Patch 5.3 interview with Ghostcrawler
Mystery of the Unborn Val'kyr
The latest patch 5.3 news
All of the latest Mists of Pandaria newsForum 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 2 of 3)
Marten Jul 12th 2008 9:51AM
People will always undercut. If your not making the proffit you expected, adapt or find a new marcket. Its a big game, there is alot of opportunities out there waiting for you!
Bob Jul 12th 2008 9:09AM
So here we have a person complaining about the decline in AH prices, while everybody else complains about inflation due to dailies. I guess some people aren't happy unless they're complaining.
As a BS in the 360ish bracket, I have to make flamebane items to skill up. They cost about 60g in primals and I can't give them away. The sad fact is I will sell these at a loss every time, if I can sell them at all. Its all part of the deal. Suck it up and carry on.
p-diddy Jul 13th 2008 8:26PM
oh the pain of the khorium belt. I hear you my BS brother. I hear you. I'm at 365 and I haven't built up the nerve yet to watch primal after primal go into something I'm just going to DE because I can't sell it.
:-(
btw, for any aspiring blacksmiths out there - go Scryer. The Aldor BS recipes suck!
-p-
Dave Jul 12th 2008 9:34AM
Eh... that's solid economics that says "someone else got this much for selling something similar or identical to my product, but I only got that much so i lost money".
Time is a factor in profit, not just the end numbers that mean something. If you buy something for 100 and sell it for 200, you didn't just make 100. That's an overly simplistic thing that takes into account absolutely nothing and is representative of why our economy is in the crap right now honestly.
Tons and tons and tons of factors go into reducing that 100 "profit" figure into something significantly less meaningful. How long did it take you to sell it? Every minute is worth money. If you bought it for 100 and sold it for 200 instantly you probably did make a 100 profit. (and subsequently the person who sold for 150 did in fact lose 50 in profit)
It's one of the basic facts of Opportunity Cost.
http://en.wikipedia.org/wiki/Opportunity_cost
http://en.wikipedia.org/wiki/Marginal_theory_of_value
http://en.wikipedia.org/wiki/Accounting_cost
Those are some basics of economics. Most people probably won't understand them because people like to have a childlike simplicity with their money.
This is why the real-world economy is crap, and it's why many WoW economies are crap too. However, in both situations intelligent people who understand economics and have the ability and desire to work bad situations to their advantage are able to profit greatly.
What the whiner who's finding it hard to make money selling their stuff needs to do, is find a way to make it profitable. Maybe it means they buy up all the underpriced supply and re-list it themselves (it doesn't take a ton of effort, but it takes moderate intelligence to not lose your ass). Maybe it means they find alternate methods of selling that don't involve the auction house, maybe they just figure out a different way to use the components they have, whatever. There's profit everywhere. You just have to have the smarts to figure it out and understand the fundamentals of economics.
just because it's a video game world, doesn't mean it doesn't adhere to the constraints of real world economic principles, and with multiple millions of players in the game you better believe that there are at least a few people on every server with a superior understanding of economics that are getting rich off the lack of intelligence of the majority.
Michael Jul 12th 2008 9:58AM
So simply put, this person is an inefficient producer. Her total (opportunity) cost exceeds her revenue per unit (price of whatever she's selling). She should leave the market.
Chris Anthony Jul 12th 2008 10:21AM
While I'm sure your mother is very proud of your fantasy-world economic prowess, perhaps you should spend a little less time being Better Than Everyone and a little more time reading the original post and the Wikipedia articles you linked to.
Heilig Jul 12th 2008 11:11AM
As this and your lower post clearly demonstrate, you have no clue what he's talking about. As he also clearly said, most people don't. Maybe YOU should read the articles he linked. because you clearly have no understanding of Opportunity Cost.
Chris Anthony Jul 12th 2008 9:45AM
The first response to the original thread has the right of it: "You haven't lost any money. You just haven't gained as much."
I think the OP should read up on Hanlon's Razor: "Never attribute to malice that which can be adequately explained by stupidity." She's assuming that people are deliberately undercutting her prices - that they know what the "going price" is, and they're posting auctions for less than that. In fact, the people who are posting their auctions for 10% of what she wants to get are probably not even paying attention to what the "going rate" is; they're just posting the bid price that Blizzard tells them to (which is, as I recall - it's been a while since I've used the default auction house UI - three times the vendor price) and marking up a bit for the buyout.
Dave Jul 12th 2008 2:07PM
The first response is only right in the simplistic sense that says money above initial purchase price is profit and as long as you're a cent over that, you're good.
But, you have lost money if you sell something under market value, regardless of how much you paid for it. This is not the same as a loss, but it is lost money. The only scenario in which this isn't true, is if the price is never going to recover to the previously established market value and your new selling price is representative of the true market value. Then you haven't lost anything at all.
However, if things are selling for 100, and you settle for 50, there's no reality where it isn't true that you didn't just lose 50. That 50 is represented in a value that describes why you didn't sell for 100. Impatience, ignorance, or anything in between is worth that value you sacrificed from the market.
This is how plenty of people make their fortunes.
epsilon343 Jul 12th 2008 9:45AM
This isn't really a hard question to answer.
The AH is the epitome of free market capitalism and if this person/these people can't compete then they'd better figure out a new way to operate or the market will leave them behind.
Menalaous Jul 12th 2008 9:50AM
I rarely do the money grab gathering skills. One of the things I like about the game is the crafting professions. But that could have something to do with the fact that I make leather and metal armor in real life (LONG STORY). Unless I am making something like "Green Iron Hauberk", high end bags, or greens and blues that are worth wearing. I never AH items. Save for JC items, those always sell well. I simply vendor them. I look at alot of those items as free cash. I farm a fair amount as I level to keep my profs with me and look at that income as. I didnt have this, I didnt spend and really intense amounts of time on this, and it didnt cost me anything and I got more BS/LW/JC/Tailoring levels out of it. I used to make the high end greens/ craftable blues etc for AH slling but then realised that i get a better bang for my resources buck if I just make the crap and vendor it for even 25s a piece on bs 100 items. Thats 1 gold per bracer/boot. I wont huff at that.
wudielox Jul 12th 2008 10:00AM
I'm always dragging the prices down on my server. People get ridiculous with pricing. It comes down to a simple question of volume and cost.
If I list 20 items on the AH and only sell 10 of them at 5g /ea with 50s each in AH cost my net revenue is 40g. {(10*5g)-(20*.5)}
But in reality I can sell all 20 at 3g each with an AH cost of 30s each my net revenue is 54g. {(20*3)-(20*.3)}
By reducing the final price by 2g on each item, I was able to sell more of the item and lose less of my AH deposits. In the end I made more money by selling volume with smaller margin on each piece.
The best part is, because we're in a free market economy I can price my goods how I would like, and you can do the same. In the end how successful we are will determine which one of us is right.
summerty Jul 12th 2008 1:49PM
Knowledge of basic economy would help you to find better price according to market needs. Math required. :)
If you would list same 20 items for 4.5g and 15 of them sell, you make more then you make selling 20 for 3g.
Elyx Jul 12th 2008 10:08AM
Ya, the one thing you can always guarantee at the Ah is.....CHANGE.
you just have to be flexible. I think peeps who gripe about the 'state' of the AH, as such in the original posting message, are those who have fallen into a comfort zone fashioning 'X' item and selling for profit. I did that for quite awhile prior to SSO, on my LW/ench. there was a green item in the high 40's that had cheap mats (at the time) and when DE'd, the mats sold for an amazing proift. i was soaking up the easy $$ when the market changed, and the mats suddenly increased in price, whereas the De'd results didn't.
suddenly, my profits dropped and i was frustrated. But, recognizing that is was a normal AH cycle, i hopped over to an alt with diff trade skills and tried different options. Some people who only have a single toon with a single set of trade skills may not have that option, but only having 1 toon at this stage in the game is a personal choice, as its easy to lvl toons now. so those who are stuck in a single trade skill have no reason to grip IMO. Level and alt...its not like its tough anymore. and after WotLK, you can start an alt that is high enough to hit 300 trade skills anyways...
Elyx Jul 12th 2008 10:09AM
Ya, the one thing you can always guarantee at the Ah is.....CHANGE.
you just have to be flexible. I think peeps who gripe about the 'state' of the AH, as such in the original posting message, are those who have fallen into a comfort zone fashioning 'X' item and selling for profit. I did that for quite awhile prior to SSO, on my LW/ench. there was a green item in the high 40's that had cheap mats (at the time) and when DE'd, the mats sold for an amazing proift. i was soaking up the easy $$ when the market changed, and the mats suddenly increased in price, whereas the De'd results didn't.
suddenly, my profits dropped and i was frustrated. But, recognizing that is was a normal AH cycle, i hopped over to an alt with diff trade skills and tried different options. Some people who only have a single toon with a single set of trade skills may not have that option, but only having 1 toon at this stage in the game is a personal choice, as its easy to lvl toons now. so those who are stuck in a single trade skill have no reason to grip IMO. Level and alt...its not like its tough anymore. and after WotLK, you can start an alt that is high enough to hit 300 trade skills anyways...
B.D. Martinez Jul 12th 2008 10:15AM
I will be the first to admit that I under cut other buyers in the auction house. The truth is I want mine to sell first. All though I am not one of those that sell 1 item at a time which I do find rather annoying to be honest. I prefer to sell things in bunches because to me that will yield more money in the long run.
I think a good solid way to make money is to take you 70 and run some of the lower dungeons and sell what you were able to pickup. If you’re an enchanter you can place some really nice enchants on weapons and armor that will give it more of an eye appeal.
Denniz Jul 12th 2008 11:04AM
Lomentari should stop whining, it's not like she owns the whole auction house. Many people list relatively common items for often absurd prices, even with the nowadays easy to come by gold. It seems the more gold is pumped into the WoW economy, the higher the prices become in the auction house. Come on paying 60g for 1 primal mana?? That's just plain silly.
All the new players to WoW can hardly buy anything from the auction house...... 1 pair of green shoulders for a lvl 25.... a whooping of 30g, 1 green headpiece for a lvl 30..... a another whooping of 25g. Those are just outrageous insane prices.
And people complaining about other people undercutting them, but the fact is most people undercut there competition, only some people do this by small amounts while other people do this by bigger amounts. Suppose people just keep undercutting there competition, theoretically prices should eventually become lower and lower, but curiously prices just keep getting higher and higher....
*shakes his head in confusion*
Wolftech Jul 12th 2008 11:54AM
I wish primal mana was 60g on my server :) I would make a killing!
Nathaniel Jul 15th 2008 2:22PM
It's fun having Enchanting which doesn't even go on the auction house, and everyone below 375 sells enchants for free anyway.
I have gotten, in total, 60g from enchanting, having spent over 7000 leveling it, for a 6940g loss. I have the rare patterns, the raid drops, I'm 375.
Clarick Jul 12th 2008 12:02PM
The AH is my bread and Butter. Maybe I am the problem but if I list something and someone else is listing thiers significatly lower, i'll just buy it out and relist at my price. I like to stick to trade items and green drops. I also know that when I list a bunch of green crafted items, List at the DE price cause chances are thats what it is being used for.
I love playing the AH cause if you do it right go can get rich even when your logged off.