Greedy Goblin

Tuesday, April 10, 2012

Reselling fixed priced items

There are many items which have more or less fixed prices. The NPC sold items are completely fixed. The random mission loot that you collect from morons who don't know the way to the nearest hub via region-wide orders is almost fixed. Items that are common in one region but not another can be treated similarly.

The market of these items is mostly ignored because traders mistakenly try to station trade them. You can't. Station trading is arbitrage between inpatient random sellers and random buyers. Trading with these items is haul-trading. The fact that you might never leave your station doesn't change that.

How is it different? Your competition is not the guy who sets up a higher buy order and a lower sell. The 0.01 punk while can show up is not much of a problem here. The competition is invisible. The competition is the buyer telling "screw you, I go and pick it up myself". Look at this skillbook:
If you are a station trader, you set up a buy order for 9.6M, and resell the bought items for 12.8M. Except you barely get any items and they don't sell at all. You wrongfully blame the 0.01 punk who undercut you to 12799999.99, cut the price and still don't sell. Even when the punk leaves, you barely buy and sell. You declare the item useless, sell it to a buy order and leave it... to me who gets rich on stuff like this and curse the lack of trade slots to make much more.

The reason of this fail is in the market history:
The minimum-maximum values tell that transactions below 10M (your buy orders) happen 1-2 times per month along with sells over 11M. Why? Because the buyers go to the NPC station and buy it for fixed 10M. However the average price is 10.5M so there is money to be made here. People are ready to pay this 0.5M for the time not spent flying a few jumps.

So what will you do? Pick the items up for 10M and sell them for 10.5M. You can haul them yourself or you can buy them away and set up courier contract. However the item won't come to your station on its own like pirate tags. No one bumps into such book by accident. The only people selling these - besides traders - are the ones who bought it by mistake and want to get rid of it. They aren't that many, 1-2 a month.

The reason why they are left alone is the "ridiculous" profit rate. I'm selling most of these for 105% buy price. The tax and broker take 1%, leaving me pitiful 4% profit. Feel free to laugh and jump to the comment section to tell how awesome you are for selling for much higher profit. Or consider that the item has a constant daily demand so what I list in the morning is sold by the evening, allowing me to reinvest my money on the next day. 1.04^30 = 3.24 (224% profit/month). Still laughing?

Such business is completely safe. You can't lose on it, worst case scenario is being forced to liquidate for near buy price. People are always buying these things and the buy price is fixed.

What to do if the damn 0.01 punk shows up? You can do two things: one is nothing, waiting until he get bored and leaves. Most do, as they utilize their time to get on top of sells and that pays off much better with high margin items. If he stays, he is probably doing what you are, just at a bit lower price. Ask the question: "am I happy with 3% profit (143%/month)?" If yes, start selling for 10.4M. If not, liquidate the item and remove it from your quickbar, he won.

The interesting thing about daily profit on such items is that they barely affected by time spent or capital invested. The high turnover allows you to buy just one item, sell it, buy the next. That's exactly how I started with Logistics books when I thought 30M is a fortune. Or you can buy 100 pieces and sell them in a week without pressing a key. The outcome is the same, what changed is only the capital rotting and the the time spent. The more money you invest, the less time you have to spend, greatly increasing your profit/playhour, decreasing your profit/capital but leaving your profit/day intact. That can only be changed by changing the price. The smaller the margin, the more people buy from you instead of flying themselves.

Morons who buy a wrong book are rare. Morons who buy a wrong book and can't set up a sell order are ever more rare:
Note: this book is random drop, so should be station traded.

Business report:
Sunday morning 5.21B (0.1B gifts as I gave another 200M to girlfriend, 3 PLEX behind for second account).
Monday morning 6.07B (0.1B gifts, 3 PLEX behind for second account).
Tuesday morning 6.40B (0.1B gifts, 3 PLEX behind for second account).
On Friday morning I had 4.63 (-0.3), so in the holidays when the kids were unleashed, I made another 2B.

Remember that you can participate in our EVE conversations and soon group activities on the "goblinworks" channel and your UI suggestions are welcomed.


luke said...

"Or consider that the item has a constant daily demand so what I list in the morning is sold by the evening, allowing me to reinvest my money on the next day. 1.04^30 = 3.24 (224% profit/month)."
The 1.04^30 is only valid under the assumption that you get a return on all your investments for that particular type of book every day, which is clearly not possible if the book has a constant demand.

Jason Ambrye said...

Note that NPC prices *do* go up if demand vs. supply is high enough, and constant enough. It doesnt't (usually) go up by much, though. You mostly see it when a system gets a lot of traffic for an item (skillbook or BPO usually) that is in high demand, and the "stock" is low (7 or 11 items, instead of the 500+ in other cases).

The effect is usually bigger with the "trade" items (holoreels, tobacco, construction blocks, etc), which also have an NPC demand in-game.

Anonymous said...

"Or consider that the item has a constant daily demand so what I list in the morning is sold by the evening, allowing me to reinvest my money on the next day. 1.04^30 = 3.24 (224% profit/month)."

Sure, but assuming you also have ranged buy orders for this book a certain amount of your capital is locked away, so your return is lower than you are calculating.

Anonymous said...

Moron of the day:

Even if it was a laundering op, which could be an option...