Saturday, November 23, 2013

Has Phat Gone Soft?

If you haven't subscribed to my new Subreddit, you're missing out on two new great gold making posts, one from Sapu, lead developer of TSM and a great podcast episode by Stede, be sure to check them out!  

Have I Gone Soft?
I found myself asking this question about a month ago, when I decided to cut the price of my Malevelent gear by over one half.  I could have kept gouging prices, but it was time to experiment.

In the crafted malevolent gear I basically had a monopoly.  There were a few other players in the sellers market, but it was mostly me picking prices and being undercut maybe once in a 24 hour period.  I'm on a very small server!  When the patch first came out and I made my malevolent TSM groups I thought to myself: "Why not price these as high as I can and see what I can get away with.  That number for me turned out to be 1250g, and let me tell you, I did get away with it.  In my mailbox after AH fees, that turns out to be a very nice pretty number, 1234g5s, and I can't say sales were terrible, but honestly they were slow:

Click to enlarge

Now I had heard others talking about slow sales for a while, so I didn't think much of it at first.  In the screenshot above though, you'll note that I was making sales usually one piece at a time, maybe 2 on a few occasions.  The profit margins were insane, but it seemed like people were only buying pieces that they desperately needed to fill gaps, instead of decking out their toons in the PvP gear, and I wanted to see if I could change that and if that change was justifiable.

It's not always about %s...Or is it?
Normally you'll hear me harping on % return comparing professions, but not today.  Today I am going to look at my numbers a different way.  So I decided I would post at 500g a piece, and I'm now that guy who is undercutting by hundreds of gold in this situation.  My competition is posting at 700g?  Oh well, my max is 500g, sorry guy.  To me it's a fair market price, and hopefully somewhere on the supply/demand curve where both sides have favorable outcomes.  Without further ado here's the sales data from the last 2 weeks (been doing it about a month).

Click to enlarge
As you'll notice, when I DO make sales, I'm making at least 1, but usually more.  So here's my math from this, as well as the data not shown here.  I'm going to say that on average I'm making groups of ~4 sales per posting period as opposed to ~1 for the previous pricing scheme.  So how does it add up?  I'll spare you the math for this round, but I'm making an additional 450g in profit per posting, a 38% increase (whoops there's those percents again).  Even if I only sell 3x as many on average, I'd be breaking even, which is a fair gamble IMO.  So yes, sometimes "cutting yourself short" pays off.

The Takeaway
The number one takeaway here though is this.  Not just in this example, but in all markets, don't be afraid to step outside your comfort zone and try something new.  Whether it's new pricing, your TSM setup, new markets, or a new profession, the best way to learn about it isn't to read about it on some gold blog or The Consortium, but by getting your hands dirty and trying it out yourself.  Of course preparation is always good, and that's where we come in handy.  Make rational decisions and see how they play out.  Always experiment.

Don't forget I've started a new program where I'm answering user's questions, click the Ph.A.Q tab above for more details!


Phat Lewts

1 comment:

  1. I was doing almost exactly the same thing. I had mine listed at 1295. I went down to 495 for cloth, 595 for plate, and 795 for leather. I saw an immediate increase in sales and overall was making much more gold than I had been.

    My realm merged yesterday and now I am faced with a bit of a dilemma. There are people posting these for around 100-200g a piece. I'm not quite sure how I want to handle this at this point. I have bout up several pieces at or below 100g, but I am not sure if this is a good idea long term. Luckily I still seem to have a hold on the leather market.