Please Undercut Wisely

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Originally Posted by Astarica

The bulk of your profit is made from other crafters, which makes the whole thing a Ponzi scam. Ponzi scams are not sustainable, and add to the fact that most MMORPG decline on a server level after launch, the pool of suckers to make your money from is ever decreasing, so you have to be very aggressive. If you're playing on say WoW when it was new, you could afford to be less aggressive because the game was clearly growing so you figure there will always be new suckers to buy your stuff, but you can't do that here.

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The second person in this thread to misuse this term Ponzi Scheme.

"A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from existing capital or new capital paid by new investors, rather than from profit earned by the individual or organization running the operation."

Personal sales you make in FFXIV are not a ponzi scheme.
-There are no investors
-Real profits are earned

I'm sick of people using (or attempting to use) terms they don't understand to sound impressive.

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Originally Posted by Lyrinn

Hence why I said I don't advocate strictly doing one method or the other. If I have time, then of course I'll go farm the mats myself.

But the way things are on my server at least, I'm still selling faster than I can craft for half the day. Mats cost average 3k, items sell for 10k+. I'm not competing with other farmers for hours to make an extra 3k when my retainer is standing around with open slots.

Maybe one day, I'll go super tryhard and build a stochastic model just to see how much downtime for farming I have. Too much effort for a game though.

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Well a 70% margin is great. Level 40+ item, I take it. If you can still make 70% a few months from now I will be very impressed, because you're not making that on the middle-tier stuff unless you do it yourself.

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Originally Posted by Mitski

I'm sick of people using (or attempting to use) terms they don't understand to sound impressive.

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So you're tired of hearing yourself?

An item like Twinthread is produced by a crafter that can only be sold to another crafter. While in theory the buyer of the Twinthread can turn it to say, Militia Robe, this is overlooking the fact that whoever made the original Twinthread most definitely can make Militia Robe as well. The reason the seller of the Twinthread did not turn this into a Militia Robe is because he already figured out there isn't a market for the finished goods, so instead he sells it to other crafters, making the whole thing a Ponzi scam. Even raw materials like Cobalt Ore is almost certainly from one crafter to another, given DoL jobs are generally harder to level than DoH jobs. Crystal shards are almost certainly mined by someone who have crafting skills at some point (unless that person realized from the get go that leveling up crafting is clueless), and is of course is only useful to another crafter.

While the market for finished goods is not a Ponzi scam, this is also rather limited. For example the high 40s jewelry sells at a decent price, but my server's log reveals 10 of those has been sold per day, and there isn't exactly a significant barrier of entry to make such things. Even here, most of those sales are likely to be used in spiritbonding, which is one of the few recurring consumable goods in this game. I can sell an Aethernyte Ring at 500 gil and turn a profit, though at that price I might be better off selling Gold Ore or Rose Gold Nugget instead, which again goes back to the Ponzi scam.

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Originally Posted by Lyrinn

There's this thing called opportunity cost. In the time it takes you to farm all the random mats and shards (especially shards) to make "pure profit," I'll likely have sold more in the same time for a total profit greater than what you earned...

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Depends on the current cost of shards. Shards go directly to overhead. You need to figure this in as cost and use the derivative to ensure it is the most efficient way of doing business. These days shard costs are generally low enough that buying shards is by far the best use of ones time. I usually make sure they are under 20g a piece as that is the cutoff for me to make my profit margin in a down market.
If shard costs were high it would make sense to vertically integrate that portion of the process.

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Originally Posted by Astarica

*SNIP*

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I'm still waiting for the part about the investors, the fraud, and the illegitimate profits. Please continue...

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Originally Posted by Astarica

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It couldn't possibly be a leatherworker that doesn't have weaver buying the twinthread.

Not even remotely possible.

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Originally Posted by Tiraelina

It couldn't possibly be a leatherworker that doesn't have weaver buying the twinthread.

Not even remotely possible.

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Shh, let him live under his rock in peace. There is no interaction between DoH classes. :rolleyes:

Why would prices on any item remain high when there is a massive overabudance of all materials?

If your higher prices were fair then you would still sell them even if people decided to undercut you, the problem is that people are able to generate more supply and sell at a lower price threshold than you are willing to drop to. It's not their problem that you refuse to lower your prices to compete with market demand of a slow selling or (Fast selling but quickly supplied) item.

If the cost of goods is outweighing the cost of aquisition you need to switch to another market there are still a good deal of sustainable items but like I said if the game continues to de-emphasize crafting and make the generation and aquisition of materials childs play there will never be a real market in the game. Just front loaded gold rushes when new items appear.

At this point, we're at the inevitable conclusion to the market.

What people are charging for finished goods is raw material price + perceived value. Perceived value mostly being the time input that goes into making that item (being the time it took to level and gear the class as well as the 45-60s you spent going through your macro rotation to make it HQ.

Considering raw materials are worth almost nothing due to an overwhelming supply that could never keep up with demand... most items are pretty much selling for their perceived value. Well... everyone has a different perception of value.

It takes me about a minute to turn 3 gold ore into an Aetheryte ring... I see a lot of people selling these rings for 10k+ while I will happily sell them all day for 7k.

Am I being a low-life undercutter or just selling for what is the value I place on the 60ish seconds it took to make that ring?

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Originally Posted by rex1976

see above ^ when i am undercut on a flooded market logically (by 1 or 10 gils) i will undercut the market seemingly illogically. i do this because 1) you've made me mad, 2) because i am baiting the rest of the sellers into undercutting me again, and again. to the point where you are selling at a breakeven or below cost price. at wich point i will buy your items and pull all of mine from the market. then i wait a day or 2 and put the items back up after market corrected itself. stop scratching your head

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1) If you are undercutting because you are "mad" then you are undercutting based on emotion and not logic. Therefore it is not "seemingly illogical".
2) Your second point is banking on the assumption that the other people are going to get baited. This is of course at the risk of selling your own stuff cheap and the people who are trying to bait don't even get baited. Most people can do basic math and figure out where they break even you know?
No I think I'll still keep scratching my head thanks.

When enough people undercut "unwisely", the "wise" ones are over-pricing.
In an MMO, the value of an item ultimately is decided by how much people are willy to pay for it.

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Originally Posted by zdub303

At this point, we're at the inevitable conclusion to the market.

What people are charging for finished goods is raw material price + perceived value. Perceived value mostly being the time input that goes into making that item (being the time it took to level and gear the class as well as the 45-60s you spent going through your macro rotation to make it HQ.

Considering raw materials are worth almost nothing due to an overwhelming supply that could never keep up with demand... most items are pretty much selling for their perceived value. Well... everyone has a different perception of value.

It takes me about a minute to turn 3 gold ore into an Aetheryte ring... I see a lot of people selling these rings for 10k+ while I will happily sell them all day for 7k.

Am I being a low-life undercutter or just selling for what is the value I place on the 60ish seconds it took to make that ring?

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If the perceived value of the BUYER is 10k (meaning people are buying the item at a reasonable rate at 10K) then it is bad business on your end to drop it down to YOUR perceived value of 7k. Undercutting by a tiny amount to get to the top of the list make sense but to drop it by 3k even though the buyers are still willing to buy at 10k is just silly unless you are Robin Hood and are trying to give money away for altruistic reasons. However, if the item is not selling at a reasonable rate at 10k then it makes sense to try and bring it down to a price where it will sell at a reasonable rate.

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Originally Posted by MomoOG

If the perceived value of the BUYER is 10k (meaning people are buying the item at a reasonable rate at 10K) then it is bad business on your end to drop it down to YOUR perceived value of 7k. Undercutting by a tiny amount to get to the top of the list make sense but to drop it by 3k even though the buyers are still willing to buy at 10k is just silly unless you are Robin Hood and are trying to give money away for altruistic reasons. However, if the item is not selling at a reasonable rate at 10k then it makes sense to try and bring it down to a price where it will sell at a reasonable rate.

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Actually that is exactly what steel mogul Andrew Carnegie did. He dropped steel prices and massively undercut his competition (or threatened to). Granted he was vertically integrated, but the principles the same. Moving inventory fast has a lot to be said for it; if you can keep it cycling. Works especially well with high volume items (consumables and the like).

Considering you can get diremite easily from both mobs and from leves, there's no surprise that someone came in and blasted the price with volume.

Cutting your profit on a per item basis to quickly move volume is a viable strategy. You might make less per sale, but you can make more per day in volume.

I love how these whiny threads about undercutting keep popping up.

Volume sales strategies only work on common or easily procured products... which is why I find the whining so hilarious. You are crying that you can't overcharge for some common junk, because someone is just flooding the market and taking profit on volume.

Stop pretending you are selling something valuable and trying to gouge. Understand that you are selling common junk, and that if you want to overprice it that's fine...but don't be surprised when you aren't competitive.

When I get bored now, sometimes I just look for "crafters" trying to rip people off in the market and I will flood the market with items at a low price. New players that don't know that it is junk might be fooled and actually get ripped off... so I put stuff out there on the cheap so they can get it and keep leveling. I still make a profit, but I'm not trying to get rich on one sale like some people.

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Originally Posted by zdub303

It takes me about a minute to turn 3 gold ore into an Aetheryte ring... I see a lot of people selling these rings for 10k+ while I will happily sell them all day for 7k.

Am I being a low-life undercutter or just selling for what is the value I place on the 60ish seconds it took to make that ring?

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As long as that 7k is enough more than market price of the materials to net what you consider a reasonable profit, then no, you aren't a low-life even though you are undercutting. But if you sell it for less than the market value of the materials then you are NOT making a profit, even if you farm all the materials yourself. That last part is important and something a lot of people just can't see, to understand. If the market cost of the items you've gathered is greater than the price at which you sell the finished product then you would have been better off just selling the materials and not bothering with the crafting.

Edit: I know the poster I'm replying to did not mention materials being 'free' as some others have said. I'm just clarifying the difference between sensible undercutting and, well, stupid undercutting.

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Originally Posted by ApolloGenX

Stop pretending you are selling something valuable and trying to gouge. Understand that you are selling common junk, and that if you want to overprice it that's fine...but don't be surprised when you aren't competitive.
New players that don't know that it is junk might be fooled and actually get ripped off... so I put stuff out there on the cheap so they can get it and keep leveling. I still make a profit, but I'm not trying to get rich on one sale like some people.

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A lot of people can't seem to get over the fact that the item/service they provide is junk and therefore the correct price tends to settle toward junk.

And what you describe really only matters to crafting materials. If you're a brand new player with absolutely no clue how the game works, you'd quickly come to the conclusion that no finished product in the level 1-49 range is worth paying for given you can do FATE while naked. I've put level 40 HQ weapons for 200 gil before and it took a while to sell, and I'm pretty sure I was not being undercut by anyone. In some cases I am the only seller. People simply don't have a need for these things. A lot of people seem to live in this parallel universe where people constantly buy gear upgrade as they level from 1-50 even though there is no incentive to do this whatsoever. You don't need it for FATE grinding, and if you do dungeons, you'll have better.

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Originally Posted by Inquisitor

As long as that 7k is enough more than market price of the materials to net what you consider a reasonable profit, then no, you aren't a low-life even though you are undercutting. But if you sell it for less than the market value of the materials then you are NOT making a profit, even if you farm all the materials yourself. That last part is important and something a lot of people just can't see, to understand. If the market cost of the items you've gathered is greater than the price at which you sell the finished product then you would have been better off just selling the materials and not bothering with the crafting...

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Who made material suppliers the authority figure on the setting of prices? Maybe the material crafters are gouging the other crafters, who then in turn gouge the final customer. Two wrongs don't make a right. If I don't follow this plan I'm a low-life? Pardon me for not being a lazy-ass and making the materials myself. If someone wants to spend 7k on mats and sell a finished item for 8k that is their choice, However, if I go out and get the mats myself, I don't have to sell the same item for 7k. I can sell it for 5k and I make more money instead of buying mats. I don't need big piles of money to fil the coffers of the material suppliers because I don't buy things from them anyway. I should not be penalized or ostracized due to other people's laziness.

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Originally Posted by OldGeezer

Who made material suppliers the authority figure on the setting of prices? Maybe the material crafters are gouging the other crafters, who then in turn gouge the final customer. Two wrongs don't make a right. If I don't follow this plan I'm a low-life? Pardon me for not being a lazy-ass and making the materials myself. <snip>

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That doesn't make you a low-life. But if you are selling the finished product for less than what you could get by selling the materials then you are being rather dim-witted. Not evil, but very ignorant.

Edit: I don't consider undercutting to be immoral except in cases where some jerk says, "Ha, I've got so much gil that I can cause the market for fleece to collapse just for the fun of it!" Taking the opportunity cost of gathering your own materials into account is in your own self interest.

Edit 2: Your idea that people who don't gather their own materials are lazy is ignorant and insulting. If you work in a steel mill, are you considered lazy because you didn't go out and mine the iron ore (and coal and misc other minerals used in a particular alloy) yourself? If you work in a car assembling plant are you being lazy because you didn't mine the ore and smelt it yourself? Not to mention the glass, plastics, circuit boards, and everything else that goes into a car. If you run a retail outlet chances are you didn't do anything with the merchandise except buy in bulk to resell in smaller amounts at an increased price. You must think retailers are REALLY lazy.

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Originally Posted by Inquisitor

As long as that 7k is enough more than market price of the materials to net what you consider a reasonable profit, then no, you aren't a low-life even though you are undercutting.

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Net cost of materials for an Aetheryte Ring on Coeurl atm would be between 900-1200 gil based on crystal/cluster prices. Most items you're still making a 500-600% profit margin on Coeurl, I think most people just perceive that 60 seconds of their time to be worth more than a few thousand gil.

I love it when people undercut the current trend by 50% in desperation to "sell now".

I grant their wish, then relist their product back to the current trend and enjoy the (basically) free Gil.

Funny thing is, this happened to a friend of mine. He listed at 800. Undercutters went 799, 798 etc. So he listed more at 500, 499 etc. They answered by pulling their 799s and relisting at 450, 449. He bought up/pulled everything under 800 and reposted all at 800 and sold.

There ensued a slew of cursing on /shout from the "aggrieved" undercutter. It was glorious.

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Originally Posted by ArmorKing

I love it when people undercut the current trend by 50% in desperation to "sell now".

I grant their wish, then relist their product back to the current trend and enjoy the (basically) free Gil.

Funny thing is, this happened to a friend of mine. He listed at 800. Undercutters went 799, 798 etc. So he listed more at 500, 499 etc. They answered by pulling their 799s and relisting at 450, 449. He bought up/pulled everything under 800 and reposted all at 800 and sold.

There ensued a slew of cursing on /shout from the "aggrieved" undercutter. It was glorious.

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Well, that can happen when you don't really have much supply. I usually do it with 10 + of items and 10 + stacks of stackables. If someone wants to buy all mine out, that is fine... I'll just put more stacks out there until they stop buying.

Due to the limit on items you can have up. I undercut a LOT. Doing so will cause me to sell more in a shorter time then selling them at near "market value" and playing a waiting game. Sure my individual gains will be lower per item, but I'll have 5x+ the sales so my overall net gains become very substantial. I'd be more conservative if there wasn't a limit, but I spend my free time crafting nonstop so I have lots to throw up.

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Originally Posted by ApolloGenX

Well, that can happen when you don't really have much supply. I usually do it with 10 + of items and 10 + stacks of stackables. If someone wants to buy all mine out, that is fine... I'll just put more stacks out there until they stop buying.

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I don't even understand how the often 'I lowered my price to trick people' thing can even work. It's obviously not possible on anything that's gatherable (the joke's on you for trying to control supply). If you've an item that moves in high quantities, like Fleece, and you had a sequence of say 300 (default) 250 (undercutter) 200 (you), what's most likely going to happen is a third party would've bought up all the 250s and certainly all the 200s since this item moves in high quantities and both you and the undercutter loses to a third party. So is there some secret trade wars over say, Ochu Vines? If the last price is actually near the market price, I've never had a trade war that goes beyond my first undercut, because somebody would've bought it after that first undercut, and if not, the next substantial retaliation undercut will certainly be bought by someone else which makes the ploy irrelevent.

I think what actually happens is that say you got a good that's priced at 1000gil and its market value is 500 gil so nobody is actually buying, so you undercut to 900, then another guy retaliate with 800, and you drop to 700 and then someone bought all your 700 gil stuff thinking they 'won', never mind that none of those items were ever going to sell in the first place. If the fair value of the said item is 1000 gil, the item would never have lasted long at 900 gil, let alone any price lower.

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Originally Posted by Inquisitor

That doesn't make you a low-life. But if you are selling the finished product for less than what you could get by selling the materials then you are being rather dim-witted. Not evil, but very ignorant.

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Who says maximum profit is the only way to roll? I don't buy mats and I'm comfortable with an 80% margin, plus I like making things. I don't need a 99.9+% margin to feel good about a sale. Like others have said gil has very little value in this game. Aside from buying forthcoming housing, gil has limited importance in this game.

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Edit 2: Your idea that people who don't gather their own materials are lazy is ignorant and insulting. If you work in a steel mill, are you considered lazy because you didn't go out and mine the iron ore (and coal and misc other minerals used in a particular alloy) yourself? If you work in a car assembling plant are you being lazy because you didn't mine the ore and smelt it yourself? Not to mention the glass, plastics, circuit boards, and everything else that goes into a car. If you run a retail outlet chances are you didn't do anything with the merchandise except buy in bulk to resell in smaller amounts at an increased price. You must think retailers are REALLY lazy.

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Companies buy other companies in order to make materials internally and thereby lower their costs. This game allows this too. If FFXIV limited 1 character to 2-3 crafting professions like in other MMO's, crafted materials would be an essentail component to the economy. But they didn't, so crafting materials are optional to the economy. A person can do it all. It takes a little dedication but with the EXP rewards that come from HQ crafting leves it's remarkably fast and very profitable. Youi can grind 5 levels in 1 hour or so with the right recipe. If you're a dedicated crafter and you've only trained one profession so far I'm very curious about what you've been doing. I split my time between questing, grinding alts and crafting and all my main crafts are at level 35-and I'm taking it slow. So yeah, if you're not spending time developing other crafting classes, I wonder what you're doing with all that free time.

http://i.imgur.com/6Kbn52V.gif

You're welcome OP.

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Originally Posted by Elphan

http://i.imgur.com/6Kbn52V.gif

You're welcome OP.

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Exactly, and for most things in this game- supply is infinite. People don't want to admit they are selling trash...especially when they are trying to sell it at high prices.

Not only is supply effectively infinite, but the demand curve is constantly being moved to the left because there are very few worthwhile consumable items and finished product do not spontaneously break down, unlike real life. For example, if you just hit level 50 and someone offered you a Militia Hat for vendor cost (~100 gil), you'd take it. But after you have something from AK or DL hat, you most likely won't take it for vendor cost because it's taking up a valuable spot in your armory space, unless you're trying to SB stuff. You literally can't give away most low level gear just because the guys who need it can't even be bothered to look it up.

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Originally Posted by OldGeezer

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I never suggested gouging and an 80% margin is more than enough. My simple point is that if you sell finished goods for LESS than the market value of the materials then you're not being very bright. The idea that materials you gather yourself are "free" is only true if you don't consider your time to have any value. Many people simply don't understand that.

If you mean me in particular, I gatherer most of the materials I need with the exception of drops (since the highest combat class I have is level 29.) I rarely gather my own shards because my gathering time can be better spent farming other things. I would venture to say that once you get to higher crafting and gathering levels you'll realize that too.

But some people don't want to 'do it all' and it's unfair to call them lazy for wanting to spend their leisure time in a way that's different than how you want to use theirs. You call them lazy, I call them customers.

PS I'm also an Old Geezer. A grumpy one at that.

People keep on say 'market value', but they don't get that your items are not worth the market value. Let's say the lowest fleece for sale is 300 gil. A guy decided to quit the game and hand you the 1000 fleece he's been hoarding. I guess some people will think you can immediately sell 299X1000 on the market for 299K. Well, all I can say is good luck if you actually believed in that. You might be able to sell close to 299K if you had a very long time to sell them, like say a month. If you wanted to sell this in a hurry, you got to make a rather drastic cut, and the fact that you're unloading 1000 Fleece is likely to cause some kind of mass panic when other people see 1000 fleece for sale at a low price (say, 250) which further destroys the value of your items.

If you really believe your mats are that valuable when computing the price of the finished good, you should be selling your mats instead. This also ignores the fact that in a MMORPG, the finished product generally loses value compared to the original materials, because once a shard has been turned into some finished product, it can no longer be turned into anything else. You have far better flexibility holding onto a thousand shards and some basic stuff like ores, than keeping a supply of ingots/rings/plates/rivets let alone the finished product.

Please keep undercutting. Such good bargains.

What? Your crafter can't sit in a pile of gil and do nothing all day?

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Originally Posted by Astarica

Not only is supply effectively infinite,<snip>.

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The supply of materials is indeed effectively infinite, but so is the supply of gil.

The economy of FF14 is never going to really stabilize as long as there are armies of bots making the market price of some items (shards being the most obvious) lower than they would be if they were only being gained legitimately.

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Originally Posted by ArmorKing

I love it when people undercut the current trend by 50% in desperation to "sell now".

I grant their wish, then relist their product back to the current trend and enjoy the (basically) free Gil

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I know someone who tried this with shards and got burned horribly when his "correct price" wouldn't sell while the supposed undercutters he was trying to screw got their sales at the end of the day.

Your problem is that you see the "correct" price as whatever other people have listed it at in any point of time, which is a faulty assumption. By that logic you can sell hq 2 star fish at 5 figures while ignoring that no one has ever actually forked over the cash for that price. What a previous poster said about volume is correct, just because fleece is selling at 300 doesn't mean you can sell 1000 and make 300,000. The price is based on a history of sales and that history has a limited volume, so when you want to sell a larger volume than proven in the sales history you have to drastically undercut to provide more incentive for higher volume. If you want to do the whole relisting thing correctly you also have to cut volume while raising the price, I see people doing this with pastry fish where a single one sells for double the amount of one in a stack.

Also your whole scheme makes me nostalgic. Back in Diablo 3 I used to find a market of items in the RMAH that was comically overpriced and never sold, buy one of them from the gold auction house and relist it on the RMAH way cheaper than anything else. My target customers were flippers, people just like you who would think that just because a price is an outlier that it is underpriced. I wouldn't be surprised if many sellers in this game were also depending on people like you.

all people have to do is undercut one gil to get to the top of the list. not undercut to 10% of its price, im pretty sure people botting are just throwing away stuff like that..

Once again I will say that I hate undercuttings. I have tried a couple of things to counter this but to no avail. The are a couple of reason a free market doesn't work.
- You don't make wares to make a living. Lets say this were a game like sword art online where you literally live in the world. If you don't make enough money you will starve. Would you undercut? Yes, but not by such a huge amount that it wouldn't make a difference. After all, you need to earn something decent.
- There is no difference in quality. If I find a watch, and it would cost only 10 euro's, I doubt the quality of the watch. Perhaps I would buy it, just because it is only 10 euro's but I wouldn't really use it since I think it will break easily. Out here the only difference is HQ/NQ. Where NQ is still sufficient anyways for most of us. If someone has the same item for half the price. I would buy it since I cannot doubt the quality since it is just the same.
- No control on the market. IRL, in my country at least, you cannot drop prices below a certain margain, not only because the reasons above + it cost you something to buy it (or the materials) from elsewhere. But because the goverment well. governs it?
They make sure there is fair price region. Stunt once in a while, thats ok, but in the end if you have competition it again comes down to quality since you cannot drop the price too far below your competitor since it is not allowed.
These are just some problems we have with the market we have now. I am sure if I would drink my coffee and try to wake up I would come up with more... but not for now ;)