Greedy Goblin

Thursday, July 29, 2010

Equilibrium point

"No gold in inscription because of no lifers camp the AH". How many times I got this "problem". Except it's not true. You can sell glyphs even on this market for 3-4G. A Tiger Lily is around 70s (top herbs are 1.5G+), so for 3.5G you get 2.25 normal pigment and 0.25 icy pigment. Snowfall ink sells around 14G here, so 3.5 = 2.25/2*x+0.25/2*14, x = 1.55. An ink of the sea costs 1.55G, a parchment varies between a few coppers and 40s, let's average it to 0.25g, so the material costs of a glyph is 1.8G. So you get 1.2-2.2G for your work. It contains milling (2s), crafting ink (2s), crafting glyph (3s), posting with a scan (1s), emptying mailbox (1s), all together 9 secs. So if all glyphs would sell, you'd get 4-800G/hour. You can use addons for posting and getting mail, making these processes AFK, costing you no time. So even for selling glyphs for 3-4G you have higher G/hour than doing dailies or farming elementals.

This is the market equilibrium. This is not something you can "fix", since it is the natural outcome of all mature markets. If there are enough goblins around, they go to the max profit markets, but by going there and competing, they decrease profit rate until the point when some of them leaves for other markets. If there are enough goblins to cover all markets, the profits of all markets fall. In the ideal case (when everyone are goblins) the prices reach the point where farming becomes viable strategy even to goblins.

You rarely see such things. On most servers the profits are much higher. The reason for that is the high M&S/goblin ratio. M&S don't plan ahead, don't think, don't seek better opportunities, acts when he must and in a way he used to. It allows huge profits by monopolist tricks, 1c undercutting and other economic nonsense that should not work. They work because - despite they could be easily defeated - there is no one there to defeat it.

The reason while the picture above can exist is 150 greedy goblin readers on a 6K ally population server, most probably creating the lowest M&S/goblin ratio in all servers. Of course it's still way above 1:10 so there is still M&S money to make. For example I still sell glyphs for 10+G, simply because the competition cannot cover all glyphs all time and temporary surges clears the AH allowing to reset to auctioneer price or the low fallback of the AH-players.

However it shows the reason why capitalism is good: it decrease prices. The reason for high prices are not goblins. The reason is the M&S who buys overpriced crap because they just can't see ahead of their noses. No one would buy out the flasks on reset day and relist for 2x more if everyone would have a stockpile refilled when prices are low or if 10 people would list flasks undercutting the monopolist. No one could play 1c undercutting around 40G with glyphs if every living scribe (about 10% of the players) would undercut you.

The "magic tricks" to permanently keep a market away from equilibrium can only work in lack of thinking competitors. So if you are no longer making 5K/hour, you are not doing it wrong. Others are doing it right. If everyone would do it right, you'd make 300/hour like everyone else.


Anonymous said...

21 glyphs out of 400 is hardly a good sample size. How do we know you didn't just find the best group for your example?

I didn't see any of the big hitters in there like glyph of charge or glyph of thorns.

Gevlon said...

You create a char on Agamaggan-EU ally and see it yourself.

Anonymous said...

You should lower your threshold to 4 gold, you're losing money not posting glyphs that could be making you a profit.

Gevlon said...

I won't work for less than 1000G/hour. The glpyh I sell is a glpyph I have to craft, and mill link for. So I'd rather not sell it for that low.

Vinnyj said...

Thats a fallacy. I do understand that you don't want to work for less then 1000g/h, but you seem to be doing that just so you can SAY you're not working for less then 1000g/h.

You've mentioned yourself that most of the work you do creating glyphs is AFK time. Therefore, your actual g/hour would go up if you sell glyphs for any price above cost. Lets say your actual time investment is the creation of the glyph, which takes five seconds altogether. With a material cost of 2g per glyph, you could sell for 3.4g per glyph and still make money.

This assumes that you fill that AFK time with usefull things. (I do dishes, laundry, cleaning, manage my music and videos for iPhone/iPad, have breakfast, etc).

WeekendWarrior said...

Are you using QA3 (?) now or is that Auctioneer? I'm wondering what report that screen shot is from. I have been tinkering around with Inscription in order to simply get the hang of the batch posting, price setting features and the business side of this and have not yet learned all of the features I suppose of Auctioneer. So I am still unsure if I have set it up correctly.

Anonymous said...

"However it shows the reason why capitalism is good: it decrease prices"

Not necessarily. (Supply) Competition lowers price.

This can be the case in capitalism, but also in other forms of market economies.

Interestingly enough, most capitalists are working to their best abilities to defeat the basic rules of supply&demand.

Anonymous said...

This is why you make 4k gold a week gevlon, I'd like to recommend lowering threshold as well. You probably make 100 gold per hour with this method including crafting time (still time played)

Anonymous said...

Why is snowfall ink so expensive? What is it used for to value it so high? on my server (Grom@ru) it sells for less than 7g, while greatness decks go for 2k-2.7k already. I even think of crafting epic offhands to de. would you share your thoughts on snowfall inks? i've been doing qa3 inscription for more than half a year and still didn't find anything good for snowfall inks.

Anonymous said...

There are 3 essential factors missing in the wow economy to be able to compare it with real markets: brand, quality and alternatives.

A crafted item in wow has no quality. Whereas a red T-shirt made in Taiwan or made in the EU will /might have a different quality (as in you wash it 2x and it becomes a pink T-shirt.

Brand: and item can't be of 2 different brands in wow.

Alternatives: due to no brands & no quality difference, an item has no alternatives. One can go for a lower iLevel piece, but that is in fact a totally different product.

My point being: stating that capitalism is good because it decrease prices is not a true statement. It might be good in wow, in the inscription market - but stating such thing goes wider than wow alone. There are many many many real world examples where capitalism boosts prices to insane amounts, to a point where more than half of the possible clients either can't afford it any longer or have to hurt themselves.

You use rl economy terminology to describe the wow market, and then you use the wow market to prove a rl economy statement.

Anonymous said...

"This is why you make 4k gold a week gevlon, I'd like to recommend lowering threshold as well. You probably make 100 gold per hour with this method including crafting time (still time played)"

You do realise lowering the threshold actually lowers the gold per hour rate.
Maybe you should also advise him to go farm his herbs so he can get them for free.

Soge said...

@16:25 Anon

The price differentiation created by brands IS a social thing, typical of M&S. By focusing on the brand, they forgo the comparison between the quality of products in favor of social status. This is true specially for "fashion" products, in which a similar quality product can cost 100x more depending on the brand.

As for quality, as can be proven by Gevlon's Undergeared, a Higher quality item has the EXACT same function on the lower quality item, and only differs on efficiency on doing the task. Ie: buying blue x purple gems, crafted items from Ulduar x TOC x ICC. there is a real difference of quality between those (ICC gear can result in, say 50%+ DPS over Ulduar gear), but their basic function is the same. Similarly, forgoing the brand, a higher quality Shirt, of Headset, or car will perform the EXACT same function, but being better in some way, such as comfort, speed or durability. Of course, you will pay premium for that.

Thus, the are alternatives for items in WoW, similarly to the real world, considering that brands are a stupid concept.

There is a difference, however, in price comparison, since in real life finding a better price at a given moment in time involves a time investment that is not considered in WoW. However, that doesn't invalidates Gevlon's point

Anonymous said...

I'm struck by your claim that "You can use addons for posting and getting mail, making these processes AFK, costing you no time." It's good of you to be transparent about how you're calculating your gold/hour but I would not count AFK time as free.

I cannot do something in-game with that time, like crafting spellthreads or belt buckles or flasks. Nor can I switch toons to earn emblems or honor while my crafter is automatically collecting his mail or posting glyphs. At best, I can take care of non-game tasks so that I have more time free to play later. To me, this should not be accounted for as an increase my gold/hour; only the number of hours played per day.

Shouldn't the measure be gold earned per hour played (the amount of time between logging on and logging off)?

JayTekStorm said...

"You do realise lowering the threshold actually lowers the gold per hour rate.
Maybe you should also advise him to go farm his herbs so he can get them for free."

Except Gevlon said, "You can use addons for posting and getting mail, making these processes AFK, costing you no time"

So where exactly does it affect the gold per hour?

JayTekStorm said...

Forgot to add to my last comment, the gold per hour would actually increase do to the increase in sales of glyphs that gevlon normally would not sell. Glyphs that always sell for 3 to 4g each.

Even if glyphs he normally sell drop below threshold the profits would still increase. This is a common principle in real world economics, selling for quantity rather than markup on one item.

Anonymous said...

The primary use for snowfall ink is making Darkmoon cards. Now that the Darkmoon trinkets are so far behind other available trinkets, the main market for Darkmoon cards is people grinding Darkmoon rep to get "the Insane" title.

Buying snowfall ink even at 15g is cheaper than buying it for 10 ink of the sea.

Personally, I haven't seen any snowfall inks listed on my server for weeks. Does your server have cheap pristine black diamonds too?

Cold said...

Why waste all the time buying/milling/mailing/posting for crap profit? Inscription is dead. Write about something else man.

Anonymous said...

I am kind of with Cold on this one. Just the screenshot of QA posting glyphs fills me with sadness. I know all too well that about 98% of what's posted will go unsold. Not worth the effort.

N said...

I have an interesting problem... I recently re-entered the glyph market, and another glyph seller explicitly told me that he would sell glyphs at 2g indefinitely to lock me out of the market.

It puts us at a stalemate... I can sit on bags full of glyphs indefinitely, waiting for him to get bored and raise prices... but if he decides to cut prices down below cost to keep the market locked down, there's not much I can do about that. I haven't figured out a solution to that one yet.

Gevlon said...

If he goes below mat costs, buy him out. With every sold glyph he made loss!

Anonymous said...

...and thats all folks! Id like to point out, that when Gevlon started this, i believe that he was boasting profits of 5-10k/h. Now we are down to 4-800g/h. Why? Well, besides goldfarmers, WoW is overpopulated with "I farmed it so its free" individuals, and 24/7 campers. I come from Warsong-US and the average time to undercut on glyphs, enchants and gems is less then half an hour. So...whats the g/h when ALL your auctions are undercut by 1c within half an hour? 150? 200? As sad as it is, i made more gold selling 100 stacks of arrows then selling glyphs/gems/enchants combined in the last couple of months.
It has come down to a grind. The guy who camps AH more wins. No pricing strategy will fix that. What all of Gevlons strategies assume is that people crafting items are not idiots. In WoW people WILL and DO sell below mats costs because "farming makes mats free" and because the time of these individuals has no RL value, which allows them so sit and camp the AH all day.
Q.E.D. if you want gold in WoW, be the first to cover a niche and know when to jump to the next one.

Anonymous said...

Heh, on my server most glyphs are at 50-100g, only two of us competing. No problemo!