Undercutting works when there is a large quantity for sale. There isn't enough demand to sell all of listed items and one must undercut to sell. For some items, such as cloth, the deposit is quite hight and having the item returned results in a net loss. For limited supply items, I agree, don't undercut.

Undercutting is one of the cornerstones of the gold making process. Like it or not, people are going to buy the cheapest item for sale every time, and if that item's yours, you make the profit. I'm not going to encourage aggressive undercutting, especially in slow-moving markets such as 264 crafted items, but undercutting is most definitely one of the easiest ways to increase your sales figures.

I don't always buy the cheapest. Clal me dumb, but if I see someone who has undercut by like 1 silver or 1 copper on cheaper stuff or 1g on more expensive stuff, I will pay more just to spite them.

But Basil, if I am posting and selling an item that I post for more than the current undercuts. Who is making more money? You have to understand the market of an item to really be able to make money off of it. Otherwise I could be loosing potential earnings or I could buy items thinking to resale and end up taking a loss.

Really relying on software and undercutting to make quick profits before a loss is no different than the automated trading crash that occurred in wall street. It's really the same thing.

@Trido Undercutting by significant amounts on commodity goods only serves to permanently ruin their value. The amount of customers for commodities is stable, the amount of goods they will buy is stable, and the only way to change that equation is to sell at a massive discount which combined with a lack of overheads (in the minds of most vendors) will result in a race to the bottom.

In real life, anyone who does this will go out of business. In WoW, no-one who engages in this senseless market destruction goes out of business because they place no value on their game time and consequently have no overheads and any sale they make they consider to be profit. In real life, this behaviour is simply not possible - by not buying from the people who undercut by tiny amounts, you are supporting the selfish people who do not understand the basics of economics and want their money right this very second and consider any sale at all to be a success.

I, on the other hand, place a high value on my time and have better things to do than be flying around Sholazar for 2 hours picking flowers to sell - if I don't sell it at a reasonable price, it is a waste of time I could be spending on other things, like seeing a movie, or spending time with friends... or actually playing WoW instead of grinding.

Price matching and undercutting are done all the time in real market economics. A *lot* of companies thrive on advertising having the lowest prices. And they don't do that without undercutting most of their competition.

So it's not a hideous, horrible thing: It's just the way economics works.

I generally undercut because I'm not interested in playing an economics simulation - I'm only interested in selling off the stuff I can't use. Undercutting means I sell stuff faster.

If you care to be a reseller and buy and resell my items - go ahead, I could care less. Resellers are also common in real life. I get a profit either way.

"In real life, anyone who does this will go out of business. In WoW, no-one who engages in this senseless market destruction goes out of business because they place no value on their game time and consequently have no overheads and any sale they make they consider to be profit."

It's also this way because:

-There's no concept of debt in WoW. None at all. Either you have enough gold to buy something, or you don't. There's no risk at all of owing anybody a debt.

-Gold is granted to players by means other than market economics. Mobs drop gold, quests give gold, dungeons reward gold, etc. You're not just competing against other people in the AH - you're actually competing with the game world, which is supplying players with an endless stream of cash. If it weren't for large money sinks in the game, the currency would inflate like crazy.

Economics in WoW has very little risk. You can't go into debt, and you can't really go bankrupt because there are so many sources of money.

Going penniless in real life is a major concern - but going penniless in WoW is just a minor annoyance. In real life, it may take months to find a job, but in WoW, you can just kill a few mobs or mine some ore or whatever, and you'll have money in minutes.