Forum post of the day: Using the Auction House properly
by Amanda Dean 
Jul 12th 2008 at 6:00AM
The economy in WoW has some interesting nuances. Players spend oodles of WoW gold on their crafting professions, and sometimes manage to turn a tidy profit. I'm often surprised to see some items that are strongly in-demand, like Light Feathers. Shrewd players use the auction house to build their bankrolls. Lomentari of EU-Draenor is exasperated with people who fail to use the auction house "properly."
She is angry that other crafters are selling the same product she creates for several gold lower than her preferred price. The items are placed on the auction house en masse at the low low rate, which the original poster blames on Leather Workers skilling up. She feels powerless to do anything about her "massive money loss." The original poster is willing to accept small cuts in pricing, but has a hard time deal with steep declines in prices.
This story is analogous to the real-world economy. I live in
There was some sympathy for Lomentari's position. Lyrica of EU-Scarshield Legion suggested either entering a price war with the competition or diversifying into other areas. One not-surprising-suggestion is to buy underpriced items and mark them up under your own name. I actually have a hard time wrapping my brain around Lomentari's complaint. Is the auction house supposed to be fair? How is fair defined, anyway?
Just like real world economics, profit in WoW can be measured by subtracting the cost of making a product from final sale price of the item. Coolin of Turalyon measures profit a little differently. His profit comes from the amount of markup on the auction house over the vendor price for the item. The sale price should be set by supply and demand.
The auction house market is completely unregulated in game. Blizzard may inspect transactions for suspicious trades, but they do not set or change posted prices. They've got a buyer-beware attitude, and keep their hands off the player-driven economy.
I've noticed on my server that prices for most crafting materials go up on the weekends and drop sharply again come Monday. Prices on enchanting materials rose steeply in the weeks surrounding the release of arena season four. Events also have an impact on the economy. When the Darkmoon Faire comes to town, interest piques in cards and decks.
If I have the bank space, I'll hold on to items, until market conditions are favorable to my price. Whenever I level Engineering, I will always gain every skill point I can on Deadly Blunderbusses, and sell them for around five gold a piece on the auction house. If I can't sell them today, I'll be able to tomorrow.
How flexible are you in auctioning your wares?
Filed under: Analysis / Opinion, Economy, Making money, Forum Post of the Day
Reader Comments (Page 1 of 3)
clarisse Jul 12th 2008 7:18AM
I've had similar issues on my server with Gem prices. People undercutting a get by 15g etc. EG Delicate living ruby posted for 60G, sortly followed by someone who has no regard for econamy, selling 20 for 40G.
Best option IS to just buy their gems and sell it. Reset the market to how it normally is. Prices are based off supply and demand like most people have pointed out, but crashing the market to get quick cash is just foolish. To make the most money out of your resources, you should only post 2-3 of a particular cut, undercutting the price slightly.
And I will hunt down and kill those SOBs who post arcane dust one at a time. Most people buy it in stacks and have to flick through ten pages of idiots posting it in ones !
Hank Jul 12th 2008 7:39AM
What I don't understand is the pricing of manufactured goods LOWER than the cost of the materials to make them. And I would also like to publicly flog people who post 100 single items that stack to 20.
mensrea Jul 12th 2008 8:30AM
Prices are set by the value that the buyer places on the good/service. The problem with the WoW Auction House is that we have no idea what things are selling for. We know what they're being posted for, but that's not a very good proxy.
That said, there are a bunch of reasons why you might sell a crafted good for less than the materials: one of them is that you used the materials to skill up, and having 40g for all of your gems now is worth more to you than spreading out those sales and getting 10g more per gem over time. There's a time-value of gold in WoW directly analogous to the time-value of money in the real world: having 10g now is always better than having 10g 3 months from now.
All that to say that just because YOU think that taking your time and selling the gems for a larger markup, but more slowly, is better, doesn't mean that the other buyer shares your opinion on the value of the gold. If, for example, you've got 15,000g in the bank, and everything you've ever wanted to buy is bought, you have no need to have the gold rightnow. If the other person is still saving for their flying mount and is getting really sick of running along the ground, having all of that gold ASAP is worth more to them.
Smoky Jul 12th 2008 8:51AM
Hank, depends on how you define cost; buying mats from the AH means you are paying for the actual effort required to obtain that material, but you are also paying the seller's desired profit, which may be quite substantial; not paying this profit (e.g. by farming them) directly lowers the cost of an item manufactured from these materials.
katsuyakaiba Jul 12th 2008 9:03AM
I got a worse story. Somebody bought a couple stacks of adamantite arrows. All fine and good, but then he went and split the stacks into SINGLE ARROWS and reslisted them! 16 Pages of single adamantite arrows. I wanted to kill him.
Chris Anthony Jul 12th 2008 9:27AM
Clarisse, I'm not convinced that "most people" *do* want stacks on the AH. When I'm buying (for example) Arcane Dust, what I'm generally looking for is what suits my needs right now, which is usually one or two Dust. I'm not looking to stock up. My experience is that most people do the same thing; if they have to buy a stack, they're going to use what they need and then relist the rest of the stack.
My tactic has generally been to list enchanting mats in stacks of 5, which lets me catch the eye of the "one or two" crowd" without overwhelming the AH with listings.
mensrea, actually, the price at which things are listed *can* be a reasonable approximation of the price at which things are sold, given two prerequisites: first, that you have a (relatively) large amount of data over a (relatively) long time, and second, that your fellow auctioneers aren't dumb. If the other people on the AH aren't dumb, when something doesn't sell, they'll relist it at a different price - either lower (on the assumption that the item was more than everybody wanted to pay) or higher (on the assumption that if something's priced really high, people will assume that it's worth it). Either way, you get the benefit of them refining their auction house prices - but only if you've got the first part down, which is scanning regularly over a long period. Once or twice daily (you certainly don't need to scan more often than twice daily) for a week or two should give you a good idea of what current market prices are; if you don't get a price for an item, that means you get to set your own (since nobody else is selling it!).
katsuya, that is obnoxious. Unlike profession mats, I think people probably generally buy ammo a stack at a time. Who on earth thinks that one arrow per auction is a good idea? (Maybe the idea was that less-savvy players would just buy them up, thinking there was nothing else on the AH?)
spinninnzen Jul 12th 2008 10:48AM
katsuya: thats when you dont buy any of it and let him have alllll the fun of opening 200+emails for auctions expirations hehe seriously who does that
Bootsanator Jul 12th 2008 1:34PM
dude, death to people posting 40 arcane dusts 1 at a time. Death.
Zamboni Jul 13th 2008 3:45PM
As one of those SOBs who post arcane dust one at a time, single stacks are only ones that sell. I can list dust in stacks of 4, 5, 8, 10, or 20 and get them all back unsold. I list them as singles for 30% more and they sell every time. Buyers want them as singles and they're willing to pay more to get them that way.
Now I do think there should be a limit on the number of auctions you can have for each item. I only post about a dozen singles at a time and refresh them as they sell. The clowns posting 50 to 100 items at a time need to smacked down.
Helig Jul 12th 2008 7:44AM
I tend to only deal in trade materials such as uncut gems, primals, etc. On my server it seems that the market is just too fickle to attempt to pawn off even 65+ green armor or weapons in a reasonable time frame irregardless of the auction going up on the weekend or in the middle of the week. Working the AH is alot like the stock market, you can go for short term quick gains or play the long shots and hope for an even greater profit: I routinely hold a few stacks of mid-level ore for that one time when a guildie says that its going for absurdly high prices such as 40+g for a stack of Mithril.
Rhadagast Jul 12th 2008 8:03AM
This is one of the things of a free economy, people can undercut you. You spent a bunch of gold....so did they, or they dropped a bunch of time in on the items on another toon and are recouping the cost.
This post seems one of arrogance. How can they set the price and say no one goes below that or it is unfair? A group raids kara on farm, they end up sharding everything. As the shards are gotten quick and easy, and they are just geting a repair fund, they sell the mats 'cheap', or cheaper than a group that took 4 hours to get to and down Curator. As it took longer for the 2nd group to get their shard, is it worth more than the famr group? Nope. The value of anything is what people are willing to pay for it.
I have 2 70's (alchemy/herbalism & leatherworking/skinner), and an enchanting/miner close to 60. Simple logic, if people are smashing the AH, don't put your stuff in. If they do it after you, tough luck.
If you are short on bag space, create an alt, get it a guild charter, have friends create toons to sign it, and buy a guild bank. 98 bag slots for about 110 gold...cheapest bag in the game (just remember to boot everyone from your guild as they can clean you out). Wait til they sell off, then put the stuff back in.
PeeWee Jul 12th 2008 8:12AM
Cry me a river, build a bridge, and get over it.
Seriously.
Arann Jul 12th 2008 9:40AM
Hmmm... sounds like someone's having a cranky day!
While everyone else is working on those bridges, I'd suggest making yourself a boat, taking that attitude, and shoving off.
To get back to the topic of the article, I actually LOVE the people who post far under market value--they're practically giving you money!
I found this to be particularly true in a couple commodity markets--most notably cloth. The more the price fluctuates, the more room you have to buy up everything below what you consider to be "reasonable" and profit by reposting at your price.
For example, if I pull up Linen Cloth and buy all the stacks that are listed for 10 to 85 silver and repost them at, say, 1g per stack times 40 stacks, I've made myself a nice chunk of change. In my experience, the higher the level of the trade good, the more stable the market, but the more profit can be made when someone does undercut everyone else.
Does this take a little start-up cash? Yes. Is it risky. Of course. Can it be profitable? Extremely.
And of course, the big protip: If you can buy a full stack of netherweave cloth for anything less than 3g, you are guaranteed a cash return. It's amazing how many stacks I pull off the AH for under 2 gold.
Happy shopping!
moink Jul 12th 2008 8:28AM
I may be considered part of the problem on this. On my server, there are a couple of people who routinely put golden spellthread on the AH for 550g buyout. I've tried a 500g buyout before and it didn't sell, same with 450, but 420 nearly always does, so that's my price point. Subtract the low-end AH prices for primal life and primal nether, and I'm making about 100g profit, which really is enough for me, for a pattern I bought at a vendor, even if I do have to be aldor exalted.
If they don't like it they can buy my spellthread at my prices and try to sell it at theirs. I just don't like having my gold tied up in commodities waiting for some poor shmuck to spend far too much on their spellthread.
Heilig Jul 12th 2008 11:08AM
I think your last sentence here is the key. I can't tell you how much money I have made by playing the players. if i see the "king" of our auction house has the lowest price on something I have a lot of, I undercut him by about 20%. That is the price point where I KNOW it will sell because HE is going to buy it to relist.
I just did this with Runed Living Rubies last Tuesday. He had about 20 of them listed at 70. I had been stocking up throughout the week and proceeded to post a dozen of them at 55 each. I then got on an alt and whispered him that somebody had flooded the auction house and undercut him. Two minutes later I had 660 gold in my inbox and he had 12 new Runed Living Rubies in his bank. I got my money now, he gets an extra 180 if he sells them all this week, which he will, and everyone wins.
Except the poor saps paying 70 gold for a Runed Living Ruby. But I guess that's what you get when you have one guy on the server with 600K gold spread over 4 toons. He gets to make the pricing rules.
thelightandthedarkness Jul 12th 2008 3:15PM
I agree with the build a bridge, and I don't mean it negatively, but the real world works on supply and demand.
I have a hard time leveling enchanting because there are many 375/385 chanters on, and I may get angry, but oh well. That's life.
I'll admit, I am a routine undercutter. I always check similar prices for whatever I sell in the AH and drop it by about 15%, usually because I have no time investing in finding it. Farming is not a time loss for me, so I use my extra high-end cloth and drop it for about 5g less. Sometimes someone undercuts me, and I have to hold and resell later. And sometimes I get to sell primal mooncloth for 100g :-)
It's a game. right??
Nick S Jul 12th 2008 8:41AM
the issue that may be at fault here is the multiple rewards crafters are considering.
on the one hand, there's the monetary reward of selling the item on the auction house, but on the other (and often, this is the more important thing) they're getting skillups. many items are sold at absurdly low prices simply because crafters are powerleveling and want to quickly get some portion of their gold back.
those who aren't getting skillups, then, aren't getting a "full" reward for their items.
i often see cut gems going for less than the mats it takes to make them on my server. how does that make 375 JCs feel? not good, i'm sure, but it's all part of the deal.
Michael Jul 12th 2008 9:39AM
Cut gems sell for less because the market consists solely of the people who want that specific gem. Thus they won't sell as fast, if at all. It's easy to find a 375 JC who will cut anything for a small fee or even free, so it's much better to have uncut gems of given colors. Same situation goes with primals, which can be used by nearly every trade skill to craft numerous items.
el Jul 12th 2008 8:50AM
The auction house is as "fair" as PvP, raiding, or other part of the game with a lot of human interaction: If you lack skills and experience, don't be surprised if other people do better than you. It probably should be an eSport - http://timhowgego.com/pro-auctioneering-the-new-esport.html ;) .
Eternalpayn Jul 12th 2008 11:08AM
Nice article.