(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!
I WANT ONE... Hatemail that is... lol... it is great feedback that you are a true goblin... there are few things I dont chop by 1-5 gold... Its not always about profits, its about market domination and control.. if they get out, there are going to be more mats to get, and more sales... etc etc etc... goodness and gold... goodness and gold... :-0
ReplyDeleteIf you can not be good... BE GOOD AT IT!!!
Why not just offer to sell your inks to him? Maybe he'll buy your whole stock =)
ReplyDeleteSince the author failed to address the major complaint in the hatemail, readers can infer that the author IS actually guilty of such an act.
ReplyDeleteYes, that's a dick move. Why?
Because it devalues the market. How?
When an item's market value is 90g and product is getting listed at an undercut of 50g, those that are ignorant enough to not know what a profit margin is will eventually go tit-for-tat with the new price. Instead of listing at 89g (which any sane businessman would), the author has successfully devalued the market by almost 40g.
What kind of idiot would sell product for 50g when he could easily double his profit margin by selling at 89g?
Many players have seen this time and time again in their respective markets - the Jewelcrafting market being the foremost example. On many servers, cut gems now sell for fractions of their raw counterparts as a result.
It is these kind of practices, combined with widespread un-checked botting, that have put the Cataclysm-era auction house in the toilet.
A real "goblin" exploits niches in the market while maximizing profitability - the antithesis of what the author has purportedly done here.
I appreciate the cowardly approach taken to essentially drop hate mail on a person posting about hate mail. Irony anyone?
ReplyDeleteOf course the person above was "anonymous":)
You're horribly wrong, fellow anon. If I have to decide between selling 1 at 90 or 3 at 50, which is the better choice? Spend two minutes researching demand curves.
ReplyDeleteWell, Anon #1, you know what they say about assuming things.
ReplyDeleteI did address the "major complaint" albeit very briefly right at the end of this short post. I also seem to have made a typo; I meant to say I thought I "did" undercut by a few silver, not I "didn't." Understandably confusing, so I fixed it. I also didn't address it in full because why he was bitching was irrelevant to the post, which was simply to express my happiness at having someone bitch at me. If you must know, turns out I did undercut him by about 5 or 6g, but only because I was undercutting people by a few silver who had already undercut him by those few gold. I have no idea how this guy missed that. He didn't seem too bright anyway, since I think he was buying up my stock (which was at avg value) to "flip."
Also, please go read up on "Deep Undercutting." (My favorite post on the subject is here: http://wow.joystiq.com/2010/12/02/gold-capped-why-deep-undercutting-on-the-auction-house-works/) I used to think exactly as you did. Why undercut by more than a few copper? I'm only missing out on more profit! Well, turns out undercutting by multiple gold can actually be more profitable. Like Anon #2 points out, 3 sales at 50g is a much better deal than one sale at 90g.
Sup Anonymous, I'm Anonymous too!
ReplyDeleteGems, in particular, tend to have quite a few AH campers. I list one, 2 seconds later, I'm undercut. When this goes on I will undercut again, sometimes by as much as 50% to get them to knock it off. If they undercut that, I buy them out and relist my stuff & theirs later on when they leave.
I have gotten many-a-hate mail since Cata has come out - never before though. Interesting because I tend to not post large amount of gems or anything else at a time, maybe 1 or 2 of each at most. I don't generally uncut by more than a silver or so, but will to piss off a camper.
Has been amusing to see how territorial folks are. :)
There is a time and place for deep undercutting but it is unlikely that the OP is using it correctly. Pissing people off isn't the sign of a true goblin - being emotionless with regard to price is.
ReplyDeleteThere is one universal piece of advice every good trader will always give: undercut by 1cp, never more.
This is for good reason. The guy writing you isn't guilty of hate mail, he's rightfully pointing out your error.
Sorry but before you too excited you need to double check your own confirmation bias. The simple fact that you're testing the market with a stack of 2 indicates you have absolutely no economic basis for the deep undercutting strategy.
The sole purpose of deep undercutting is to disenfranchise competitors that encroach on your market share with a resource you are unwilling to compete on; time. If they are posting more often than you then they are winning in the resource game, assuming similar access to the item in question.
Deep undercutting works when you control the associated markets tied to that item and you can afford to sell things at a drastically lower price that makes their effort fruitless. You can think of it easier, for example, as raw mats in the form of crafted items instead of considering the item itself a commodity. It's a simple exercise in opportunity cost, and is only meant for people willing to stake substantial amounts of gold in controlling the markets tied to a particular item.
The OP's post reeks of amateurism and short-sightedness. Despite what you think right now, you would much more likely be better served by the 1cp undercut, unless you are playing with such little stock that really it's irrelevant. The latter seems to be the case here.
Who knew a simple post about some random hatemail would spawn such a debate! Again, Mr. Anon (if that is your real name), I am not guilty of deep undercutting the inferno ink market. Mr. Hatemail-Guy simply misread his AH window and assumed I was (though how he missed everyone else who undercut him escapes me). Even if I were, I assure you I would have a good reason to do so.
ReplyDeleteI don't necessarily agree that undercutting by 1c is always the best thing to do.
ReplyDeleteI've recently entered the Glyph market. It's pretty well camped and I quickly learned to deal only in discovered patterns. It's still very competitive.
Every time I undercut by 1c, I come back 15 minutes later to find myself undercut by... 1c. If I want to play the glyph game by these rules, I'm going to have to camp the auction house. Not my idea of fun.
So I've changed my strategy. I find overpriced glyphs and post a wall. My first glyph gets posted at a 5g undercut. Then I post a wall of some number of them, each undercutting the previous by 5g-15g, until I've got a nice lot of them posted. If someone is stupid enough to undercut me after that, I'll re-post another wall and take them right down to my bottom limit.
Here's the morale to that story. If I post at a 1c undercut, I make ZERO gold, even though the profit margin is theoretically over 100 gold. This is because I'm undercut immediately so nothing ever sells.
If I post my walls, I make hundreds of gold per day... I just have to sell more glyphs to do it.
Hrm... Why did I share this???
A thought, maybe he sent it to everyone that priced under the big cut, lol! I have sometimes come out ahead pricing my item just below the undercuttee, if the deep cuts are shallow where the market demand should still reach my item, maximizing my return. And if the cuts are truly deep, I buy them up to flip! Either way, I usually come out ahead!
ReplyDeleteI love when someone clever thinks they can scare me from a market by deep undercutting. Eventually they just end up working for me and I get to profit from their item at its real value.
ReplyDeleteI especially love blogs like this that encourage such behavior. Keep up the good work.
And by the way, hatemail isn't a sign of being a good goblin. Swimming in gold and being in more markets than you can count is however.
I'm Anon poster #1, and I'm only posting as "anon" because I'm far too lazy to make a profile for posting on random blogs.
ReplyDeleteTo the OP, fair enough, if what you say is true, you didn't massively undercut the hatemailer. I read the rest of the debate, and the article you posted about massive undercutting.
One poster used my example, and said that 3 items sold at 50g is far better than 1 item sold at 90g. The problem with this example (and why it is ultimately inaccurate) is that it does not consider profit margin.
Let's pretend that the 50g/90g product model are gems. Obviously, the gems did not materialize out of thin air. Yes, they could be earned by mining and then prospecting, but most people don't commit to that kind of time investment - instead they buy raw gems at a low price, cut, and resell. After all, the latter takes way less time and requires the person to never leave town. Let's say in this example that the raw product (gems) were purchased at 35g a piece (which is a reasonable price for some raw gems). A sale of 3 of these at 50g per nets a profit margin of only 45g (sale price minus cost of the item, times three). If the person had sold just 1 gem at 90g, he would have realized a profit margin of 65g. Obviously, selling at 90g is much better idea - price cannot always be sacrificed upon the altar of quantity moved.
The idea at work here is that deep undercutting is not an affective means of achieving healthy profit margins, unless you are acquiring raw product very close to free. Yes, it may work in the short term, but the practice's long term effects work toward shrinking everyone's profit margins in the long run (even the deep undercutters). It is a bad strategy to advocate when you consider the aggregate and profits in the near future. This is why it is difficult to find an example of deep undercutting in the real world - the cost of raw materials are static in the aggregate, so therefore sellers have no option but maintain a healthy profit margin by selling at or just below the market rate. It's why you can't by a new 50" plasma TV for $500 when the market rate is $900.
The great thing about Mr. Anon #1 criticism? Who -cares- if you WERE deep undercutting. Your bottom line, your profit is your only concern.
ReplyDeleteThat's like the one hatemail I got calling me a "vulture" for buying up an item that was posted below material cost to produce and reselling it.
Ultimately, these peoples' opinions are worth what you're willing to pay for them. I'm willing to be that is 0. :)
Congrats on your first hatemail from someone who was obviously trying to be underhanded with you from the start. (To be in the market, to ask you if it is selling at all, and then to buy you out to repost? Sounds fishy to me.)