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Gold Capped: The first player to have a new trade skill


Every week, WoW Insider brings you Gold Capped, in which Basil "Euripides" Berntsen aims to show you how to make money on the auction house. Email Basil with your questions, hate mail, or guild applications!

Everyone is going wild about the new meta gems and bracer enchants. They're all clearly better than what people are currently using, and logically, since the demand for these will be high, the recipes (which are completely random world drops) should be very valuable. The question is how valuable.

First off, I would like to say that if something is not going to be widely available, the only way to make it fairly available to tradespeople is to have it randomly drop, and let them pay whoever lucks out for it. It'd be a different story if Blizzard decided to put this on the trainer and let everyone compete, but this method spreads the wealth a little more.

Carpet bomb!

If you're the first person to get one of these very desirable recipes on your realm, you've got the potential to make a lot of money with no competition. There are two general ways to get this money:
  • sell a few at a very high profit margin
  • sell a lot at a lower profit margin
Now, I hear the particularly hardcore auctioneers among you asking why we shouldn't sell a lot of items at a high profit margin. If you're literally the only game in town, and it's the best-in-slot enchant or meta gem, the math seems to indicate that you will sell one of these to every player at whatever price you want, so long as they have enough gold to buy it.

The reality is that the demand, while strong, is always flexible. People know that it'll just be a couple of days until the AH is flooded with these gems and scrolls, and unless their guild (or arena team or whatever) is so important that they're willing to spend more than they feel it's worth, they can hold out. Most players have an inherent sense of what they're willing to pay for something, based strongly on what they perceive as its value to them and the mats. Also, even if they have the money and a really strong desire to spend it on something that would make them perform better, they have to compare the boost they'll get from this to the boost they'd get from buying a BoE or epic enchant.

In my opinion, the least risky option here is to sell as many of these as you can get your hands on the mats for at just a low enough price that you sell out. The only risk for this scenario is if you set the price too low and sell out, losing potential profits. The risk with selling high is that you might not move enough inventory to make back your investment.

The other benefit to carpet bombing is that you're gobbling up as much of the initial demand surge as you can before you have a lot of competition. This will have the effect of leaving less initial demand for the next person who gets a recipe. This will reduce their profitability per item they sell, as well as ensure that there is a lower total number of items being sold than would have if you hadn't carpet bombed.

So who would pay 30,000g for a recipe?

There is a very simple way to determine the profitability from your your purchase of a (probably very expensive) recipe. Compare the profits you've made over a period of time to the extra money you spent to buy that recipe as early as you did. Here's a basic example:
  • You bought the recipe for 30,000 gold.
  • You are making an average of 200g profit per (for example) meta gem and have sold 100 of them in the last week.
  • At the end of your week, you could have bought the recipe for 12,000g.
In the above example, the price you paid for acquiring the recipe one week earlier was 18,000g (which represents how much extra you had to pay to get it early), and that is less than the 20,000g you made during that week. Here's the issue: It's easy to look back and see whether you made the right decision, but what if you're trying to decide whether it's worth making the leap of faith? You need to make guesses, and a wrong guess could cost you money. Personally, I am waiting for the first recipe I can get under 5,000g.

If you are considering the much more expensive bracer enchants, you have to remember the mats. All the new recipes require 2 Maelstrom Crystals, which will limit the number of scrolls you can make. Unlike raw meta gems, which can be transmuted all day if you're willing to keep prospecting ore, Maelstrom Crystals are tied to people disenchanting crafted Chaos Orb-based epics or disenchanting unwanted raid drops.

Mmm ... pie

The total market is going to be divided up among all the people capable of selling these rare recipe items. We've discussed the relative merits of increasing the size of the pie while you are one of a small number of people able to produce the items. That said, the demand for the first few weeks is a one-time initial surge in which everyone who has an inferior enchant or meta will want to acquire the new one. Once most people who need them have their first one, the market will level out and be based on the number of helm and bracer upgrades being earned by the endgame population.

This doesn't mean that the market will be small, though. If you want to get an idea of a similar market to compare demand on your realm, check out Ebonsteel Belt Buckles and Dragonscale Leg Armor. This type of market tends to run deep, and the people who keep a market presence for months are the ones who make the largest final profits. In fact, even though the demand and profit are insane for these new recipes now, it's going to be a drop in the bucket compared to the total amount of money made by the end of this expansion. Being the first crafter able to make something and being able to point at a relatively large profit if you succeed in marketing your wares is good for bragging, but it's not really relevant if all you care about is making money (once you factor in the risk).
Maximize your profits with more advice from Gold Capped, plus the author's Call to Auction podcast. Do you have questions about selling, reselling and building your financial empire on the auction house? Basil is taking your questions at basil@wowinsider.com.

Filed under: Economy, Gold Capped

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