Undercut Hell

[NoF2P]

One thing for me is if there are several items up for say 10k and someone puts one up for 9999 I will buy the one below it for 10k.

I do that too. 9999 is just an untidy way of saying 10000, so I buy the one that was listed first to be fair to the seller (and because I like round numbers). Undercutting by 1 gil is the market equivalent of a kill steal (a "sell steal"?) If I've made a seller happy then I feel good about it. I'm glad I'm not the only one.

[Keyln]

It's time for fun time with Economics, starring me!

To fully understand the economic underpinnings, one must understand that the type of market in FFXIV, at least on the market boards, are a perfect competition market. It can't be a monopolistic competition. It can be an oligopoly, but that's only true for relatively rare and high level crafting items. It can also be a monopoly, but that's difficult to create, and very difficult to maintain over a given length of time. Thus, it's important to realize that for most items, we're dealing with a perfect competition market.

With that said, the supply curve in a market economy is the quantity of a given good that suppliers will give at given prices. As prices rise, suppliers will supply a greater quantity of a given good. In a perfect competition market, the supply curve is an aggregate of all of the suppliers of a given good at given prices that they are willing to sell that good. The demand curve in that same market is the quantity of goods buyers are willing and able to buy at given prices. As prices rise, buyers will buy lesser quantities of a given good. The equilibrium point is where the supply curve and the demand curve meet. It is the optimum price point where the market can supply the quantity demanded without excess. Price above that point, and there is an excess of goods in the market, and things don't quite sell as fast. Below the point, and there is a market deficit, and things sell faster than can be supplied. The problem, though, is that the demand curves and the supply curves are in constant motion, making the equilibrium point move up and down.

This is especially true for durable and semi-durable goods. For durable goods, the demand curve will constantly move to the left, as demand is filled and does not need to be filled again. For semi-durable goods, the demand curves does move to the left like in durable goods, but can move to the right according to changes in the game.

As far as undercutting goes, it may be a signal that the prices are set too high, especially if the prices stick, and thus, the person who set their prices as high as possible will be left with a market surplus that isn't selling as well. On the other hand, if prices are set too low, such as below the NPC price, these market goods will sell very fast, and the person might not be able to meet the market demand. Undercutting is neither bad nor good from an economist stand point, rather it is a signal and a sign of where the market curves are, and where the equilibrium price is located.

Okay, now there will be a test on this next week, so I expect you guys to study. ;p

[Zarzak]

I am fully prepared to get shot down in this thread by the undercutters themselves but I just don't understand these people and it's driving me insane.

All weekend I have been selling an item and profitting well out of it, I started by undercutting the best price by 1gil.. this keeps the price at the same amount and if anyone wants to undercut me at 1gil they are VERY welcome to.. all our stuff will sell for the intended price eventually and everyone is happy.. yes you have to keep an eye on the market but thats fine because we are all profitting.

If you undercut me by 1 gil I'm going to drop it 10k every time until you stop. Put it at the same price if you want but the 1 gil stuff is beyond annoying and I'm not going to stalk the boards to play your 1 gil game.

One thing for me is if there are several items up for say 10k and someone puts one up for 9999 I will buy the one below it for 10k. If you are going to undercut someone don't be cheap about it, give a better deal than one dang gil imho : ) .

Same here. I never buy th 1 gil undercutters.

OP talks about maintaining the economy. You know when I go to the vending machines down the hall... All of them sell drinks for the same price.

Your the reason people are undercutting if the accepted value of something was a FIXED number it would stay so. Your the one starting the downward slope.

[Stihllodeing]

I never buy th 1 gil undercutters.

I couldn't care less. I almost always undercut by 1-5 gil. The only times I will price match is if I'm selling a product I know is in high demand.

I do not discriminate against 1 gil undercutters, and have actually found that some of the people who do that are diligent with their products on the market, know the going rates much better, and give more reasonable prices when making personal requests.

To each their own I suppose. This has a little to do with my stance as well:

Give us unlimited retainer space and/or the ability to sell unlimited amount of items and I will start to be patient. As it is now we need to sell quickly to just not drown in mats and gear.

I don't undercut prices that are unusually below the standard going rate. Just thought I'd mention that.

[kidvideo]

OP talks about maintaining the economy. You know when I go to the vending machines down the hall... All of them sell drinks for the same price.

But if you go to a grocery store you can buy your beverage at a lower price. At a big box store you can get them in at an even better price. Then of course, sometimes they can be on sale.

Is that undercutting? No, that's a deal.

[Zarzak]

But if you go to a grocery store you can buy your beverage at a lower price. At a big box store you can get them in at an even better price. Then of course, sometimes they can be on sale.

Is that undercutting? No, that's a deal.

And then you are paying for the convenience of not having to go to those stores in town.

Since the MB is in 1 place regardless.. The vending machine scenario works.

All things being equal the price has to be equal or the higher priced people go out of business. If the status quo is maintained everyone will sell for the same price and make equal profits. undercutting in any amount destroys that. Be it 1 gil or 50k the person at fault is the 1st person to break the status quo.

[Ren_Taka]

Vendor prices are WAY too low. Currently, you have two options: vendor it for next to nothing (most items < 10 gil) or put it up on the market board. If vendors offered a reasonable price for items, then I think a lot of the undercutting casuals would vendor items rather than deal with the hassle of the market. For example, a housing item is up on the market for generally ~50k. The vendor price is 100 gil. This is too much of a gap and doesn't reflect the rarity of the item. So the people who need money put it up for a fraction of the market price to move it quick. But, what if the vendor price was 5k? I think a lot of people might just vendor rather than deal with the market board and also to have the money in hand. You combine this with the limited space to sell and it puts a lot of pressure for people to make quick sales.

[Stihllodeing]

All things being equal the price has to be equal or the higher priced people go out of business. If the status quo is maintained everyone will sell for the same price and make equal profits. undercutting in any amount destroys that. Be it 1 gil or 50k the person at fault is the 1st person to break the status quo.

I appreciate your purchasing and economic philosophies. However, this is business. The truth of the matter, is that your personal buying habits and selling principles are such a small part of the common purchasing demographic in game that it's hardly realized, if at all in any tangible way.

You need top paged. Unless you're leveled high enough to craft things in extremely high demand, you need to push product. If I want to sell 3 craftsman materia I or II at say 3k a piece and there are 10 of them on the market board for 2675, I'll be selling my three for 2670. That's just the way it works.

[Zarzak]

I appreciate your purchasing and economic philosophies. However, this is business. The truth of the matter, is that your personal buying habits and selling principles are such a small part of the common purchasing demographic in game that it's hardly realized, if at all in any tangible way.

You need top paged. Unless you're leveled high enough to craft things in extremely high demand, you need to push product. If I want to sell 3 craftsman materia I or II at say 3k a piece and there are 10 of them on the market board for 2675, I'll be selling my three for 2670. That's just the way it works.

Do what you want. But don't do it then complain that someone else did it to you.

[kidvideo]

The vending machine scenario works.

Incorrect. Your vending machine scenario is essentially price fixing. More often than not, the sodas & beverages are all from the same parent company.