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12-02-2010 @ 5:22PM
"The lower a price gets, the more units will sell."i'm sure i'm going to get voted down into oblivion for this, but this logic is complete crap. supply and demand exist, but undercutting by ridiculous amounts will not make people look for your items any more than they already are. this is why: you level an alt of a certain class and you get to a point where you decide it's time to buy all your glyphs for that alt. a reasonably minded person would then simply go through all the glyphs for that class and buy the cheapest ONE of each glyph. it makes no difference at all how much cheaper it is than the glyph posted above it.the same is true of raw materials. if i need a stack of saronite ore (and i'm too lazy to go get it myself) i'm going to look at stacks of ore and the first stack of twenty i see, i'm going to buy. the only way i wouldn't would be if the amount was insanely high, which rarely happens. let's say that stack is 20g. if the next stack up is 21g, i'm still going to buy the stack for 20g. if the next stack up is 40g, it changes absolutely nothing.from the other side of the ah, if i see saronite ore for 40g and i post mine for 20g or 39.95 (i like to undercut by 5s) and player-x comes looking for ore they need right now, it doesn't matter if it's 20 or 39.95, it's the cheapest and they are going to buy it. if i post for 20 instead of 39.95, it will not make player-x decide they want that crafted item and go looking for ore at the exact time my ore happens to be the cheapest any faster.point being, people have their own reasons for wanting items and undercutting by stupid amounts will not make those reasons happen any faster, so it will not make the people look for the items faster, and it will not make them buy the items any faster. contrary to popular belief, it also does not make others not undercut you. check the listing for any raw material several times over the course of a week and you can see this. one person posts for 40g and then someone undercuts them to 20g, and then someone else undercuts them by one copper. the ridiculous undercut didn't stop the last person from undercutting yet again.what undercutting by large amounts does do, is make it so everyone selling makes less profits. it also screws the undercutter themselves out of potential money. when people want something, they want it now. they don't care how much less it is than the next cheapest one.
12-02-2010 @ 5:35PM
You're missing the point that there is a marginal utility for the glyphs. Some people just don't care enough about a glyph to pay 200g for it. Period. By going directly to 40g you are approaching their marginal utility point, so less people will look at it and just say that's too expensive. Yes, it will just get undercut again but they will all sell instead of one selling every now and then.Look at it this way: If the cost of getting all 20 or so glyphs for your class is ~4k gold then it is almost _cheaper_ to just level up their own inscription alt, make the glyphs they need, then compete with you. You don't want that. You want to turn a profit on your materials and time and keep prices low enough that it doesn't encourage additional competition to come in.
Except that he is right. I sell a LOT of glyphs, and it's a very clear pattern - I sell 4 or 5 glyphs at over 150g per day, and about 50-90 between the 20-40g sweet spot. Assuming my costs are between 15-20g per glyph, you can see that the vast majority of my profits are from the cheapies.Also, you definitely see pent-up demand when a high-value glyph drops below a certain threshold. If a "must have" glyph is selling for over about 50g for a while, the first time that it drops to a lower price in volume, it moves extremely fast for a while.It's awesome when you sell a glyph for 200g, but it sure doesn't make you rich!(plus, the angry mail from other scribes when you drop the price on a set of glyphs to the 40g range is pretty funny).
12-02-2010 @ 5:41PM
+1 You beat me to it! People won't buy something because it's cheap. They will buy it if they need/want it and it is the right price:I have more than enough paperclips in my office. If Office Depot sells 10000 paperclips for one cent, I'm still not buying. I shave my head regularly. If Target has hair dryers for ten cents, I'm still not buying. There has to be a market for your product. If someone is offering the same product for cheaper and has more supply of it than there is demand, you need to get out of that market.
Tatsumasa...I cannot agree more. In the end, unles your fallback in a given market or item is rediculously high, mammoth undercutting does not change demand significantly. It may change individual buying decisions, but not overall demand.The reason is that, because the AH is not advertised and, frankly, has an interface that forces you to know what you are looking for to find anything you want, players cannot see that there are shifts in the market. The is no Nordstrom's sign saying HALF-YEARLY SALE EVENT ON GLYPHS! STOP BY!So, what you say is absolutely true... people go look for the Glyph of ... (Less fail) and either decide to buy or not. In this respect, what drives the demand (looking for the glyph because I hit level 75 and need 3 more) is complete inelastic with price.Undercutting by dumb margins in these markets is not smart.Now, in markets like ores, herbs, cloths and other raw materials where people are scanning them to see opportunities to craft or otherwise prospect the materials, undercutting can be EXTREMELY powerful.I laugh at the undercutters. They craft, sell, and lose their shirts. When they shift off of the glyph in question, I just post fallback and count the coinage.
12-02-2010 @ 5:50PM
Let's take a real world example. Yesterday at the grocery store I saw a can of potato chips for $1.49, normally $1.59. I really like these potato chips, but the regular price is much higher than I want to pay, especially considering that there are sales periodically where I can get them for closer to $1 per can. So yesterday this 10 cents savings got my interest, so I decided to buy just 1 can. Then I saw a sign next to it that I read as, "buy 5 of these and pay only $.99 each" so I picked up 5 cans.When I got to the register, they all rang up as $1.49 each. When I inquired about the sign, I discovered I had misread it (stupid font sizes). If I bought 10 cans (or any combination of that product and other products sharing the sale), I would save $5 off my grocery bill...effectively making these cans $.99 each...assuming I bought 10 cans.I did not want 10 cans of potato chips and I did not want to buy a bunch of groceries yesterday, so I kept one can and returned the rest."The lower a price gets, the more units will sell."At $1.59, I would buy zero. At $1.49, I would buy one. At $.99, I would buy 5. My breaking point was more than 5. So there is truth to the statement that the lower a price gets, the more units will sell. A corollary to that is that there is a threshhold, a saturation point, which the consumer will not cross.Obviously there are differences, potato chips being perishable and WoW items not...except what if we are talking about Cardinal Rubies? If someone listed 30 on the auction house for 20 gold each, I could buy all 30 gems, but if I don't sell them before demand for them disappears, they essentially "perish"...no one will want a Cardinal Ruby for 50 gold if a Cataclysm gem with the same or better stats can be crafted/purchased for 10 gold.
Undercutting in this fashion isn't theory. There is extra demand that isn't being fulfilled at the current prices simply because the price is too high. People aren't stupid and they do look at cost/benefit. Many players don't have more then 1k gold on them at any one time and 200g is a major imposition on them. Anyone that does have a significant amount of gold is going to know you're taking them to the cleaners because they aren't stupid, and will get someone they know to craft it for them.Selling below cost is without a doubt a stupid idea. Selling at 1.5-4x cost is just smart business.
12-02-2010 @ 5:53PM
You make some points, but this one, you're not exactly right about:"what undercutting by large amounts does do, is make it so everyone selling makes less profits. "This is incorrect my good sir. There will always be people who aren't willing to undercut that low. So hard undercutting will likely drive away some of the competition. And, with less people undercutting your now significantly lower undercut, your item has a much better chance to sell. If there are 50 people selling, say, Glyph of Revenge, all priced around 100g, and then you hard undercut to 50g, there is no way all 50 people will then undercut. What you will get is the AH pvp'ers re-undercutting, but there will be way less of them than the original people who posted for 48 hours.Basil is also trying to make the point that your time is better spent crafting and hard undercutting, as opposed to camping the AH and canceling/re-listing. I'm not sure I agree with that premise, but I don't disagree with it. I'm also not sure that I agree with the premise that undercutting by 1c or 1s at a high price by camping the AH is worth it, at least from a gold-per-hour standpoint. Both arguments are valid to make. Basil says it right up there though: He believes re-undercutting by camping the AH is a "Colossal waste of time." If you are going to make the counter-argument, you have to address that statement.I think one thing that basil might have not said that should be said is that if a certain glyph is priced very high, and you undercut by a small amount, there is a very good chance you will have dozens of undercutters, and there is little to no chance that that glyph will sell at the price you posted. So if you are not going to camp the AH, then you really almost have to undercut hard on expensive glyphs if you want to have a more sure thing of a sale. Picking up dozens of unsold items means not only did you lose that specific sale, but that you now can't make another glyph of the same type to sell again on the AH.To counter your point, Basil also said this:"Just because you have the lowest price auction when someone searches for a glyph they want doesn't mean they'll automatically buy it. They may scoff at the idea of paying 230 for something that takes three inks to create and go talk to a scribe friend instead, or they may simply decide they'll be able to hold off a while or use an alternate glyph. The lower the price is, the less likely these things are to happen and the more likely auction house searchers are to buy the glyph."I can attest to this. My Scribe can't make the Templar's Verdict glyph, and I wasn't going to pay the egregious 250g (yes it was actually that on my server's AH) for it that was on the AH. There was a glyph of Crusader Strike for around 17g, so I went with that one instead. So basil's point here is right: I really don't think most people are going to pay for glyphs that are that expensive. It's worth it for most people to find an alternative, either an alternative glyph, or an alternative way of obtaining it.
12-02-2010 @ 5:58PM
I disagree Ben,You're looking at it from the perspective of someone like yourself who has oodles money to burn. For those like myself that aren't overly interested in playing the AH game and making thousands upon thousands of gold, it's a bit different. There have been countless times while gearing up I'll hit the AH for a glyph or a gem that I need, see that the price is exorbitant and decide to come back another day or ask a guildie to craft one for me later.
12-02-2010 @ 6:00PM
The thing you're forgetting with your example, though, is that with something like Saronite, there are going to be people like me who buy a TON of it when it's cheap and don't buy it other times; these are gonna be the big sources of income for stuff like that.There's a point at which the lower price/higher volume theory does break down, but that's more due to supply and demand than anything. And in the example of glyphs, some people just can't afford the prices, so they WON'T buy the more expensive glyphs.
12-02-2010 @ 6:28PM
Tatsumasa, your faulty assumption is that people only ever buy what they need and no more. If I was looking for glyphs for my mage alt and I see a bunch at ridiculously low prices, I (and a lot of other people) would try to grab them immediately not because I need them, but because I plan to resell them. Moreover, there are a lot of auctioneers who are constantly looking for anything on the auctionhouse that they think they can resell. Moreover, you will frequently have competitors see your low-priced goods, and they might be willing to gamble that they could sell their own stock and resell your stock at a high price.Resellers buy your product because they think that they can sell at a higher price. When they go to a higher price there is less demand at that price and they risk ending up with a surplus, and they will end up forced to lower their price in order to sell their products, which means they might eventually have to go with a price lower than they bought from you. That means you win. You tricked a reseller into buying stock that they eventually had to take a loss on, and their loss was your gain.Additionally, even if low prices failed to create extra demand, it would lower supply, because the product would be less profitable and therefore fewer suppliers would craft it.
12-02-2010 @ 6:31PM
I disagree: I myself have been holding back on buying the complete set of glyphs for all my toons until the price got right ($40 max / glyph). when it was outrageously expensive, I passed.I also do that for gems, gemming blue or even green instead of epic, but sometimes get flak for it when trying to join a raid pug. Same with enchants, the bleeding edge is sometimes very expensive for very little gain. never got flak for that. I always do gem, and do enchant.
12-03-2010 @ 9:36AM
You have clearly never taken an economics class, tatsumasa. Lower prices increases demand while higher prices decreases demand. So more people *will* buy as the prices go down, even though it may not matter to you what the price is. Having hit the pre-Cataclysm gold cap more than a year ago using precisely this strategy, I can tell you that it can and does work. Granted, you make fewer big 100+ gold per glyph sales, but you make up for that with a consistent flow of income, and as competitors who want the big sales drop out of the market, your average income increase. The real trick to the glyph game is keeping your costs down, but that is story for another day
12-03-2010 @ 10:23AM
Comparing glyph sales to any type of consumable or craftable is wrong though, since people have a reason to buy a stack of 20 gems, but do not have a reason to buy 20 of the same glyph anymore. You guy it once and that's it. You buy the cheapest one at the moment (as long as it's not ridiculous, 200g or whatever) and then you forget about it.I've found that massive undercutting still just gets you undercut by one copper by the guy camping with his iphone app at work all day. I've even done experiments where I put glyphs up for 40silver and will still get undercut. I guess it all depends on the market, and stuff works on certain servers that don't work on others.. but I'm not willing to massively undercut to the point of making no profit or losing gold just to force someone out of the market for a certain glyph due to my undercuts. Most of the AH campers have more gold and time than me and will win that battle anyways.
12-03-2010 @ 4:27PM
@Res: If someone is undercutting your 40s glyph then why aren't you posting things for 40s, buying up all the 39.99 glyphs and then reposting?For others, we all know that everyone can only use one of each glyph for each character, but everyone can only use X of any commodity for each character for every commodity. The difference between 1 and X is irrelevant. How many abyss crystals could a person use in Wrath? A caster might need 6 for each staff they get and 4 for each chest they get. So they need 50-80 for the entire expansion and then will never need them again. The total number of crystals that will ever be needed by a single character is basically fixed (and will drop to zero when the next expansion comes around).The demand is created because there are so many people playing. The price matters because people don't have an unlimited amount of money. If you are very rich, odds are you did not create the vast majority of that gold (creating gold is done by looting it, vendoring things and quest rewards). That means you are making your money from other people who *are* creating gold. Gold creation is generally far worse than auctioneering for actually making you money. While it feels like 200g is just a little bit, for many people it's a lot, and for many of those same people, not buying at all is an option.I undercut big time and it works like a charm. In my mind, the main goal is to make someone who thinks they can make a huge profit buy from you, then just post more and have them buy those. People who actually need things don't have nearly as much money as people who are just making money, so you should be aiming to get your money from other money makers, not from money creators.
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