Defenestrator's Guide Auction House Happiness
By
Defenestrator,
Posted on: 2008-04-25 24:39 in Player Guides
10. Equilibrium is key.
Experiment and learn which price points you can set your wares at to maximize your profit and keep your sales moving quickly.
Arc# 92382 -- "The S.P.I.D.E.R. and the Tyrant" -- Ninjas! Robots! Praetorians! It's totally epic! Play it now!
Arc # 316340 -- "Husk" -- Azuria loses something, a young woman harbors a dark secret, and the fate of the world is in your hands.
I remembered another buyer/seller subclass that deserves some special attention, and they need to be mentioned as both:
The Arbitrager -- this is the person who will buy up low-valued surplus commodities and resell at higher prices in order to profit off an artificially created market. You can generally tell an arbitrage attempt is happening when a commodity (usually a piece of salvage) that normally sells for well under it's value is suddenly being sold for well over its value. The best solution here is to dump your current stock of said commodity to profit and wait for the market to return to normal.
This is not to be confused for a commodity running into an extremely low supply and driving prices up.
Arc# 92382 -- "The S.P.I.D.E.R. and the Tyrant" -- Ninjas! Robots! Praetorians! It's totally epic! Play it now!
Arc # 316340 -- "Husk" -- Azuria loses something, a young woman harbors a dark secret, and the fate of the world is in your hands.
When I tell people I can make millions of infamy/influence with little effort in a weekend at the auction houses (Wentworths or
the Black Market), people often ask, "Gee, Defenestrator, how do you do this?"
I can turn around after a day of rocking faces and turn into an entrepreneur, and so can you with Defenestrator's Easy Plan to win at the auction house, which I will offer now.
What this guide is NOT:
1) It is NOT a step-by-step guide on what EXACTLY to do to build wealth on the auction houses. I put in time to research my cash methods, I will ask you to do the same.
2) It is NOT a way to have money pouring into your coffers without putting in some effort. It WILL take time and effort to get your character(s) to the point where you can benefit the most.
3) It is not a guide to farming for influence and recipes.
What this is is some basic BUSINESS philosophies that I apply when dealing with the auctions.
Here we go:
1. Do your homework.
There are many resources on the web that have breakdowns of crafting costs. www.paragonwiki.com is an excellent resource and a database of information. Once you have that, you will need to learn how to apply it to your own auction needs.
2. Know the mathematics of the auction houses.
This is a mistake I see happen all the time when monitoring the pricing data. As you should know by now, the AH will charge a 5% listing fee, and then extract the remaining fee (10% total) once the item is sold. An item that costs 200k inf to create that sells for 210k on the AH is actually LOSING money.
To determine your BREAK EVEN price for an item you have created (or, even a recipe you are selling), you need to multiply the cost by 1.111111.
For example, you spend 5,000 on a recipe, 5000 on component A, 20k on component B and 20k more to actually craft the recipe for 50,000 total inf. Your break even price on the AH should be:
50,000 x 1.11111 = 55,556. If you want to guarantee PROFIT, you should aim a bit higher.
3. Sum up ALL parts of the final good
One good way to start crafting early on is to use the salvage you find to create your first items, but a common mistake is to simply assume that because you found the item, it costs you nothing.
Let's say you find a Luck Charm and Boresight, and you purchase a recipe to use them for 5000. The recipe costs 35,000 to craft. A common mistake would be to sell the IO for 50k. That would be profit, right? Wrong!
On the hero side, you can usually turn that Luck Charm around for 50k! That would be 50k in lost earnings if you short sell the crafted IO even though you got the Luck Charm for free.
4. Specialize early, diversify later.
Crafting is set up so that once you earn a memorization badge the cost of crafting goes way down, and you no longer need a recipe. Concentrate on getting one badge and producing that item as you can until you build up a decent nest egg, THEN branch out into other areas and begin selling other items.
5. Know your market.
This isn't always as easy as it sounds (more on this later), but common knowledge of the game should dictate what types of IOs you concentrate on.
Pop quiz: How many different power sets use Hold enhancements? How many different power sets use Damage enhancements?
I think you can see what I'm getting at here.
There will be more people buying Damage IOs over time. That's good. The bad part is there will be higher competition, but that's okay.
Patience is key.
When buying or selling, you need to be able to stick to your guns on your pricing and on what you're willing to pay. 70k for a Luck Charm? Forget it! Low ball bids and let them sit. The market typically fluctuates up and down several times during the course of the day. Start your auctions right before you log off and reap the rewards when you first log on the next day. Let the AH do the work while you sleep or run missions.
Do NOT give in to market pressures and slash your prices (unless you really goofed on your pricing). You lose your 5% listing fee, have to pay a new listing fee, and might even lose money if you price yourself too low.
7. Observe market trends.
Okay, so you want to do some crafting but you're not sure which IOs to make first. You have components for Damage and Endurance Reduction. Check the market out before making the enhancers. If you see: "Bidding: 3; For sale: 163" then this is currently a weak market. You may want to hold off on making that type of IO. If you see: "Bidding: 50; For sale: 2" then you might want to rush your product on the market.
Additionally, if you see that prices are much higher than normal, you'll want to increase supply to try to take advantage of the current market. If prices are much lower than normal, you'll want to stay out of that market.
For this reason, I do not recommend crafting level 10 or 15 IOs at all unless you want the badges (and only then, do so in your later levels when you have tons of spare cash). Level 20 IOs are also risky. These markets are dominated by The Badge Hunter seller and The Vulture Buyer (see below).
Likewise, level 45 and 50 IOs will be money losers until after you have the badges as that is a saturated market. (Expect to lose MILLIONS to gain these badges as you will lose 150k - 300k per sale.)
8. Understand seller psychology.
I've broken the types of sellers down into a couple of categories.
a) The Mogul. This is the person who tries to profit from the system and won't sell at a loss. Ideally, this is where you should be to make inf. The Mogul is patient and will wait for his or her prices because he or she will not lose money on the AH. The AH is not a welfare system for lowbies.
b) The "Normal" Seller. They approach the AH as a system to supplement their gaming and will try to make a reasoned approach to selling. They're not out to be a Mogul, but they're not going to get taken to the cleaners, either.
c) The Badge Hunter. This is a person going after the badges, crafting everything as fast as they can and then dumping their inventory at low, low prices on the auction house. A Badge Hunter can still be a Mogul. The Bargain Hunter (see below) loves the Badge Hunter, and the Badge Hunter can cause problems for The Mogul.
d) The Ambivalent. This is the player who doesn't give a crap about the auction houses, the economy or the crafting system, but they're okay with reaping the rewards of an over-inflated economy. They're the type who will place everything they find on the AH for 100 inf. or less. The Mogul can take advantage of this person to supply raw materials.
9. Understand buyer psychology.
Buyers tend to have different tendencies than sellers, and here are my observations.
a) The Mogul. This guy appears again, and he's out to minimize expenses while maximizing profits. Again, this is ideally where someone taking the time to read this guide should be at.
b) The "Normal" buyer. They exhibit patience by placing a bid for what they believe an item to be worth. They have no problem waiting for an item to come to them on their terms.
c) The Lemming. They look at the sales history and see that the last 5 of something sold for 400k each, so he automatically bids 400k. Mogul sellers like The Lemming.
d) The Impatient. This one is pretty common as we seem to be in a "I need it now" kind of society. They will generally start with a low bid and then work their way up until they actually win what they're looking for. Money is generally no object for the Impatient.
e) The Bargain Hunter. They behave much like the impatient, but their low bids will generally start in the basement instead of at a medium price, and they'll stop bidding at a pre-determined ceiling. They won't spend more than they believe something to be worth.
f) The Vulture. This is the predatory practice of placing extremely lowball bids on expensive items and hoping that market forces converge to create a buyers market. This requires a low # of bidders versus a high number of sellers and having an Ambivalent seller coming along. These buyers are the most patient of the patient. Vultures are not the target buyer of The Mogul Seller. The Vulture is not your friend.
9. It takes money to make money.
You're going to need to have some sort of a nest egg to begin crafting. I've started with as little as 60,000 inf. and built that easily into 7 digits over the course of a couple of days. If you're of a low level, you can easily get a small nest egg buy acting as The Vulture, buying up Uncommon Salvage for low prices and selling it to a shop for 1000. You don't have to do this too much, but it should be easy to get into the 60-80k range to start real crafting.
The level 45-50 IOs are profitable in volume, but take a huge outlaying of resources to get to the point where they will be profitable. You'll need to be a dedicated crafter to make this work.
That's pretty much all for now. If you've learned anything from this, it should be that crafting can be profitable in CoH and in CoV to those who are willing to exhibit buyer and seller patience and who do their homework in market trends and in the math of buying and selling. You'll need to experiment and figure out what works for you.
If you have questions, I'll try to answer them.
Arc# 92382 -- "The S.P.I.D.E.R. and the Tyrant" -- Ninjas! Robots! Praetorians! It's totally epic! Play it now!
Arc # 316340 -- "Husk" -- Azuria loses something, a young woman harbors a dark secret, and the fate of the world is in your hands.