Overflowing stupidity

[Zigkid3]

You are missing the point of that example:

Tomb mats do sell a lot faster than crafted items.

In the example the mats total market value was 200k, the finished item undercut to 150k.

Regardless of if the 150k finished item sells faster than the other crafter's 250k item, the undercutter is still in effect losing 50k easy profit, by not just selling the mats.

The fact he farmed all the mats himself is irrelevant, while the 150k may be "pure profit", it's still a minimum 50k loss on the gil potential and a senseless move on his part.

You aren't completely wrong, but not completely right either.

if someone sold a good farming their own mats so COGS was 0, then they made money technically. You are right though in that if someone sold that item for 50k cheaper for no reason at all then they lost money due to their opportunity cost. (a drastic example would be farming for mats that took hours to obtain and then selling the finished product for a measly 5k, which means they lost money do to their opportunity cost because they weren't adequately paid for their troubles). So you are right in that sense.

However, there could also being a reason to sell for cheaper than the total mats required if someone farmed the mats themselves, and this depends on the inventory turnover which depends on the elasticity for the product depending on if it's inelastic or elastic. Of course this is assuming someone farmed the mats, in which the amount of time they spent gathering mats and how much they feel their time is worth is subjective. Also if someone is specifically farming mats over and over down to a routine, knowing what they're making etc... as opposed to people who happen to get the mats over time, then to them the mats would be cheaper (to themselves) than the ones on the marketboard, because they gained the mats more efficiently than most people due to economies of scale. Of course this is all assuming someone farmed the mats.

Now assuming if someone bought the mats from the MB, then made the finished product and resold them...then obviously they can't buy 200k worth and sell for 150k, as they'd lose from COGS alone. In this case, say item X costs 200k to make but it can only sell for 150k. this would be because if item X didn't have much demand to begin with. As a result, sellers won't produce item X because it is unprofitable to do so (assuming everyone buys mats), then supply would go down to drive the price up to the point where it would be greater than or equal to 200k.

[scarebearz]

Snip.

I agree, my example does not take into account all factors, but it was used to hopefully illustrate the foolishness of someone selling an item cheaper than they could sell the mats.


In terms of 2 star items being sold way below cost due to silly undercutters, I believe this is the main reason:

A crafter has been selling a lot of 1 star items and other things fast on the MB, they gear up and think "I'm going to make and sell some 2 star items!".

They list the item and expect it to sell as fast as their other items.

After a few days or less they get worried that it's not selling and a large part of their gil is tied up in this item.

They keep dropping the price / undercutting in large chunks because they are desperate to get back whatever gil they can ASAP.