Greedy Goblin

Wednesday, March 7, 2012

Be poor, accept that buy order (or give it up to 0.01 ISK punks)!

Ever considered why WoW has no buy orders? Because Blizzard try to make sure that idiots are not exploited by people with brain. EVE is not WoW and in the market there are buy orders. If you accept those, you instantly sell. ISK now yay! - says the lolkid making sure that he'll run missions for ISK for the rest of his life (or converts PLEX).

If you want to make money with anything, the general rule is not to accept a buy order but to set up a sell order. The difference between buy and sell orders are usually large enough to let the station traders be rich. They are the guys who set up the buy orders and then resell the same item on the same station. Since they are mostly annoying 0.01 ISKers, please don't feed them. Keep the profit and the tax+broker fee for yourself: sell it yourself.

Of course there are exceptions from every rule, sometimes you should accept buy orders:
  • The difference between buy and sell orders is so small that it doesn't worth fighting with the 0.01 punks.
  • The buy order of one station is above the sell order of another, this was set up by some idiot or by someone whose time worth more than the price difference. This case you can transport to him.
  • You sell on some distant station where you don't want to transport from or don't want to return to modify the offer. For example a miner who mined Plagioclase, refined it in the nearest station transports the Mexallon to Jita but sells the Pyrite and Tritanium nearby as transporting those don't worth his time.
  • You ran out of open market order slots so can't set up more sell orders. This case find the order with the lowest sell-buy difference and modify the order to match a buy order to get rid of it.
Now let's discuss the most annoying thing a trader has to face. No it's not pirates, not even griefers, it's the 0.01 ISK punks. They are exactly the same bunch that undercut your WoW auctions by 1 copper. They utilize their playing frequency to always be on the top of the auctions, making sure you sell nothing unless you camp the station. They are often the creators of buy orders and since you can't sell, you'll give up and accept their price.

Don't! The rat poison that works on their WoW buddies get rid of them just as well: deep undercutting! Please look at that transaction log (oldest entry on the bottom):



On 2012.03.03 6:36 I sold the sole book I had for myself since I saw the price way over the buy price. It sold fast, so I chose to buy some more. These books are sold for 25.2M by NPCs on stations 5-10 jumps from Jita. The profit was 28.6*(1-0.0127)-25.2 = 3.03M on a single book. So I went and bought some, and started listing them. Sold 2 more when the resident 0.01 punk noticed competition and undercut. Since I was jumping in and out to Jita with various stuff, I could undercut him by 10K or something often, still I could only sell 2 when some guys bought them in rapid succession, probably in the 5 minutes window of the punk. So I cut the price by a million and since he did not give up, by another half the next day and in 3 steps by another half the day after. The profit for me now is 710K/book. Since then I'm selling happily, he probably choose to wait me out, or rather he had no choice since he is not transporting them himself but buying them on the station, having to pay the haulers fee and the tax of the sell between the hauler and him.

So calculate your minimum profit expectation and if you are undercut by a 0.01 punk, cut the price down to that minimum in 3-5 steps. He'll either go to hell, or you have to accept that there is someone who has better source or lower profit expectation. Of course it doesn't mean you shall accept a buy order, you can keep your sell order up for a few days, maybe the lower price increases the demand enough that his stockpiles are bought up and you sell too.

Before you'd ask why the hate against the 0.01 punk: I'm a preacher of capitalism and a strong believer that it's good for the World. The station trader is providing a useful service for both parties. The impatient seller can sell instantly to his buy order, the buyer will find the item on the station, he doesn't have to go there the previous day to set up a buy order. The competing station traders decrease the margin between the buy and sell prices, providing income to both parties. The 0.01 punk not only doesn't provide such service but discourage sellers to set up sell orders (as it won't sell as he undercuts them) and discourage buyers to set up buy orders, so he moves the market away from equilibrium, enforcing the belief that the market is something evil that doesn't serve the people. I'm also annoyed by his existence as it's pretty easy to get rid of him so his pure existence proves that most people has the trading knowledge of a toad.

PS: the pictures above also serve as moron of the day. Two can be seen at 03.04 10:40 and 03.06 22:55. Instead of buying my 26.9 and 26.2M auctions they set up buy orders for 29.4 and 28.9. Since no transporting was involved and setting up a buy order takes more clicks than accepting an existing sell order there is no other explanation than him being dumb. The biggest moron however is me at the top. I woke up to a car alarm and couldn't sleep back so I logged in. Recognized that almost all my books sold so I went to buy some more. Never do that half asleep, run some errand instead! I found some cheap books, checked that no low-sec gate is in the way and off I went to pick them up. When I saw CONCORD on the third gate in the row I checked the map. I bought the books on Torrinos, which is at the end of a linear chain. From Torrinos you can only go Yoma, from there Isinokka, from there Oipo, then Haajinen, then Piak. It doesn't need a genius to figure out ones route. Beyond Torrinos there is nullsec territory. This is the only way from there to Jita. All systems bright red on the "ships destroyed last 24 hours". Obvious pirate scouts at all gates, mixed with CONCORD. So I managed to buy 300M worth of books at the end of pirate highway to transport it in a T1 frigate. I made it. But it just makes me a lucky idiot.

PS2: Short business update: Cash + buy orders + sell orders = 1.002B (500M from gifts). Thanks to my luck. It could be 700M. Ouch.

22 comments:

Mika Hirvonen said...

Torrinos has no links to lowsec. The system on the other side, EC-P8R, is a nullsec system. The gate on the other side is usually camped by members of various nullsec alliances (or their enemies), so it's a perfect place for a sink-or-swim lesson on basic survival in nullsec.

Anonymous said...

GJ Gevlon :)

One question - I've always wondered when you undercut should you be doing it in several steps or in one step. If someone is selling for 1000 and your lowest price with profit is 800, should you make it first 900 and wait or go directly to 800?

If the undercut is really deep there is bigger chance that the other players will wait - at least on theory.

For the low sec hauling - the chance for losing your ship is overrated. Low sec is much safer than 0.0 because of one thing - in low sec there is no bubbles at the gate.

If you play it right there is only one situation where a bad luck can compromise you - when you jump through a gate and you appear close to another ship (2000m). This will instantly uncloak you and there is a chance that you don't warp fast enough.

Steel said...

Good read. A few articles back I linked you evenews24 site that was a podcast called the morning report, one of the thing that was discussed was the recent boting banhammer. Apparently most of the 0.01 games were run by market bots mainly, some... 10 of them, and by banning just these 10 bots the entire galactic market was shaken. Oops.

Also, if you are curious, Torrinos-EC-P8R is the main entry point for the entire null-sec north/northwest section of galaxy, so I assume quite a lot of stuff moves through there - though most 0.0 logistics are done via jump freighter. And where there's stuff, there's people looking to take the stuff. I would assume there can be a lot of market opportunities there, if you can brave the pipe (someone who knows this stuff better can chime in). In EC-P8R the gate is bubbled and camped almost 23/7, and it's one of the most active pvp hotspots in EVE. Jump in there if you ever feel a need for insta-pvp!

Gevlon said...

@Anonymous: If you cut in one step, you can leave money on the table. I mean the guy might give up at 900. So 2-4 steps.

Anonymous said...

A very good improvement can be seen here about your understanding of the game in general, and it seems some changes in attitude and assumptions you make/made.

Overall, I can not add a lot to this post, except perhaps:

Check things out before buying, develop a habit of doing things, and don't get "lazy" at any point.

In two words: Be prepared.

Some off- side hints: And take your time (an alt) and have a visit to several systems. Get around the regions, check the prices, get a broader overview and widen your network.

Anti said...

you assume the 0.01 isker considers each market carefully. and that he has a lower limit.

i traded 30(ish) items per station trading alt. 30-40 buy orders and 13-23 sell orders at any given time.

if one particular item didnt meet my current profit expectation i would stop buying that item. but i would continue to 0.01 isk the sell orders until i was out of stock.

it was technically possible that i would make a loss on individual sale. but it was more important to maintain liquidity so as to be continually buying profitable items.

it may be your "competitor" has simply chosen a more profitable item to use his trade slot on.

i would be interested in how much of your 1B is liquid (ie cash + buy orders) because if much of it is tied up in sell orders you are overestimating your wealth.

Gevlon said...

@Anti: I know that they keep selling, that's why I wrote to leave that auction up for days.

I can't remember the exact number but the sell order was 270M something.

Bozzor said...

The 0.01 isk undercutting in EVE is NOT the same as 1 copper undercutting in WOW.

In WOW, you can undercut ALWAYS...in EVE, you have a TIMER to modify your price.You cannot modify a price every 5 seconds, like in WOW.

This is why 0.01 isk undercutting works especially in Jita.Anyone who do not have time and skills to play the undercutting game will end up accepting a buy order or, in the case of +10 mil ISK items, to set up a sell order that will get him a 100k ISK more than accepting a buy order.

Bobbins said...

'The profit for me now is 710K/book'

710000/25000000 = 2.8%
Even for a no risk venture that seems quite bad. I would price the risk higher. I therefore believe you are underpricing the goods. I personally would put a sell order in at a higher price and wait for the price to rise.

Gevlon said...

@Bobbins: time is money. I don't measure the investment in gain vs capital, but gain vs time spent babysitting it.

It's a few-gate jump for 10M profit.

Higher price? This book is sold by NPCs for fixed price. So the profit is limited by the cost of placing an alt to the NPC, buy the book now and then and when 1B worth of books are together, hire a professional hauler corp.

Anti said...

you realy are going to kick yourself for taking so long to leave the low margin skillbook trade when you eventually start dealing in decent items.

http://www.jitonomic.com/Market/#Ultraviolet%20L

(Ultraviolet L Laser Crystals if link is truncated)

set tradehub filter to dodixie

highest buy - 54009
lowest sell - 107000

Anonymous said...

Did you setup a buy order in Jita for the books yourself? If not, consider it.

I setup buy orders for items I sell on a more regular basis or when I have larger amounts of an item in stock.

This might sound counter intuitive, but I do so in order to reduce both inventory and profit margins of the competing station traders.

Usually most buy orders bring in very low volumne anyway, so I either slightly supplement my stock without the cost of transportation and can be sure that when I'm being outbid that my profit margin is higher then my competitors', which means I can use this difference for even heavier undercuts on the sell order if necessary.

In your case you could easily bid as high as the npc price if you feel that to be needed to get rid of the punks. They deal most likely in lower volumne than you in the first place, hence require high margins to get a wothwhile return on their order slots.

Bobbins said...

@Gevlon
time is money.

That is true however I never said that it was a bad investment concerning the time invested in it. My concern was that unlike Wow there is a real risk with regard certain actions and to ignore that risk and relate it purely to the time involved is a mistake. If the risk you are running is neglible then 710k a book is good (that assumes you will never lose a cargo).
As for hiring a hauler you have already said that makes him uncompetitive with you. If he is hiring a hauler he is using the hauler to offset the risk however you are making no allowance for risk in your profits. If you lose one cargo 300,000,000 isk you would have to sell 300,000,000/710,000 = 422 books just to recoup the loss.

Phil said...

Gevlon please explain what there is to hate about 0.01 undercutting. To me, it is essentially the same as your own deep undercutting.

You are both competing for the same sale, and presumably you both have a lowest acceptable profit for that sale. You sacrifice profit to get that sale by undercutting heavily, and they sacrifice their time by making smaller undercuts more often. And as we know, time equals money so you are both really doing the same thing.

Other than they are in the way of you making an easy sale, I can't see how you can justify calling them "punks."

Steel said...

Heh... http://greedygoblin.blogspot.com/2009/05/suggestion-to-ah.html

Casares said...

It should be noted that npc sold items like those skillbooks are rather an exception than the normal case in EVE. The big majority of items are either random drops from killing mobs, farmed material (salvaged, reprocessed, mined etc.) or player build items out of those farmed material.

The big difference is: those skillbooks have a FIXED prize, in contrast to all the other goods. The difference to the npc prize only comes from transportation costs, not supply. It is MUCH harder to do deep undercutting on items with a floating lower prize ceiling.

---

Also what Phil said.

To call 0.01 ISK undercutters names because they ruin your business (or limit your profit) is stupid and a social act, definitly not a rational reaction.

Gevlon said...

@Phil, Casares: the 0.01 guy don't have a chance. Never had against a deep undercutter. Still he resists and wastes my time. Not competition just mere annoyment.

Casares said...

That's nonsense. All you have proven is that the lowest profit you will work for is lower than his.

I'd really like to see the details of your business here: how many items do you transport in one go? How many time do you spend transporting them? How much time do spend setting up the orders and how much time in updating them (in case there is any competition left)?

I'd be utterly suprised if you break 20 mio isk/hour with 700k per skillbook on a 10 jump travel, assuming you transport only "what you can afford to lose", i.e. not 50% of your entire wealth.

If I remember correctly you had a minimum prize of 4g for glyphs when material costs were below 2g. You weren't willing to work for a lower profit, so you let the 1 copper undercutters have that market segment. Kinda puzzles me that you completly forgot those principles and happily claim that you "beat" a 0,01 ISK undercutter only because he is letting you have a market segment that isn't worth his time anymore.

Gevlon said...

@Casares: the point is that my minimum profit expectation is naturally smaller than his as he need to spend lot of time updating his auctions because other 0.01 ISKers do the same. I can update whenever I'm on Jita anyway.

If he did not sell today, he lost. Tomorrow the price will be just 0.09 ISK lower so tomorrow will be like today.

If I did not sell today, I can sell tomorrow, as the price will be significantly smaller, so I'll have less competition and more buyers.

Anonymous said...

"time is money. I don't measure the investment in gain vs capital, but gain vs time spent babysitting it."

Measuring earnings/time spent is an employees point of view.

Measuring earnings/invested money is an investors point of view.

Gevlon, if you want to make substantial amounts of money (in this game), I suggest to shift your focus, as soon as you have enough money to "let it work for you." (I remember reading in your blog you dont like that phrase but I think you know what I mean :-)

For your time will always be limited. But if you can buy people`s time, meaning employing them, the most important thing becomes ROI (return on invested capital).

Casares said...

Out of curiosity: could you please update how the skill-book trading is going?

Are you still trading those skillbooks?
What's the profit on a single book now?
Have the 0.01 undercutters returned?
How many books do you sell per day?
How many books do you transport in one go?

Gevlon said...

The profit is 700K/book, I found other books too that sell OK-ish.

0.01 guys show up sporadically, like I get one or two a day but the "5 will be below me in 10 mins" times are over.

About 20-30 books/day sell, I transport 6 or 12 on one go (the stations sell them in batches of 6).