Saturday, April 6, 2013

Market Manipulation

The topic this week was sent in for last week's post, but I had a busy week, and didn't feel as if I'd have adequate time to address the subject with the time I had to write it so I put it off until this week.  If you're interested in submitting a topic for next week's Reader Request Phriday, click here.

This week's topic was sent in by Brent99.  He's currently at ~4 million gold, and has been playing WoW since a year after it's release.  He suggested the topic of Market Manipulation, because he said he rarely sees bloggers address the topic of purchasing, and I agree, so without further ado,

Market Manipulation
First of all I'm going to define what market manipulation is, by doing something that is sure to make any English teacher cringe, quoting Wikipedia.  Market manipulation is

"Transactions which create an artificial price or maintain an artificial price for a tradeable security."

As you can see we do this pretty often in WoW in order to make gold, and many of our practices are based in this principle, which is illegal in the United States.  Thankfully, you won't have Hellscream or Wrynn breathing down your neck when you manipulate markets in the World of Warcraft, just glimmering piles of gold.

Buying
Since it was one of the subtopics that Brent99 suggested, I'm going to start with purchasing.  I'm going to use an example here, but this can be applied to basically any market involving craftables.  Golden Lotus are a useful commodity for a Transmute Alchemist, and I constantly monitor the price of these herbs.  On my server (which is on the high side) the average price for one is about 84g.  The price usually hovers anywhere from 70-120g per, and I try to buy on the 70g end, to end up making a hefty hunk of profit in Primal Diamonds.  When I look on my auction house and see something like this:



I'll gladly purchase everything up to the 83g stacks, to purchase (on average) below the market average, as well as drive prices up for my competitors to above market average by 15g per, or in this case roughly 20%.

Doing this ensures me that my competitors will have to purchase at higher prices until the market eventually lowers, making their costs higher than mine, and them more likely to post at prices profitable to me.  Of course you can never stop the "I farmed the mats so they're free, so any price I sell at is a profit" guy, but that's just an inherant aspect of the craftables market.  Buying when supply is high and prices are low (weekends for example) is the best way to stock up at low prices, keeping your costs low.  Then you'll have mats to craft through the rest of the week.  You never want to buy mats when you need them, because that forces current market prices from you.  Always buy low to ensure your profitability and protect yourself from inevitable fluctuations in the prices of mats.

Always know the general fluctuations in prices of materials.  Use The Undermine Journal to check historic prices of materials or items you are looking to invest in if you're new to the market.  Doing research and understanding regular price fluctuations can help you save thousands upon thousands of gold in the long term, so it is indeed worth the time.

Tranmog and Twink Gear
This goes along with another topic that was suggested for this week's Reader Request Phriday, a question submitted by Arctic, asking what markets were still viable in 5.2, the answer being all of them.  Here are some relevant links to my Twink and Transmog methods, and in my opinion these markets will never die.  There will always be a demand for leveling greens and blues with high stat distributions, as long as there are levelers to purchase them.  These markets are NOT high turnover markets though, don't expect to make back your initial investment overnight.  I sell maybe 3-4 pieces per day on average, but at the markups you sell them at, it's a great opportunity to make gold.

By the definition above, buying and reselling twink and transmog gear is a prime example of market manipulation.  If the stats were mediocre, and none of us were doing this, prices would probably hover around 30-50g per.  Since we are, we're effectively raising the price ~900%, and attempting to hold a monopoly on the market, in order to control the prices.   It's a very fun game to play and can be quite beneficial to the seller.  When people complain in trade chat, be sure to remind them that it might have sold for enchanting mats at a lower price, and that they really should thank you for keeping the gear on the market this long for them, paying the deposits when you had to relist it.


Cheers,

Phat Lewts

If you like my blog follow me on twitter, @PhatLewtsGold!!

1 comment:

  1. Thanks for the reference. Some further comments.

    There are many other facets to buying that are rarely discussed. Have you ever noticed that some people insist on being the lowest priced. Ever whisper to someone that you just undercut them. Ever watch the price plummet as they insist on being lowest. Think of what you can do with this if its something you want to buy.

    When I buy items in some markets I try not to take all of the mats away or I wont have cheap goods to buy. Take Golden Lotus as an example. I buy everything under 60g. If I buy everything out up to 80g how am I going to get my goods cheap. The key is to see what is posted and watch the cutoff points. In some cases leaving a stack of 20 at 65g will ensure you will continue to see items priced where you want. Removing all resets the market. This may not be what you want to do.

    There are many other ways of dealing with buying. I do believe a huge part of my gold making is just through better buying.

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