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!!

Reader Request Phriday: TSM Setup

Welcome, ladies and gentlemen, to the first ever Reader Request Phriday!  This week there were only 2 days to submit questions, but if you're interested in submitting a topic for next week's Reader Request Phriday, click here!!

Today's question comes from a reader, Leeu.  Leeu is currently sitting on 35k from xmog sales, and just getting into professions.  Their question was as follows:

The topic I am most interested in is how you set up your TSM auction groups. I am very uncertain about thresholds and just how low I should go and which method to use to sell. I try to set fixed gold amounts for all of my auction group thresholds and fallback prices. Some things sell amazingly well with this while others not so much. Do you have an individual group for each cut/uncut gem that is sold or are they all lumped into one big category? 

TL;DR: How do you set up your TSM auctioning groups?

Fixed Gold Prices: Gems, Transmog, and Glyphs
For Gems, Transmog, and Glyphs I use fixed gold prices in one large group.  For gems I prospect, so the raw mat cost for each cut is equal, and they never cost me more than 30g, so 30g is my lower bound.  For my upper bound I use 274g99s99c.  This way it'll fall back to a nice price when I'm the only one posting, which happens from time to time.  If you don't make a lot of sales using this method, there is probably someone undercutting you quite constantly.  It's not about if a specific cut sales, but more about overall gem sales, that's how I think of it anyway.

I do a similar thing for glyphs.  Since I use current mats and down convert to the old Inks, I have a set price per glyph, it's usually 30g.  For glyphs I'm not willing to sell "at cost" so my lower bound is 50g, and my upper bound is 475g.  Again a realistic upper bound where I might get sales.

For Transmog my bounds aren't so flexible.  For each tier I set my lower and upper bounds within 100g of each other.  If someone wants to undercut me in this market below that, let em.  My theory is, if they undercut me and make a sale good for them, but the common lister won't keep listing at that price if it won't sell, they'll eventually go down to a price that I'd be willing to buy at, in a worst case scenario.

Percent of Market Value: Current Enchants & Food
The other way I tend to set up groups is as % of AuctionDB - Market Value.  This is useful in groups such as food buffs or enchants, where the market tends to go up or down depending on the time in a patch.  I use these because each food is valued at a different price, and I don't have to think about the very volatile pricing.

For the food I use an upper bound of 140% of Market Value.  This is relatively arbitrary, but if there are no auctions on the AH, I want to sell for a bit more than if there were.  I set the lower bounds to 60% of Market Value.  I don't craft my food (see this post if you're curious about how I obtain it), so I don't base it off of "crafting cost", which can also be a bit inaccurate for things like food (see Ironpaw Shuffle).

Lastly of course is Enchants.  I don't do the following for old enchants because originally I did and I ended up listing some (definitely not worth it) at 400k gold because of people overinflating prices.  For current enchants though (again since I don't want to deal with them on an individual basis and they all cost different prices to make), I use 125% for Upper, and 60% for lower.

Anyway, I hope this answered the question, and gave you some insight as to how I set up my TSM.  If you have any further questions, feel free to ask them below, I'd love to get a nice discussion going about this.

Cheers,

Phat Lewts

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