Gold Capped: How patch 4.2 broke the auction house
by Fox Van Allen 
Jul 4th 2011 at 4:00PM
On June 24, 2010, I woke up at 4 a.m. I grabbed some coffee, got into my car with my roommates, and went to the Cambridgeside Galleria mall to stand in a ridiculously long line. The goal: to get an Apple iPhone 4. It was the latest and greatest thing, and we all had to have it.
A very similar dynamic is happening right now in the World of Warcraft. There are a slew of new-for-patch-4.2 items currently available on the auction house. New BOE gear from Firelands. New tailoring and leatherworking patterns. New blacksmithing plans. Living Embers. New PVP gear. They're all -- at least in theory -- high-demand items. After all, given players' insatiable lust for better gear, customers should be lining up around the (virtual) block to be buying all this stuff.
But on many servers, they're not. The demand is clearly there, but markets are struggling to function.
What happened? Why did the market break? What are players doing wrong? And how exactly are you supposed to play the market with these new-for-4.2 items?
Case in Point: The Living Ember
The Living Ember is a BOE Firelands drop that's obtained from killing bosses therein. It's this raid tier's Primordial Saronite, with one sharp difference: You can't buy Living Embers with valor points. This severely limits supply, which of course puts upward pressure on Living Ember prices. And because of that natural urge to buy the latest and greatest the second it's available, demand for Living Embers (the items you can craft with them) is high, too.
High demand plus low supply equals a seller's dream market. Huge profits are just sitting out there, at least in theory, waiting for any guild or PUG raider who gets their grubby hands on a Living Ember.
But very few sellers actually benefited from those perfect storm conditions. Why? The Living Ember market is broken.
Supply is far too constricted. In Wrath, Blizzard allowed raiders -- and indeed, even more casual non-raiders -- to buy each tier's crafting "orbs" for emblems. In Cataclysm, that's simply not been the case. Chaos Orbs are only accessible by running heroics (they're still bind on pickup), and Living Embers, though sellable, are only accessible through raiding.
Having Primordial Saronite available for immediate purchase at emblem vendors seemed to work well with managing supply. Quantities were still quite limited at first, but high prices convinced those sitting on Frost Emblems to forgo their tier 9 gear and buy Primordial Saronite to sell, instead. Initial prices were high -- often around 10,000g. But these prices were reasonably high. People were willing to buy at that price point.
And as the high rollers filtered themselves out of the market, prices on Saronite dipped quickly. A few weeks later, Primordial Saronite was 2,500 to 5,000 gold apiece -- a price that held fairly steady. Raiders and guilds sold Saronite for profit; raiders and guilds bought Saronites to craft epics. The market worked, even if many players could only participate on the "seller" side of the equation.
But in Cataclysm, without any other source for Living Embers but raids, there just aren't enough people participating in the market to correct it. There are very few sellers, and they're fumbling in the dark without a clue what to price these things at. People are listing them way too high, leaving them to languish on the auction house without a buyer. That doesn't help buyers or sellers.
Though demand is high, there's little motivation to sell. The people who want Living Embers the most are raiders. The only people who can sell Living Embers are raiders. Therein lies the problem with the market -- there's just little desire to sell right now. Most raid teams are keeping these hard-to-get items "in the family," so to speak.
Changes to the way guilds make money in Cataclysm are only exacerbating the problem with this market. The guild perk Cash Flow ensures that guilds with active members have money to spend on them. Further, for level 25 guilds, completing "guild challenges" -- as simple here as running heroics, battlegrounds, or raids in guild groups -- awards large sums of money each week:
- 250g per heroic times seven heroics/week = 1,750g
- 500g per rated battleground times three rated BGs/week = 1,500g
- 1,000g per raid once/week = 1,000g
The hardcore raiding guilds that are able to down Firelands content and obtain these Living Embers have treasuries that are flush with cash. Sure, they could rack up 250,000 gold every week for the next month by selling off its Firelands BOEs. But with all the gold coming in from other sources, do they need to?
No. And that's why few guilds are doing it. They're saving Living Embers for their raiders and giving away BOEs on /rolls like they were boss drops. Completely understandable, but all of it does little for the server economy.
Market snapshot: Living Embers
To try and get a universal view of the Living Ember market, I headed to The Undermine Journal. Few markets have Living Embers currently listed. Those that do ... well ...
Digging deeper into the Undermine Journal data, you find an ugly truth: Few of these, if any, are selling.
That's because none of these listings have found the fair market value for Living Embers. An item is only worth what a buyer is willing to pay, and buyers aren't willing to pay 429,496 gold for a Living Ember. They don't seem to be interested in paying a tenth of that.
So what's the fair market price for these things, the price at which they'll actually sell? Probably closest to the auction listed at 15,000 gold, but even that may be too high a price.
After all, no crafting recipe requires fewer than four Living Embers. At the lowest price of 15,000 gold, any ilevel 378 craftable would run 60,000 gold plus the rest of the materials. Given the history of epics and what bind on equip gear is currently selling for, 60,000 gold is just way too high a price for an epic. And worse yet, none of these markets seem to have a full four Living Embers available for sale. There's no instant gratification factor at play. Do you think someone will pay 100,000 gold for the ability to craft half an epic?
Sellers, when you've got something valuable in your hands, I know it's only natural to want to squeeze every last drop of profit you can get out of what you have. Living Embers are a valuable commodity, no doubt about it. The fair market value for these will never be higher than it is today. But if you don't list these at a fair market value, they won't sell at all, meaning you'll have to wait until tomorrow to sell them. Or next week. Or a couple of weeks. And by that time, the fair market value will have dropped. Living Embers are not unique goods. You're competing with the i378 BOE market, many items of which are currently selling for less than the price of a single Living Ember. You're also competing with valor point gear and Firelands raid drops.
Where would I list my Living Ember auction, if indeed I had one to list? Well, I'd probably list somewhere around 15,000 gold, and then bark around the trade channel trying to find a buyer at a cheaper price.
Pricing all those phat epix
We can easily extend the logic behind the Living Ember market to the rest of the new-for-4.2 markets. If you're trying to unload a raid drop like the Ranseur of Hatred, the fair market value will never be higher than it is right now.
Don't miss out on the opportunity. You might be the lowest-priced auction if you list Chelley's Sterilized Scalpel at 150,000 gold, but you should stop to take a moment to think, "Will it actually sell at that price?" With many DPS casters dreaming of picking up the legendary Dragonwrath, Tarecgosa's Rest staff ... likely not. If it's fair market value is 80,000 gold this week, it'll be 50,000 gold the next, and 30,000 gold a few weeks after that. Work [2. Trade] and make a deal.
On those tailoring, leatherworking, and blacksmithing plansIf your guild is getting tailoring patterns and blacksmithing plans left and right from trash mobs in the Firelands, the best thing to do right now is sell them. Sell them now. Don't wait. Now. The supply of Living Embers is so limited that you won't be able to craft these things for weeks anyway. And by the time you can craft them, you'll have seen the pattern drop again.
Plan out how your guild will be using the Living Embers that you get. If you decide the first item you'll make is, say, Boots of the Black Flame, then keep that pattern and sell the rest.
When supply isn't an issue ...
Not all new-for-patch-4.2 items are gated behind the walls of the Firelands. There are plenty of new craftables to be made. PVP gear sells, and it sells better than you'd think, even on a PVE server.
When I first logged on last Tuesday, the new cloth PVP Bloodthirsty Fireweave Bracers were being listed on the auction house for 2,600 gold apiece. The sellers had the right general idea -- these new items would command a higher than expected price. But when you consider that the materials to make these items might only cost 200 gold on that same auction house, would anyone be dumb enough to pay a 1,200% markup?
Not on my server, at least. They simply didn't move at any appreciable quantity. Buyers have a price they're willing to pay in mind, and it's nowhere near what these items are being listed for on the auction house. The new PVP gear didn't start selling until the markets got flooded with goods, and once the market was flooded, the time to profit had long since disappeared.
How should this market be played? Well, right now, on a number of servers, it can't. Too many people with dollar signs in their eyes made too much PVP gear, and now there's a glut. Bide your time, and check in with the market in a few weeks. Many of the early sellers will be discouraged by their inability to turn a profit (or even sell an item) here and will move on to greener pastures. If the market still appears to be profitable on your server, undercut and undercut hard, preferably through trade.
Maximize your profits with more advice from Gold Capped. Do you have questions about selling, reselling, and building your financial empire on the auction house? Fox and Basil are taking your questions at fox@wowinsider.com and basil@wowinsider.com.
Filed under: Economy, Cataclysm, Gold Capped
Reader Comments (Page 1 of 3)
Dnizzle Jul 4th 2011 4:07PM
haha, i grew up 2 blocks from the galleria on charles st, remember when from there to kendall sq was all empty dirt lots
stephaniepaul7 Jul 4th 2011 4:12PM
On my server we have got quiet a few trash runs going through Firelands.
Unfortunately this has ninja-ring at a high.
Warlocks complaining about the loot rules and says MS-OS-AH and then when the Tank loot drops they loot it and leave the raid and log off.
So many people getting reported its shocking.
I think its the ninja's that are killing the market, people know that things are being taken through those means so people aren't buying the items.
I know it's a high discussion topic on my server.
Mitch_b_666 Jul 4th 2011 9:59PM
Never heard of Master Looter?
Grubba Jul 4th 2011 10:07PM
You could be at least partially right, but trash runs aren't netting living embers, which is a big part of the discussion in this post.
Jordan Jul 5th 2011 3:01PM
I do not, under any circumstances, run in a pug that is free for all. No dice, I'm not going to do the work only to see the rare drop fall and then fine an f*in' DPS pally make up with my BIS Tanking plate because "I have an OS Tank" - unlike many, I don't have an OS - I am a Prot Warrior, my dual spec is a PVP flavor of prot - I love prot, and when I raid I tank, and tank alone. So for me it's double insulting when the two MS tanks don't get first dips on tanking gear that drops in a dungeon.
As for the Living Ember I agree fully, the raiders aren't going to sell these, because they need them, because they're raiding. If living embers were dropping off trash that might be different, but it's not, it's Firelands Raid Content only, which means these just don't go on the AH.
I've been scanning... waiting... checking... not a soul is selling them on my server (Silver Hand) more the likely for the exact reasons in the post, no one is selling because the people who CAN sell are the ones who WOULD buy.
Dascylus Jul 4th 2011 4:18PM
Should also mention how the multitudes of Firelands trash runs by pugs in ZA/ZG gear are lowering the demand for BoEs being purchased on the Auction House. I mean, why fork out 30-50k on something you can get for free with a little patience.
There are usually 15+ trash runs starting every hour on my server, this REALLY kills the profitability of BoE items on the Auction House. The fact that you don't need any raid experience to kill trash and that trash is 300% more plentiful in Firelands than in any of the previous tier raids should lead to gear being worth about as much as T11 gear was a few weeks before 4.2
In that context, if you're going to sell, sell now... if you're going to buy, wait 3-4 weeks when the demand is so low due to trash runs being so common that the market crashes and everything can be bought at reasonable prices. Of course, trash runs only ruin the market on high population realms, so it might be different elsewhere.
Zal Jul 4th 2011 4:20PM
The people selling these BoEs from Firelands at such extortionist prices are in a word, stupid. These are people who have gold fever, got a hold of a juicy piece of gear they know people will want and putting it at a price they WANT. The problem is that they are not identifying the market for those items at all! The people who are most likely to want and buy those epics are not the people sitting on 100K+ gold. That group of players tend to be either intense raiders, AH campers or people who play a long time and DON'T spend a lot of gold. You can expect to probably only have a 1% chance of selling to this market because they are highly UNLIKELY to buy it for varying reasons.
The real market for these items are those sitting in the tens of thousands of gold area, the less intense raiders who are not likely to see new gear immediately. Looking for a way to boost their DPS so their guild can down bosses, or nonraiders with a fair amount of gold. Listing it at that area for 20K gold would probably bump you into at least a 50% chance of selling. But again, these people are not identifying their markets, being greedy with gold lust and generally moronic. Especially since the previous tier of content is laughable save for some bosses which drops 359 which satisfies many more casual player's interests in gear. If I were fortunate enough to get that Raneseur again or the tanking trinket, I would list it for several tens of thousands gold less than what it is currently listed. I know the market looking for that, and will sell so much faster and make a larger profit in that time than those selling for 100K+. Even if it is some AH camper that buys it and then reposts it for that high value, they still won't make money on it.
ancient.astronaut.theorist Jul 4th 2011 4:23PM
Amazing article, and all too true. The scarcity of Living Embers has destroyed the market. Prior to 4.2 there were many people stocking up for the sudden increase in demand for things like Pristine Hide, volatiles, and Truegold, thinking that either A. Living Embers would be buyable with valor, or B. the Blacksmithing weapon recipes wouldn't be locked behind a month of non-stop dailies.
Now that there's no NEW tier of craftable gear available to make (aside from the new pvp items, but as you said, they're barely selling) all those markets seem to be falling. Truegold has returned to its pre-4.2 speculation price and still falling, and volatiles are at an all time low. And with these once profitable items being worth far less than expected, people are unloading their 4.2 stockpiles at a huge discount, desperately trying to rid themselves of those tainted goods before the prices go even lower. And although normally those goods would be good for crafting 359 gear, Blizzard ruined that prospective market with a mix of new JP gear and extremely nice pvp weapons now available.
And now with a huge influx of goods on the AH for record low prices, the average person has a much harder time making gold from the traditional source - farming. So now the average person has less income, so they buy less stuff they once did - less vanity items, less offspec gear, less gear for alts, less BoE epics. This in turn hurts the market even more on a much wider scale. By simply making the new craftable items so difficult to make (or as in the BS weapon recipes, difficult to unlock) Blizzard has undoubtedly broke the economy.
The only real way I see it getting better is if Blizzard implements Living Embers buyable either via valor or a soon to be unlocked NPC in Hyjal and bought with the daily tokens. Until then, anyone hoping to make any money on the AH will be horribly disapointed.
devilsei Jul 4th 2011 4:23PM
Just to add to Primordial Saronite, its 3rd use was as part of the increasingly raising walls between people and Shadowmourne. In fact, it fed into the buy and sell market it enjoyed so much. People loved them some legendaries, and thus loved available PS.
It's arguably what kept the prices up in that range consistently, and requiring 25 of them ensured a healthy dose of buyers for it.
Dah Jul 4th 2011 4:42PM
Awesome post and very true. When you consider how much grinding and auction house market play it takes to get these piece of gear, it doesn't match how other gear is obtainable at all. If this were Vanilla, where players expected incredibly long grinds for gear, it wouldn't have the same impact, but in the current state of the game, this is incredibly out of balance.
The sad thing is that economic conditions like this just make gold buying even more appealing to players...
wutsconflag Jul 4th 2011 4:43PM
@Fox Van Allen:
"They simply didn't moving at any appreciable quantity."
So, yeah, there's that. ;p
Great article, over all, though. Makes me think we should have sold some of the patterns my guild was rolling in the first couple of days, but I think people were under the impression that the drop rates wouldn't get nerfed as quickly as they were (which I don't get - obviously Blizzard was going to nerf that into the ground, asap).
Liero Jul 4th 2011 4:54PM
This is a horrible article. Living Embers are not a "Case in Point", Living Embers are an item in atypically short supply right now. They are not representative, they are not a case in point, they are not a sign that the markets are broken. You guys complaining that the markets are broken should just keep whining and leave the profits to us nonwhiners. I've made more profit since 4.2 than I did even in glyphmas. The markets are beautiful right now, and if you don't have the patience to simply wait for living embers to become available as raiders start to sell, go play Farmville.
Do you guys go to the supermarket, see that element 109 is not readily available, and retreat to your bunkers to wait out the obviously occurring zombie apocalypse? Or do you keep this Chicken Little-ism to your gaming life?
wutsconflag Jul 4th 2011 5:01PM
"Do you guys go to the supermarket, see that element 109 is not readily available, and retreat to your bunkers to wait out the obviously occurring zombie apocalypse? Or do you keep this Chicken Little-ism to your gaming life?"
Huh?
O.o
albanesp Jul 5th 2011 8:21AM
The point is that by the time living embers comes down enough in price given the supply shortage, many people will have equal/better gear from raiding.
There is no market right now for crafted gear. The article hits the nail on the head.
Take my tailoring profession. Even if I could get my hands on 4 living embers for 60k plus 8 dream cloths that I would want to charge 1000g per, who would pay 70kg for epic gloves or boots that will be replaced with boss drops, VP, or Baradin Hold tier gear in a few weeks?
kaosgrace Jul 5th 2011 11:17AM
@albanesp:
Hint: You're a tailor. You can craft boots with spirit, if you can get the pattern. No spirit cloth drops in Firelands. There is no other source of spirit cloth boots in the game.
ryan_brown77 Jul 5th 2011 1:16PM
markets function when optimally when there are certain conditions met: there and many buyers and sellers, no barriers to entry, identical good and a few other factors. this article has quite rightly pointed out that markets and not performing up to scratch because; barriers exist (raiders only) and there are not many sellers. when markets are efficient it is a beautiful thing but this is clearly not an example of one in action.
If this was the real world this would be the perfect market for government intervention
BK Jul 4th 2011 5:13PM
The market did not "break". There were no living embers at all prior to 4.2. Now they are in the earliest stages of availability, with tightly restricted supply, and most of that staying within the raiding guilds that are obtaining them. All as designed.
Anyone pursuing a profit on crafting these goods now is not pursuing a predictable profession. You are either farming for the embers, praying for luck on the roll; or speculating that you will be able to obtain enough of them and make the sale before a volatile market moves against you. All fine is good for folks who want to spend their game time that way, but these were not a viable, predictable strategy pre 4.2 or now.
Many weeks/months from now, Blizz will loosen supply as they always do by making them available for VP and a more regular market will emerge.
And finally, this material and its crafted goods represent probably less than a tenth of a percentage of all the goods traded on the AH. And many of the rest of the 99.9% are currently quite profitable. Ridiculous, misleading headline. I suspect the author knows better and was pressured into it anyway.
Rob Jul 5th 2011 6:56AM
I agree, i think the markets are working as expected. It's a new material, and people are trying to find out the sweet spot. That means lots of reposting, trial and error. And the sweet spot, than price which you will sell it and people will buy it, moves all the time, typically downward. I know you can make good money doing professions for raid items, like last expec, but you really need to have nerves of steel and realize that maybe you will actually lose money.
Poltergeist Jul 5th 2011 2:36PM
I also agree that the market is not 'broken'. Simply in its infancy. The current patch is only a week old. It's a bit early to declare that things simply aren't working.
In Fox's defense, him and Basil do need to come up with a compelling topic for the column each week. I'd imagine any publication needs to stretch reality a bit when there just isn't anything newsworthy to report on. Every media outlet practices this, and is simply a part of a news-hungry customer base that has grown used to getting up to the minute information.
Keep in mind that it has also become a bit more difficult to provide the amount of compelling wow-related news that WoW Insider was able to provide during the Lich King expansion for one reason: Ghostcrawlers' silence. In Wrath, he provided insight into character and raid balancing on an almost daily basis. It supplied Wow Insider with a steady stream of topics to cover, and a few comments from Ghostcrawler was enough to provide a healthy does of analysis and speculation to each columnist here for a good couple of weeks.
I myself used to read WoW Insider almost every day during Wrath for the above mentioned reason. Now, I can easily go for 3-4 days at a time without feeling compelled to do so. It has nothing to do with the quality of the articles published. The guys here still provide a top notch blog. It's more of a content problem, and not the sort that anyone can do anything about.
Morcego Jul 4th 2011 5:39PM
Prices are still pretty "out there". Right after Cata, everyone was sitting on a load of gold. So everyone could afford the 20K-30K peaces that were all over the place (people would buy 4 or 5 of these). Now, however, people don't have that much money to spend on it, after the money sinks (Drakes, Sands of Time for the epic staff etc). Also, if you consider how much of an upgrade these new items are compared to their old 359/372 items (specially for people with 372 items), they are simply not work 60K+ gold.
The market on most servers is not healthy right now. Prices for everything are all over the place. Costs of raiding are on the rise (new tier = more repairs, more flasks, more food etc). People have to spend gold on enchants, gems etc. Many players are working hard to get dailies and raiding done, with not much time left to make money.
So yeah, until we have enough of a supply to get those Living Embers down to 8K or less, you won't see a big market for it.