Please Undercut Wisely

[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?

[MomoOG]

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?

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.

[Lstkaws]

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.

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).

[Inquisitor]

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?

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.

[OldGeezer]

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...

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.

[Inquisitor]

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>

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.

[OldGeezer]

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.

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.

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.

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.

[Inquisitor]

snip

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.

[zdub303]

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.

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.