your time more wisely.

An example:
Guy logs in at 6pm server every single day, posts his auctions, then logs off and you never see him again until the next day at 6pm server.

You are stupid not to use that information to your advantage and it's obvious you can spend your time more wisely by hitting the AH 30 minutes after or 15 minutes after or RIGHT AFTER he logs off!

Euripides OutDPS said...

@Gevlon Some servers' factions are so populated that your 48 hour strategy wouldn't work. My experience on a very large economy with about 20 goblins who clearly read your site has been that no matter how heavily you discount, once you get undercut, your stuff will not sell.

How would you deal with this type of market situation? Most people turn it into a game of trying to guess which characters are alts, and trying to log in as often as possible to relist their stock.

Personally, I've taken my profits from another side of the equation- I list glyphs when the markets cycle high (once a week), and sell most of the ink I mill.

Okrane S. said...

Ok, another call for moderation here.

I believe each and every one of us reading this blog in making already ENOUGH amounts of gold to entertain all possible needs.

Now, why on earth would you spend extra time with this kind of nonsense... camping competitors, adding them in ur list, addons who track down their alts...

Frankly, if by working 15-30 minutes each day, and posting at 48h, I have managed to gather 100k+ gold in about 4 months, why the hell would I want more?

I agree making gold and competing on the AH is fun. BUT... in the game there are many more enjoyable aspects... as well as other enjoyable activities outside the game. Time is limited u know.

So once again, I am with Gevlon on this. Wasted time is wasted

Roboticus said...

Gevlon's argument only works in classical fantasy world where transaction costs are zero (or at least negligible). Glyphs and enchanting mats/scrolls qualify in this case. Gems and most other things do not. In a market with (functionally) finite volatility and considerable transaction costs, revenue less costs can be predicted by amount of time in which your posting is the lowest entry multiplied by purchases per unit of time. In such a circumstance, it is obvious that you can increase profits by posting when your competition has just logged off, which WILL increase your profit.

Also, Gevlon's standard fallback line, implying "I made goldcap therefore I am right" is pretty flimsy. Tom Cruise is quite rich in real life, therefore Scientology must be correct.

Nielas said...

The way I see it, Gevlon does not actually actively 'compete' with anyone in the AH. Instead he simply flows with the market instead of fighting it. He let's others do the aggressive moves and he reacts to them. He makes money because he understands how the market flows and is willing to sit out negative trends rather than fight them.

The glyph market is very forgiving so that's why his strategy works so well there. If he guesses the flow wrong it does not cost him much and he simply readjusts his strategy for next time.

Anonymous said...

I'm not even sure why this needed commenting on. Do people actually care what others are doing on the AH? I surely do not.

I price my goods based on a percentage markup. If they sell, great, if they don't - I either adjust the margin or move to a better market segment.

If others insist on posting with no profit, it may inconvenience me by triggering a change to a new market segment, but that's the extent of my concern. And that's easily covered by the profits I make in the new segment.

Gnome of Zurich said...

Somewhat like Gevlon, I pay relatively little (not no) attention to my competition. Most of the time, all I need to know is how many items are on the ah, and what their prices are to know whether I should undercut sharp, undercut low, or buy out and reset.

I do disagree with the OP to a degree. Knowing the competition's intentions can tell you something about what will happen in 2 hours, or 2 days, even if it doesn't change the price and quantity on offer right now, and information about future behavior definitely affects my optimal strategies.

The guy who is dumping shit below cost because he has a backlog (transferred servers, used it to level) can be bought out and profit will be had. The idiot who is persistently making and selling things below cost "because I farmed the mats for free" can't really be beaten except by consumers. That kind of idiot will own the market if he wants it. Buying him out will just result in you choosing between the evils of spending a lot of ttime to get rid of your inventory at a small loss or just eating everything you invested.

One thing to note... I have often heard people say on this blog -- if you can't compete, find a cheaper supplier. That's just stupid. If you can't compete with somebody using ah prices for your supplies, you should not be destroying wealth by turning valuable raw materials into less valuable finished product. If you find a cheap herb supplier under these circumstances -- sell their herbs for market prices and turn a profit that way.

If your competitor is willing to do people the favor of selling glyphs (or whatever) below the going rate of materials just because he got them cheaper, let him, but following suit is just idiotic. Make more money with less work just reselling the mats you bought cheap.

KevMar said...

@Shiko

Thanks for mentioning my post. The timming was interesting. For the most part I do ignore my competition and adjust to the market. I have a good feel about when its up or down and I adjust to that.

I run a very low threshold most of the time, but my market on average does not sell that low. I don't actualy like to sell glyphs at that price. When the market does get that low, I pull my threshold up a little.

I did learn a few things from taking a good look at the competition. I have 8 people keeping the price dirt cheap. I can expect this to last +2 weeks. But after all that, all it did was confirm that I was already reading the market correct with my gut feelings.

Nick S. said...

I'm beginning to question the validity of a 48-hour undercut cycle.

I'm currently reposting twice per day - once in the morning and once at night. That gives me good income.

But I've tried letting it go for 48 hours, and I sell significantly fewer glyphs, because there are people who are undercutting the entire library 5+ times per day, and with numbers of glyphs such that the stock isn't consumed very often.

Tonus said...

Okrane: "Ok, another call for moderation here.

I believe each and every one of us reading this blog in making already ENOUGH amounts of gold to entertain all possible needs.

Now, why on earth would you spend extra time with this kind of nonsense... camping competitors, adding them in ur list, addons who track down their alts...
"

I agree. I think that many times, Gevlon's comments are very specific in nature. He's shown that it's possible to make lots of gold by directly analyzing the market and ignoring the competition. Within the context of WOW, his methods work just fine. I think it's entirely different in the real world, but that's not the focus of the blog (well, not all of the time anyway).

It may help to know and understand what is driving some of your competitors, but it seems as if the effort is costly compared to simply studying the market and working within that framework, even when it means ignoring the 'people factor.'

Chris said...

If you spend too much time watching the people who are a part of the market you will get yourself into the bad habit of thinking you can accurately predict their behavior, and if you change YOUR behavior to match theirs, then you have given your competitor the advantage of making your decisions for you.

Cameron said...

One of the reasons I play a MMO is the interaction with other people.

Because I like the interaction, it makes it much more enjoyable to know who I am undercutting or moving in on their markets.

It does not change how I play, just makes it more fun.

If something makes the game more fun, then it's hard to call it a waste of time.

Anonymous said...

I started using inscription as a serious money maker right when the MMO-champion guide was posted. I dabbled in it before, but the guide showed me a few ways to work more efficiently.

First I made a deal with a farmer on the server to COD me as many herbs as he could pick. This allowed me to produce cheaper than anybody else. I spent a solid week cancelling/reposting whenever I happened to be near a computer with WoW until all of the glyphs I could make bottomed out. After working two weeks for no profit, all of the mmo-champ kiddies moved on. I kept it up until it was only myself and one other major competitor, but then another AH camper who seemed to be able to post/undercut every hour of the day entered the scene.

Since I didn't want to play the AH 24 hours a day, I have since switched to being a 48 hour deep undercutter, it's just I use QA2 instead of auctioneer. My fallback is about 1/3 everybody elses, so just by posting I have deeply undercut the competition. From there, I use a 70s undercut for anything below my fallback value. My intentions are to slowly ride glyphs to the bottom until somebody else gives up.

I don't move as many glyphs as I did when I was an AH camper, but my work has gone from milling herbs and crafting 100+ glyphs a day to collecting unsold glyphs from the mailbox and reposting them once every 2 days. Since i'm spending significantly less time overall and making much more profit per glyph, I think i'm pretty happy with my position in the market right now.

The time i'm saving has allowed me to dabble in other markets. Nothing serious, but it all provides a nice supplemental income.

Dahkeus said...

Like it or not, competitors can play a role in certain markets. For instance, at one point in time, there was only one other large scale competitor that would undercut me. I added him to my friends list and it helped me as follows:

If I logged on to post glyphs and saw he was on, I would wait and switch to do other stuff on another character, such as dailies, pvp, maybe a heroic, etc. As soon as I saw him log, I would post my glyphs.

Why? Because simply I knew I would be undercut if he was on. It was like clockwork, so for the time and the situation, it worked.

Now there are many more competitors, so it's not near as relevant, but from a practical perspective as someone who sells secondary to doing other stuff, it helps me optimize the time when I do post my auctions.

Anonymous said...

I disagree in one very specific situation. I trade items between factions and I have discovered there are people who camp the neutral AH and will poach items that players put up for one silver. I have them on my friends list because I need to know when the poachers are on.

Goth said...

Gevlon, you have it right as usual - play the market not the player is an excellent strategy. Diversify your auctions and don't get stuck in a single market solution - Inscription is not the only market in Wow. The problem with many of the QA users is that they are too focused on other player instead of market averages. This causes instability in the market causing wild price fluctuations - key reason why the glyph market has not stabilized.

The only thing I have on my friends list is Auctioneer Jaxon and my mailbox.

Jay said...

I like to see when my competitors are online if only so I don't post at the same time as them. If I'm crafting and I see some of the bigger names that compete against me online as well I'll hold off on posting until I see them log off. No sense in posting 1000 glyphs when they'd be undercut in minutes.

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