In this multiple part series, I'm going to go over my thought processes and how I think about concepts in gold making in World of Warcraft, and why I do things the way I do. Today I'm going to spotlight the Buying aspect, because in my opinion, it's the hardest part of gold making for new gold makers to nail down, as well as the most important.
The Logic Behind Buying Crafting Mats
Although it may not seem so from the outsiders perspective, there is indeed a certain logic behind purchasing items in WoW, and it's a key to making massive piles of gold. Whether it's raw mats or an item to flip, I always focus on one question when buying: "How much am I earning by making this purchase?" This may seem counter intuitive to some, but purchasing is actually when you make your gold. Just think about it. Yes, you may have to do intermediate steps such as prospecting and cutting gems, but your profit is going to be determined by how much you paid for the item to begin with, and how much you sold it for, because what it boils down to is: Profit = Psold - Pbought, where P = Price. Are you buying at a reasonable price? Could you get it cheaper? Could you get someone to farm this for you? Minimizing cost is more important than maximizing selling price. How much you buy raw materials for is something that you can have MUCH more control over than how much you sell an item for.
Some items that you use in bulk would be great if you could get a farmer to get them for you, but is it worth the time invested and annoyance to maintain farmers? Yes. Farmers, in my experiences with them, come in cycles. The legitimate ones soon get sick of the game, as farming is a menial repetitive task, and soon get bored and stop playing for a while. What I've personally found odd is that when they do return, they usually will contact me to see if I want to continue receiving ore/herbs. Gluttons for punishment, the whole lot! The illegitimate ones usually soon get banned, but provide you with mountains of ore/herbs that you will be able to whittle away for long after they're gone.
How Much is Too Much?
Another thing that I see new gold makers hesitant about is buying more than they can reasonably prospect within a short time frame. The hesitation is understandable, and the future price of the mat is uncertain, but if you're getting what you see as a great deal, odds are it's worth stocking up. Say for example GIO is normally 50g on your server, and you know there's profits at that price. On the AH is a couple hundred stacks for 35g all of the sudden. It's not time to panic and wonder if that's the new price for your server. If you watch your mat markets, and where the price should be, if you think it's a great deal buy it up. The worst thing that could happen in 99.99% of the cases is you break even. There's very little risk involved when you make smart purchases.
Learning to Estimate Value
One thing I do a lot when I buy, is estimate. I don't need to know I'll make 41g 93s 64c off of a stack of ore, but I might be able to do some quick calculations to figure about how profitable it is. These estimations are key, and a big part of understanding your purchasing. Sticking with the ore example and going back to the logic in this post, I know that for every stack of Ghost Iron Ore I buy, that I'll get on average 1 rare gem and 6 uncommons, spread equally. I know that if I'm buying at 40g, the minimum I'll get from the uncommons is 16g back (see the other post for reasoning), therefore rares are costing me 24g at most, which is a price point I can definitely profit quite a bit at.
Alchemy (Xmute) is another great example, 6 Trillium Bars -> 1.2 Living Steel, that means on average it's 5 Trillium Bars to one Living Steel, so compare those prices. You could even go further down the line with this one. You can transmute the Trillium from Ghost Iron Bars, requiring 50 bars, or 5 stacks of Ore. So compare the prices of 6 Trillium, 50 GI Bars, and 100 GI Ore to find the cheapest mats for your CD, and whichever is cheapest is the optimal way to go!
I will be continuing this series later this week, keep an eye out for the post!