I really don't want to moan about undercutting but....

[ruskie]

I don't understand why you would choose to spend more money than necessary. If it's about principal, I'm pretty sure no one is getting the point and just cares about their gil.

I do similar. But I go a step further. I check to see which one has no tax on it so chances are if you are undercutting from a location I'm not buying from yours won't get picked. That tax is a gil sink and I rather see the gil circulate in the player base than to go into a black hole.

[CelestialFurry]

My biggest market pet peeve are people who sell HQ items for less than NQ? Why would you even do that?

[LineageRazor]

My biggest market pet peeve are people who sell HQ items for less than NQ? Why would you even do that?

There could be any number of reasons. For example, if the HQ items currently up aren't selling fast at all, you'll lower the price. If the NQ items are ALSO not selling well, you'll lower the price below those whether you're selling HQ or NQ. Do you have a full inventory and want to unload stock asap? You'll lower the price until you're sure it sells fast. Did SE just add new items that makes the things you're trying to sell obsolete? You'll lower the price to make sure you get at least a few gil before word gets around and the market collapses for that item. Those are just a few of many possible reasons.

Really, the only action that really puzzles me is when folks sell items at or below the NPC sell-price for the item. I mean, why waste the marketboard slot, when you can just unload the item onto an NPC instead?

[xblackfriday]

What would you call selling Vanya Robes of healing for 47k, when the Potash alone is worth 36k?

Thats more than what we get here on Sargatanas. All philo crafting items go for 1k if that. For the most part the items made stay around 40-60k. Depending on the class its for.

[IAmPotent]

The fact is, these people are not selling the items less than cost. At least, not THEIR cost. They farm tomes rather than buy philo mats.

As well, if you buy Philo mats in bulk from a person(10+ at a time) you can usually get them to drop the price even more than Market board(which anyone shouting to sell mats is already selling lower than MB in the first place). Many people would take say 32-35K NOW, then wait to sell the other 2 mats to make a full 40K, just because it's convenient.

[IAmPotent]

I do similar. But I go a step further. I check to see which one has no tax on it so chances are if you are undercutting from a location I'm not buying from yours won't get picked. That tax is a gil sink and I rather see the gil circulate in the player base than to go into a black hole.

All MB's are connected, it doesn't matter where you post it as it can be seen from any other town.

[ruskie]

All MB's are connected, it doesn't matter where you post it as it can be seen from any other town.

Yes but you misunderstood. Players pay extra tax if they buy from a retainer not currently in the same city as you are. If something costs 10k and the retainer is in limsa while you are in gridania you would get something along the lines: 10250 gil(after tax) vs 10000gil(if both the retainer and the player are in the same city.

[Karilyn]

Not sure if this counts as a necro; thread is still on the top page, and I had something meaningful to add... sooooooooo... my apologies if I'm out of line.

IN DEFENSE OF REALLY BIG (greater than 5%) UNDERCUTS:
PROVING IT'S EFFECTIVENESS BY MATH!
(AKA: Making myself look like an asshole, and defending it with large profits)

Pricing your item .002% lower than your competitor might look like undercutting, but it's not. That's selling the same thing for the same price, but doing it an underhanded way to ensure yours sells first. It does nothing to move the market toward equilibrium. It does not benefit buyers in any real way -- saving one gil on your Vanya Robe is like saving a fraction of a penny on a PS4. Rather than incentivizing efficiency, it encourages crafters to stand in front of the market board for hours constantly rejiggering their prices. It is the economic equivalent of elbowing your way to the front of the line.

Oh, please try that. It's not like people with money won't, you know, buy your item for half price, re-post it, undercut by 5 gil anyways, and make a ton of cash. No wait, I will. Keep on doing that. [...] All you do is screw over yourself as the crafter and make the price of items vary wildly, never hitting equilibrium, making it impossible for anybody to ever know if they'll be able to afford something beforehand (or make a profit if they sell something).

It's simple, you go by percentages. On an item that sells for 50k+, undercutting by even 1k is meaningless. If you start undercutting by 5k or 10k, you discourage your competitors who are looking to undercut you in turn from doing so, as it would mean they would have to drop by the same amount.

If you undercut ENOUGH and the market is hot enough, I'll simply buy and re-sell.

Thank you Wilbow, players like you help me fistfuls of money in MMOs. Let me explain with an actual example from a few days ago. I'm relatively new to FF14 (but not to MMOs a genre), so I'm going to use a low level example, but it still gets the point across why players in MMOs re-selling my items makes me a bigger net profit than they make, despite them making a larger revenue.

Short answer: When I sell a 2000p item which costs 500p to craft for 1600p, and someone buys it to resell it at 2000p, I've already won. Because I made a 1000p profit (post-tax), and they are making only a 300p profit (post-tax). I've made triple what they'll make, and I literally created a buyer out of thin air, where there wasn't a buyer before. And the re-seller now has double the inventory they have to find buyers for. It's almost enough for me to feel sorry for them, but it's their decision to buy to re-sell from me; and they were not who I'm trying to sell to, re-sellers are just an added bonus on top of the players who are going to use the items themselves. When you buy to re-sell, you are effectively your own con-artist who is busy scamming yourself.


[LONG ANSWER (AKA THE REST OF THE POST)]:
I am currently leveling Armorer. I recently sold 4 Iron Kite Shields (A level 27 item) on the Market Board in less than 8 hours for 6400gross/4400net profit, with no HQ. Which, I think, is pretty healthy profit for such a low level, especially considering it only took me like, 5 minutes to craft and post them, and I needed to craft something anyway to level up Armorer, so I might as well make 50k+ net profit per hour of crafting, if I'm going to be crafting low level garbage anyway, it's not like it takes me more than a 5-10% increase in time to post the items on the Market Board instead of vendering them. (Forgive me if that sounds really low to a level 50 crafter, as I haven't gotten there yet, because I got the game a week ago, but just like any MMO, this principle should scale to work at any and all levels in this game, just like it does in every other MMO). But anyway, onto the explanation...


[MATH PART]:
Iron Ingots are used in my expense calculations below, as they are cheaper on my server's Market Board (55p) than crafting your own (13p shard + 18p iron ore from a vender * 3 iron ores = 67p). This took me about 30 seconds to figure out by checking the Market Board, and while it only made me an additional ~336p across these 4 transactions, it added up 4000p across all crafted iron ingot items I sold that 8 hours. Not only that, it cut the time it took me to craft the shields by over 50%, as I didn't have to craft the raw materials, only the finished product; a worthy investment of 30 seconds, as I basically doubled my gil per hour spent crafting, and exponentially increased my EXP per hour spent crafting, as I wasn't wasting time crafting low-EXP materials when I could be crafting high-EXP final products instead. (Gil per hour is a concept worth an entire 5000 character post explaining)

So the total cost of the materials is...
7 Iron Ingot = 55*7 = 385p
2 Earth Shards = 13*2 = 26p
7 Ice Shards = 91p
Total = 502p


[WHY WILBOW MAKES ME RICH]:
The going price for Iron Kite Shields on my server's Market Board currently is 2000p. I sold the four Iron Kite Shields for 1600p each, which is admittedly an insanely large 20% undercut, but it only cost me 500p in materials, and I'm still making over 1000p net profit, so that's okay. Of the ones I sold, 2 were bought and resold by another player. 2 were purchased by someone who used them. I made ~1000 profit per Iron Shield sold, for 4000 total. The person who tried to resell my items, still hasn't sold them 48 hours later, and even if he did he'd only make about 600-800p total profit, a fraction of what I made total. He may have made more revenue, but I not only made more profit, I also made it in less time and that's what ultimately counts. His reselling will ultimately net him about 50% profit per sale relative to the amount I made per sale, but, as I sold 4 within 8 hours, and he still hasn't sold his 2 within 48 hours later, I'm literally making over 24x as much Gold per Hour, even if his sold right fucking now.

24x more gold per hour, and I'm doing massive undercuts, in the 10-20% range, depending on the item. And that doesn't factor in the fact that I'm not just pushing Iron Kite Shields, but I'm also pushing dozens of other items. So in reality, I'm probably making over 100x the gold per hour that someone who is buying my items and re-selling them at a higher price would be making by reselling them. Thanks dudes like Wilbow! You totally account for about 50% of all my revenue. You guys rock <3


[EXPLANATION OF TECHNIQUE]:
This is what I call "Pricing to Move." It's dickish to other sellers, it makes buyers (not resellers) love me, and makes me obscene amounts of money. There's a lot of reasons it works well. A level 27 player might be unwilling to spend 1000p on an item that only gives them +1 Strength over their previous item. Give them a different item, that also only increases their strength by +1, but is selling for 1600p instead of 2000p, suddenly they will jump on the huge 20% sale. It's part of human psychology.

This is an economic trick that many real life companies (such as JC Penneys) use. People will buy something that has a large discount, even if it would cost them more than a cheaper item that they wouldn't be willing to buy because it isn't on sale. In layman's terms, with my large undercut sale-price, I was able to create a larger market for the items than there would've been otherwise, due to people purchasing them who probably would've just skipped it. And by creating a larger market, I achieved a greater net profit than I would've been selling to a smaller market at a higher margin.

And immediately after my items sold (which all sold within 12 hours), the price was back at 2000p, because either my items are selling too fast for anybody to undercut me by a penny, or nobody wants to undercut me at how low my prices were. So even with my insanely large undercut, I didn't cause the market to crash.


[40 ITEM LIMIT]:
To some extent, I consider this technique more important than ever in FF14, because you can only have 40 items for sale on the Market Board at the same time. I used to play WoW, and on average I would push around 2000 different sales on the Auction House at any one time, completing well over an average of 1000 sales per day (batch processing hooooo). Because of the 40 items restriction, I have to push items that much harder and faster, in order to still pull what I consider to be a reasonable profit. If I don't think I can sell the item within 8-12 hours, I'm not going to put it on the Market Board at that price. As my net profit is going to be tied not to the margin per item, but rather the speed I can get that 40 items to sell at, allowing me to post new batches multiple times in the same day.

And that's my argument in defense of large undercuts, that simultaneously makes me an asshole, which I can mathematically defend with large profits. You're welcome.


EDIT:
[DISCLAIMER]:
This doesn't mean undercutting by 5-20% is always the most ideal thing. This is for getting items to move that don't move easily, such as equipment. For things which move faster and easier, it's often better to overcut by 5-20%. Furthermore, the correct amount to overcut or undercut can change based on the day of week or even the time of day. There is no one-solution fits all thing. This post was just narrowly and specifically addressing certain situations in which deeply discounted undercuts can be the most profitable action. It does not address situations where overcutting is more profitable, or address gold per hour, or any of a number of different factors that can go into play towards creating the largest net profit, even if you aren't making the largest per-item revenue.

[Shadygrove]

Karilyn your iron ingot math part example ignores one thing.

You can auto synth, getting EXPs for each synth, while you are AFK. 12 gil for several hundred EXPs isn't a bad deal at ore.... all.

[cotti]

I like how the rude-but-true marketmongers almost make my eyes bleed with all that edge.