Greedy Goblin

Monday, July 26, 2010

QA3 or Auctioneer?

The title is a long debate, especially on glyph front. Now I try to give a general advice when to use the first and when the second. Actually we are not even talking about the two addons, we are talking about two pricing strategies:
  • Undercutting a bit to the current seller, no matter how much he sells for (within a threshold-fallback range)
  • Sticking to the long-trend market price, no matter how much it is (with a 10-20% undercut range).
If you know anything about economics, you know that the second is not just superior, the first is plain stupid, and theoretically no one should use it. Yet it is widely used, including by people who gain huge amount of gold. I've been using both for couple of months now and can tell exactly how can the "stupid" be better than the "optimal": it depends on the imperfection of the market.

On a near-perfect market, buyers and sellers know the prices. The trading happens on the equilibrium price. You sell if you have something that cost you (or currently worth you) less than the equilibrium price, buy if you need something more than you need its price (alternative products from it). The profit comes from efficiency: by being efficient you can get materials and worktime cheaper than the equilibrium price.

On an imperfect market people have no idea about the prices and what the price they are asking and giving is largely random. Profit comes from arbitrage and abusing M&S: you buy low from some dumb and sell high to another.

If the market would be perfect in WoW, people would all accept the equilibrium price, it would only depend on supply and demand. Everyone would use auctioneer. The market is never perfect, not even in real life. In WoW, where even "i farmd for free" kids are significant factors, it's often far from perfect.

The decision between QA3 and Auctioneer depends on the perfection of the market. If the M&S is an exception, use Auctioneer. If the M&S is the rule, use QA3. Before you'd say "the M&S is the rule on every servers", remember that not the number of people but the buying/selling power count. If there are 3 intelligent sellers playing with 10K gold on that field each and there are 50 punks, paying-expecting 10-50G from the same market, the market is near perfect.

How can you be sure that a certain market is near-perfect or terrible? From the G/hour available to the public. If it's low (300-600), it's a near-perfect market. If it's high, it's ruled by M&S. The "to the public" in the previous sentence refers to rare drops, rare recipes and "on-CD" items that your competitors can't mass-produce.

Crystallized fire can be produced from eternal fire with a click work by anyone. A Dalaran-sold pet can be bought by anyone with a click. A single arrow can be "produced" from a stack with the selling interface without effort. These are typical M&S markets where the equilibrium profit should be 0. No point trying to stick to the market price, reap whatever insane price you can, use QA3.

However if cut gems are in the range of the uncut, it's near-perfect. You should use auctioneer to keep the equilibrium price if some "farmed for free" kid is posting below mats or some wannabe millionaire monopolist bought everything up and selling 2x equilibrium. If you just undercut him by a copper, the next seller will undercut you anyway. The old equilibrium price proves that there are many competitiors.

Using the above logic falls only one market: glyphs. If you look at the 1000% profit (4G mats, 40G price), you say it's an M&S market, so 1c undercutting is the proper move. However there are often campers who are not M&S and - despite they sell only a few items a time - are representing a near-infinite selling power. You will not sell anything with QA3 since they undercut you the second you log out. The proper action here therefore Auctioneer, or manually configuring QA3 to cut deep under them.

Auctioneer shall be used also when you are oblivious to the price. This is typical with "whatever crap dropped during questing". You should not research the market of "pants of the eagle" but nor shall you sell it 88.99 just because some punk listed it for 89. Use the long-term market price here.

So the question before you choose your pricing method is: "am I competing with intelligent people or M&S?"


Unknown said...

I don't understand a thing what you mean....
Sorry for that.
Im playing the AH since WoW classic. Since WotLK I use QA3 for my auctions. My mainmarket is Jewelcrafting and I undercut by 1 copper. Why?
Oke I buy a raw gem for 80g. Cut it post on AH for 120g.
Then a competitor posts the same cut gem for 119g99s99c.
I can do 2 things now.
Cancel all auctions and repost at the price at 119g99s98c.
Of underprice by 10% which is around 108g.
If I log out again then im undercut by a copper again. It doesn't matter if I undercut by 1 copper or 10%. If I undercut by 10% then I loose 10% of profit that I could make on that same gem.


Gevlon said...

If you'd decrease the profit rate, someone of the competitors (he or you) would say it does not worth it and leave. Then you wouldn't have to camp the AH anymore.

Anonymous said...

Don't understand what you're saying here Gevlon... so the market is stupid and therefore you make less gold with the more optimal strategy?

This is a game, not real world economics. Trying to compare the two is silly! There is no such thing as quality in this game, only quantity and price.

You're trying to make it more complicated than it really is and the simpler addon is always going to win. What gets my items out there fastest and for the best profit? QA3.

There are exceptions, but sheer quantity of sales will outdo the losses you suffer from using qa3.

Anonymous said...

Who in their right mind would use QA3 for everything they sell? You make it sound like you must choose one or the other, why not use both?

Both tools are good for different things, it's not 100% one way or the other.

Your very title is incorrect! It is not 100% either way.

Anonymous said...

I'll have to disagree with you on this one, as i have been working my servers Gem markets very succesfully using QA3

I have setup a snatch list in Auctioneer with all of the raw gems i need, priced in an area i know i can find lots of supply in and still make good profits on.

I then cut it, and have QA3 setup with a group for every color/rarity, with my fallback being Snatchprice+20%+AHcut, and a fallback around double of that.

This way i can go up to the AH window with my gems, and be 100% sure that i am not loosing money on anything but the posting fee.

Jeff said...

Here is what I don't get. Why even have this debate? It doesn't matter. Gold is so easy to get that any which way you do it works, and once you get over 40k or so, you don't even need any more of it.

I was curious for myself how easy or hard it was to make gold in WoW, and found it incredibly easy. I went from zero to goldcap in about three months with jewelcrafting, though I don't doubt it can be done with other professions. All I did was buy uncut gems low, sell higher.

I ended up camping the AH some, though in retrospect, it wasn't really needed. My undercuts sold, but also even after people undercut me a few times, eventually my stuff would sell anyway. If it didn't, it wasn't hard to relist and then get sell the rest. Actually, I probably spent more time looking for deals on uncut gems than I did watching my prices and who undercut me.

Most of the time, I didn't use QA or Auctioneer to auto-post. The volume of gems I was selling wasn't so large, and I preferred to set the price myself, not always undercutting.

But what it comes down to is that the market is very far from efficient, and this is what allows these easy profits. And I would not say it is because of stupid people. Remember, this is all monopoly money. Maybe some of these people that buy without regard to historical prices are focusing on their real lives at the expense of managing their wow wealth (focusing on raiding or whatever), and are in fact far from being morons.

Anonymous said...

Remember, this is all monopoly money. Maybe some of these people that buy without regard to historical prices are focusing on their real lives at the expense of managing their wow wealth (focusing on raiding or whatever), and are in fact far from being morons.
Well said.
According to this post I'm dumb, stupid, and a moron. Yet I'm in The PuG's raids, performing on par with Gevlon himself.
I simply don't care about efficiently earning WoW gold. Inefficient selling provides more than enough gold to cover the occasional new gems/enchants.

Anonymous said...

WoW's AH and followingly Auctioneer got one major problem:

Unless it's your own auctions, you do not know exactly for how much items are sold. You only ever know what price items have that haven't been sold yet.

Now Auctioneer does get close, especially when keeping a continuous watch (so it can make pretty educated guesses), but it cannot and does not list the market price for which items are sold.

Willowbear said...

"If you'd decrease the profit rate, someone of the competitors (he or you) would say it does not worth it and leave. Then you wouldn't have to camp the AH anymore."

You aren't implying that you drive your competitors out and then reprice? If someone does this in a market I'm in I either buy the low cost post or stop selling until the prices come back up. Eventually the person trying to capture the market loses patience and moves on.

"This is a game, not real world economics. Trying to compare the two is silly!"

Um...actually market economics do come into play EVEN IN A GAME. Supply and demand is the same in whatever form it takes.

Deepcut said...

I think you are leaving out one big portion of the equation: elasticity

At certain times, gems are very inelastic (ie raid nights), and those who are raiding want a gem and don't care about the price. The same probably holds true for glyphs.

It's not about M&S, it's about whether or not YOU are making intelligent decisions about how to post your auctions based on more factors than just what your competition is doing.

Adjust your play-style so you can beat intelligent players and M&S at the same time. It requires more work, but the payoff is greater.

Braille said...

Auctioneer has a "Glypher" option now that looks like it works similarly to how QA3 works. I've been using that for posting glyphs for a couple months now and it's made posting a whole lot easier, since the glyph market on my server seems to fluctuate as much as 50g from one week to the next (not sticking close to market averages at all)

masochista said...

You definitely seem to hold an anti-QA3 bias. I find it pretty short sighted of you to dismiss the notion of setting a price channel for an item as stupid; while advocating blind adherence to the “Market Price”. Retailers the world over engage in selective pricing by offering sales prices periodically and marking items up during certain periods within the year; would you admonish them?

Many of us use Auctioneer’s Snatch to automate and constrain our purchase costs while using QA3 to automate and constrain our sales prices.

Considering how easy it is to manipulate Auctioneer’s Market Price calculation I am disappointed each time you taut it as superior to manually evaluated and explicitly defined prices.

I’ll continue using QA3 to post my gems, glyphs, armor kits, epic crafted gear, enchant scrolls, and trade goods at prices than range from 100% to 25% over my cost thank you very much.. I’ll save Auctioneer’s Market Price for when selling bag clutter.

Anonymous said...

I only have experience on my server that seems a bit more competitive than some: most glyphs sell for under 10g, NW Bags under 9g, cut gems fairly close to uncut, etc.

There are definitely two types of markets. I find the QA3 style markets to be simpler if not as glamorous as flipping 10k epics.

I disagree with @Jeff's 40k figure: to give a new T9 toon a jumpstart on the GS invitations, I spend over 70k on 264 BoE neck, wrist and wand as well as crafted legs and boots. Prices are dropping so I expect to at least buy battered hilts and boots for 3 alts as a slight head start for cata. Frozen orbs are up to 20g but were 2000g in Nov 2008. I would prefer to start my Cataclysm crafting operations with far more than 40k in the bank. Hopefully there will be more crystallized fire. As Jeff said, none of this is necessary; but nothing in WoW or has economic value.

P.S. some blogger posted about WoW avoiding the embarrassment of closing servers by having battlegroups (you can always find LFD/BG even on dead server) and posited that you may someday see battlegroup AHs. It was a heretical idea to me. yet intriguing; it should be a much more efficient market than some servers.

N said...

I used to use QA3 because my strategy for the glyph market was simply to cut the maximum price to 9g, then undercut by a gold against all of my competitors.

It required that I keep every single glyph posted at all times (lest one jump back up to 50g and give someone a win) but it was spectacularly profitable.

Problem was... there was a mandatory number of hours that I'd have to be around in order to keep it up. If my glyphs sold out, the prices would go back up and competitors would return to the market.

So... now I just use Auctioneer. It takes less time.

shirtfight said...

I'm not sure there's really such a thing as a market price...more like a market price range.

As any good goblin would do, I have strict parameters on my raw material purchase prices (for example, I'll pay up to 130g for a cardinal ruby if I'm desperate). I also have a set selling price range (I won't sell below 150g, and if no others are up i'll post at 240g).

By doing this, I've set a minimum profit I'm willing to make...anything on top of that is just icing on the cake. And let me tell you, there's a LOT of icing!!!

Do people post under 150g? Yes of course they do. And when that happens I don't sell that particular gem. But that's just one weapon in my moneymaking arsenal...and eventually that cut will go back up within my selling price range.

QA works great for this, and I don't feel that I'm losing profit or being inefficient by using it.

The Gnome of Zurich said...

Not only doesn't auctioneer (or any other tool) not know for certain when things are actually sold, there is no way to know (other than educated guesses about the market) what exactly people are willing to pay that is less that what is offered, because you cannot put a buy order into the auction house.

Because of this, even if there were *NO* M&S in the market, it would still not be very efficient in the absence of multiple major market movers on both sides of the market (buy and sell), and it would be possible in principle for someone smart to exploit the inefficiency to make a lot of gold.

The problem is, to keep a market efficient, you must not just behave intelligently, but you also have to care enough to check on the market regularly and act when it is out of whack. 3-4 major market participants can keep a market efficient -- but as long as the market is efficient, there is little advantage to putting that kind of time into it, unless it relates to another market which is not.

Gevlon said...

Obviously, pricing manually, calculating all factors is better than any automated addon. That's kind of obvious.

Gnome of Zurich: There are usually enough people on a normal pop server to make major markets (glyphs, gems, leg armors, bags, fish feast, flasks) tolerably optimal. I can rarely see these items way above the material price.

You are right that there are more rewards to reap in inefficient markets. However you can't MAKE such markets just hope that there is none taken. You can find gems of course.

In efficient markets the profit is in volume and efficiency. A flask spec alchemist with CoD farmers and scheduled AFK crafting time can make nice profit on the flask market where a random seller sees little.

Gevlon said...

PS: I hope you post more on your blog. You made nice layout but yet only one post.

Julian said...

On my server, there is a guy who has 2 accounts, has them logged from 8 in the morning to midnight, every day. Every 10 to 15 minutes he undercuts with 1c. Once in a few days he selects a few glyphs that are going low and resets the price to 100g. My only money comes from these resells, it's impossible to compete with that nerd for a normal customer.

Forreststump (in hibernation) said...

If I want to pay for multiple accounts to camp the AH for every waking minute, it's my prerogative, thank you very little...

Just kidding... it ain't me... And mass price drop doesn't work, because he lets his addons do the 1c undercut with no threshold, amirite?

masochista said...


You compete with a camper like that by posting X of each glyph just above your minimum acceptable profit amount regardless of what competition prices are. By doing this, you block him from resetting the price without buying you out. Forcing him to either buy you out for your price, or to accept marginal profits on all glyphs. Eventually, this will limit his returns to a point where he will not find it worthwhile to camp the AH. You have to post many of each glyph to ensure that he won't recoup his buyout cost before you repost your next round of glyphs.

To do this in Auctioneer you'd have to manually set the price of each glyph to your desired profit price. To do this in QA3, you'd just set the fallback price to your capped price and enable autofallback.

Anonymous said...

He's only on from 8 to midnight and only undercutting every 15 minutes?

Dam you're lucky. The auction camper on my server has at least 3 accounts (probably more), hasn't been offline for any significant amount of time in over 6 months and cancels / reposts as fast as he can (about once every 3 minutes covering gems, chants, leg armors, flasks and god only knows what else).

The only thing that discourages him is mass posting at low prices. I guess he figures it's not worth his time then but the minute prices go back up on anything he's right back at it again.