Tuesday, April 26, 2011

Warcraft Econ Hall of Fame!

My interview with WacraftEcon went up today, go check it out!

Nothing else really new and exciting going on as far as gold making is concerned. With exams coming up, I haven't been on as much lately, so I haven't been making as much as usual. Still up over 750k as of now, and hopefully I can rake in a lot of gold tonight. I will, of course, update as I find interesting things to write about.

Thursday, April 21, 2011

Messing with Glyphs

About a week ago I finally followed through on my threats to crash the glyph market. It was something I had wanted to do for quite some time, but never really got around to doing. So after a few weeks of stockpiling cheap inks, I sat down to craft a boatload of glyphs.

I will admit, I got cold feet at first and started posting at normal undercuts for a few days. Interestingly enough, it was actually profitable. I stalked my competition through The Undermine Journal, saw that most of them didn't post early in the morning when I woke up for classes, and took advantage of that window of opportunity. I made a decent amount of sales for a few days, but quickly grew tired of it all. So I crashed the market.

Wednesday, April 13, 2011

My First Piece of Hatemail!

As some of you may know, I've always wanted my own in-game hatemail from an upset competitor. As the old goblin saying goes, "if you're pissing someone off, you're doing something right." Well by that logic, I've been doing everything wrong! Until this morning, apparently, when I got this great gem:

(Please excuse his french)

Now there's a bit of a funny back story to this. Yesterday, while going about my glyphing, I decided to throw up a couple of Inferno Inks just to see if people were buying. I have a decent amount (though not quite enough for cards) stocked up that I'm not sure what to do with just yet, but if I can sell them off at decent prices I'd be happy. After tossing up two of them, I get a whisper from some guy asking me if Inferno Inks actually sold. I reply that I'm not sure, but I have a bunch if he wants to buy. He says that he was curious since I had just undercut him, and he wanted to know if the market was active. I simply say, sorry, no idea, I'm testing out the market myself. Five minutes later I see "A buyer has been found for your auction of Inferno Ink" x2. So I immediately run and throw twenty up in singles. And as I do from time to time, I go to the auction window to see who bought my Inks. It's the guy who moments ago had asked me if people were buying. And this morning, I get the aforementioned lovely message from him for undercutting him more. (Funny thing is, fairly certain I did only undercut by a few silver...)

Moral of this story? Isn't one really, just felt like sharing an amusing anecdote!

Sunday, April 10, 2011

Why I'm Not Worried About the Shuffle Change

Just about every blogger has wrote about the datamined change to cut uncommon Cata gems (going from 9g to 75s). And most of them seem to take a doomsday-the-sky-is-falling approach to this new. I'm not convinced that this change heralds the end of the shuffle. Will it affect the economy? Certainly. Will it crash the economy? Probably not. Shuffling will still be useful and profitable, it's just going to take more thought than the current lolshuffle. 

First off, I've never seen the 9g vendor value as anything more than a safety-net; If all goes wrong, you could always cut and vendor. But shuffling specifically to cut and vendor has never been a part of my plan. It's also a handy way to figure out what's profitable. With such a high vendor value, all our calculations have been based on whether or not it's more profitable to shuffle, or to cut and vendor. Even if it's more profitable to cut and vendor, that wasn't always the default option. Sometimes you could just wait it out. And rarely have I been put in a position where cutting and vendoring was my only option. Basically, that 54g floor price for Obsidium was just a comfort in the back of my mind. I knew that I could buy below that, and be guaranteed profit one way or another.

Well, if this change makes it live, that safety net will be abruptly removed. Think of it this way: you're a tightrope walker and that 54g floor is the net. You know that if you mess up, that net is there to catch you. Now, without that net, you're just going to have to be extra careful not to mess up. Now, we're going to need to do a little more market research before we go wantonly throwing gold after cheap ore. But I don't think the markets are going to come crashing down around us.

I think two scenarios are likely to occur if this change hits live servers. First, scared by the lack of a safety net, JCs stop snatching up cheap ore. Bots/people continue to farm, supply overwhelms demand and Ore prices crash. Meanwhile, because people aren't shuffling as much, mats that come from it start to dwindle. Less rare gems/dusts/essences are on the market, driving those prices back up. Suddenly, shuffling becomes profitable again! All that cheap ore can easily be shuffled in to profits. Demand for ore and supply reach a happy medium, dictated by the profits gained from the other markets. Scenario two pretty much ends up the same way. Bots get scared off, ore prices rise. Put off by high ore prices, JCs don't buy ore. No shuffling decreases mat supply, prices rise, they continue to rise until shuffling is profitable again. 

Think back to the beginning of Cata. Back then, the floor price seemed merely conceptual. Prices of ore were at around 100g a stack, and still we were profiting. Cutting to vendor seemed like a total waste in light of what else could be done. I know I never expected the floor price to be reached, or at the very least for JCs to snatch up anything below, keeping the prices constantly just above the floor. I also remember when people started reporting ore dropping below the floor, and how luck we thought those people were. And then it happened to everyone. And keeping up with that supply became impossible. And prices dropped further. With that influx of super cheap ore, we saw all the other markets crashing. All that elementium prospecting in to all those rares crated huge supply, further dropping the prices on cut and uncut rares. Dusts and essences dropped past the point where crafting jewelry to DE was profitable, and we would rather just cut and vendor. Huge supplies of gems even made selling on the dailys tricky, as so many people were posting that the prices quickly dropped to the vendor value anyway.

Right now, when buying ore our options are shuffle for profit, or cut and vendor for profit. Once cutting and vendoring for profit go out the window, our option is simply shuffle for profit. If shuffling isn't profitable, we don't do anything and just wait for it to be profitable. The thing is, enchanting mats and gems (the rare ones at least) will always be needed and there will always be a demand for them. Dropping the vendor price for uncommon gems will have absolutely zero effect on the demand for things like enchants and cut gems. How could it? Are people going to think, hey, uncommon gems vendor for less, so I should totally (not) gem/chant my gear now? No. When people get new gear, they're going to need new enchants and new gems. Demand for those is dictated by the rate at which people acquire gear, not at what price uncommon gems vendor for. As long as we can sell chants/cut gems for more than the mat prices, those markets will be profitable.

One of the reasons shuffling ore was so profitable and so alluring was because it allowed us to acquire mats for less than their AH prices, and thus increase our profit margins on things like scrolls and cut gems (or simply selling the raw mats back at profit). Again, I don't think people were drawn to prospecting simply to cut and vendor (though this may certainly have been the case for some). The reason we do it is because all the other markets were still profitable. As long as those other markets are profitable, I see no reason to stop shuffling.

I also don't see how this change in vendor value will make the related markets less profitable. Just because the "base" cost to craft a Jasper Ring becomes 1g95s (with exalted discount for the setting) does not mean the dust market will decrease accordingly. Why on earth should it? That market's prices depend on supply and demand, just like every other market. The only way prices would drop that low is if there is an overwhelming supply. But, from what I've been gathering, shuffling is something we should probably shy away from, meaning we'll see a decrease in the supply of related mats! If we stop shuffling, prices on the mats that come from it aren't going to magically decrease to reflect the changes to the vendor values. They will still be affected by supply and demand just like everything else.

The one way I could see this change dropping prices across the board would be from lack of other alternatives (i.e. vendoring). So now, if you get stacks of Obsidium at 40g each, you're almost forced to craft to DE in order to get profits. And if everyone's doing that, supply could very well overwhelm demand and drop prices on dusts/essences quite low. Alternatively, transmuting could be your only outlet, again dropping prices.

But I still don't think it will come to such drastic measures. The simplest way to put what the changes will do is this. Before, we thought, "is it more profitable to shuffle or to vendor?" Now, we'll think, "is it profitable to shuffle?" 

Monday, April 4, 2011

Point of Diminishing Returns

The point of Diminishing Returns is an economic concept that, like opportunity cost, has facinated me for quite some time. The simplest explanation I can give for it is that at some point, additional input won't really change the output in any meaningful way. To illustrate, think of workers making widgets (I still have no idea what a "widget" is, so good luck actually visualizing this). Say it takes one worker 30 minutes to make one widget, two workers 15 minutes, three workers 10 minutes, four 7.5 minutes, and so on. At some point, adding one more worker doesn't substantially change how quickly widgets are made. Certainly the difference between one worker and two is huge (30min compared to 15min), but the difference between ten and eleven is quite small (3min compared to 2.73min). And of course, there's no guarantee that this model will hold true for each worker you add. There's probably some point where the widget just can't be made any faster, and adding workers will do absolutely nothing. The actual "point" where the returns start diminishing is going to be somewhat subjective. Shaving .27 min off the time it takes to make a widget will add up if you're making thousands of them and certainly be worth the cost of the extra worker, but there's going to be a point where the cost of that extra worker just won't justify what little time you'll save.

So what on earth does this have to do with gold making?

Saturday, April 2, 2011

You'll Feel Right as Rain!

I was poking around on WoWhead looking at the latest additions to the PTR, and found an interesting little gem that could provide a nice income boost. "You'll Feel Right as Rain" is a new achievement that requires you to eat 91 Chocolate Cookies. Chocolate Cookies are made by cooks and it takes one Simple Flour (buyable from vendors for a negligible amount) and one Cocoa Beans (also buyable from vendors for next to nothing). So how is one to make money off of this? Simply by making a mess of cookies, throwing them on the AH, and barking in trade! Anyone remember Second That Emotion? People were paying pretty good money to complete this achievement when it was released. Though there are some discrepancies (Second That Emotion was required for the cooking meta, and took a bit more effort to make), I can imagine that the novelty factor of a new achievement should push a few sales. I'll probably try to make a few sets to sell for ~200g each. Expect to get a lot of competition if sales are decent and people start learning how easy they are to make, so this'll probably only make you gold during a very short window.

Thoughts on this?

EDIT: Apparently Cocoa Beans aren't buyable from vendors in the normal sense (despite what WoWhead lead me to believe), but they are contained in Imported Supplies. Imported Supplies will cost you one daily token, and has about 40 Cocoa Beans. So while this does limit the amount you can get to some degree, as any toon with the cooking skill can do the daily you can get about 2 stacks of Cocoa Beans per toon per day. So if trying to make gold off of this is appealing to you, start stockpiling some tokens!