Every week, Gold Capped brings you tips on how to make money on the auction house. This article from inscription specialist Steve Zamboni has been brought to you by Seed, the Aol guest writer program that brings your words to WoW.com.
Almost all auction house tactics revolve around the undercut. It may be a single copper, a few silver or a few gold, or a freefall drop down to the price of materials. Regardless of the amount or the frequency, most undercuts share a common misconception: that you're controlling the market with your undercuts. You're not. Your competitor has the control. By undercutting, you've just let your competitor decide your price. You've let your competitor set a cap on your profits -- and more, you've agreed to accept even less with your undercut.
The inscription market sees more than its fair share of this, sometimes on a large scale. The low deposits encourage large number of postings, followed by even larger numbers of cancellations and repostings. Prices fall as each new poster accepts and trumps the previous poster's prices, until the market falls to the cost of materials and the walls go up. The final wall signals a complete loss of market control.
Once it's up, it no longer matters who built the wall. If it's your wall, you can't raise prices until the competition perched above you goes away. If it's not your wall, you can't raise prices on your auctions until someone breaks the wall. Stalemate, and out come the piña coladas.
The event that started all of this, from the first round of undercuts to the market-ending wall, is actually really simple: Your competitor listed his auctions before you did. Your first reaction was to lower your price, and everyone else followed suit. Had your competitor not posted his auctions, you would have raised your prices instead of lowering them.
In the end, the only way to truly control a market is to prevent your competitor from posting. While simple in concept, in reality, this can be a huge undertaking. What we call auction house PvP may be needed to push someone out of a market when he doesn't want to leave. There are really only a few ways to drive out a competitor and make him take his wall with him: boredom, attrition and starvation.
When a competitor goes overboard building his wall and starts posting hundreds or thousands of auctions at a time, he probably hasn't considered what's going to happen to his mailbox 48 hours later. I've seen attempts to form glyphs walls using 10 of each glyph. That's 3,550 glyphs. If they expire (or are canceled), the poster gets to spend 71 minutes digging them out of the mailbox. The geniuses that post 12 pages of single pieces of Infinite Dust will spend an hour restacking them if they were to expire.
Use this wasted time to your advantage. When you see someone going nuts with his postings, start adding new auctions to block his sales, even if they cost you a small amount of gold. If he cancels and relists, you've just caused your competitor to lose a couple hours of his time. Repeat this process a few times and his gold-per-hour numbers will quickly be in the toilet, and he may start looking for something to do that doesn't involve standing by the mailbox all evening.
No deposit, no return
On small items such as glyphs and infinite dust, the auction house deposit fees are insignificant, which led to these markets' being vulnerable to flooding and continuous cancel-and-relist cycles.
Other markets have much different dynamics. While someone's posting up 100 Eternal Belt Buckles may look intimidating, forcing them all to expire will cost their owner about 240g in unreturned deposit fees. If he starts canceling and relisting because of your auctions, he gets to pay the deposit fees again. In these markets, forcing the wall to expire isn't just about reducing your competitor's income or making him waste his time; it's a way to take gold directly out of his pocket. This is one way to directly pit your gold reserves against the competition's.
I've seen a number of players leave the jewelcrafting market -- even dropping the profession entirely -- because they couldn't grasp that their 48-hour auctions could be turned against them. After days or weeks of expired and relisted auctions, they were oftentimes paying more in deposit fees than they made from selling the gems. The more gems they cut, the more gold they lost.
The embargo: A bottoms-up view of the market
Almost all crafted items in the game come from just a few basic items: ore, herbs, cloth and eternals. Even complicated markets such as inscription, with all of its inks and glyphs and cards, can be boiled down to just a few basic ingredients: adder's tongue, icethorn and eternal life. That's it. The glyphs are just red herrings obscuring the real issue: Your competitor isn't competing with you in selling glyphs; he's competing with you in buying herbs.
To stop someone from posting glyphs, you need to run him out of ink. To run him out of ink, you have to run him out of herbs. The only way to do this over the long run is to buy all of the herbs by embargoing the auction house.
The embargo works by buying as much of the raw materials as possible to keep them away from the competition. Each stack of herbs is half a dozen glyphs the competition won't be selling. A hundred stacks is 600 glyphs they won't be listing. The goal is to allow the undercutters to keep selling their items, but prevent them from crafting replacements. Let them have their low-price walls, since you need them to sell what they already have. Their sales will eventually use up the last of their stockpiles, and the wall will disintegrates on its own. With the wall gone, prices will rise rapidly along with your profits, since you're the only one left with any herbs. (We can dream, can't we?)
The embargo starts by picking a price that's unaffordable for the competition to maintain his selling price. If he's selling glyphs for 3g, buying any herbs less than 25g a stack will quickly complicate his plans. If he has herb farmers sending him cheap herbs, offer to pay more. By cleaning all of their materials out of the auction house, the battle changes from who has the lowest selling price to who is willing to pay the most for materials. While before you were forced to react to your competitor's postings, he is now being forced to react to your purchases.
Embargoes aren't limited to just the herb market, of course. Buy up all of the saronite ore, and the jewelcrafters stop prospecting gems. Buy up all of the eternal earth, and they stop making jewelry and a large source of infinite dust goes away. No eternal water, no Eternal Belt Buckles. No eternal life, no Darkmoon cards. Buy up all the Righteous Orbs, and you don't have to worry about anyone else making Crusader scrolls. (When you hear gold tycoons talk about "shutting down the market", this is what they are referring to.)
What to do with it all
A successful embargo could leave you holding on to hundreds or thousands of stacks of herbs and ore as your purchases start to outrun your sales. You don't want to sell them, because you'd just be breaking your own embargo when a competitor buys them. There comes a point when making the goods go away becomes just as important as buying them in the first place.
One method of disposing of herbs is our dear friend Jessica. The Ink of the Sea from a hundred stacks of herbs down can be traded in for three stacks of Snowfall Ink. A dozen Darkmoon decks will consume a thousand stacks of herbs. You can make a lot of herbs go away with this method and might even make a profit out of it.
Inscription also isn't the only market for herbs. Rolling an alchemist to make flasks and potions can be a handy way to take excess herbs out of the glyph market, as each flask uses half a stack of herbs. With the introduction of Frozo, the price of Frozen Orbs is closely linked to the price of frost lotus and eternal life, so your flask operation could be running into the back end of your own embargo.
Another common target for embargoing is saronite ore, which has the advantage of having multiple methods of disposal. It can be prospected into gems and dust, and alchemists will take some of the gems to transmute into epics. It can be smelted and sold to a vendor, or it can be transmuted into titanium bars. It takes 16 stacks of saronite ore to make one stack of titanium bars, and 48 stacks will make a stack of titansteel.
Read more in this special Gold Capped series on glyphs:
Maximize your profits with more advice from Gold Capped, such as this article in our special mini-series on inscription. Regular Gold Capped author Basil "Euripides" Berntsen is now taking questions for a special series, "Ask an auctioneer" at firstname.lastname@example.org.