Economics 101

[CookieBandit]

Learn it, love it, stop undercutting people by obscenely large amounts.

[Orophin]

So I guess Econ 101 didn't teach "Supply and Demand", the more supply there is but the demand is low, the more a price is going to get driven down.

[Sabaku_Usagi]

I'd rather tell off the people who make fake double melded weapons! Not the people that do what comes naturally >_>"

In XI you could consistently get away with undercutting, at least now it's out in the open and you don't benefit from others price history.

[Presbytier]

Undercutting is part of the system; learn it love it embrace it.

[CookieBandit]

I was referring to the obscene part. Undercutting me by a few gil, few thousands or 10,000 is one thing. Undercutting by multi-millions so you are selling your item at the price it cost you to create it is more my point.

[Gail]

Selling and undercutting

Basic tactics are undercutting by just 1-10 gil or cancelling sale then reposting it.

Know your product and how quickly you can sell it, how often and if the margin is worth it.
If only 1-2 are bought daily, and you are producing them faster than can be sold you may need to undercut.
Or move onto making another product.
Sometimes producing less is better, flooding your own market means you'll have to sell cheaper and less profit margin.
Another technique is to only have 1-2 of something for sale. Then put the others up when the current make a sale.
This is also good for hiding how many of a product you have from any competitors.
You don't want to alert them to what you have and any potential sales they're missing out on.

When to sale/undercut.
If you're selling consumables like potions and food. Obviously they need to be up before raids.
So you're gonna need to make sure your stock is up before NA/JP primetime for events.
If you put too much up too early, then you'll have to undercut.
Timing is one of the key things to undercutting. You should be aware of expected supply and demand.

Know your competitors.
If you see a certain retainer undercutting you, it might be wise to find out who exactly that is.
Watch the retainer, craft by it or something and you might be able to see who it belongs to.
Once you've found that out, you can add that person to your friendlist.
Wait for them to go offline, or be aware when they're out of Uldah then hit the wards and undercut.
Perhaps you can also narrow down their timezone so you'll have an idea when they have to sleep/work.

The cut.
Undercutting can be an art.
You'll get people trying to snipe your sale by a few gil.
Sometimes more power undercuts by hundreds of thousands or millions.
People are likely to do this because;
1) they need the sale quickly, for the quick gil or to clear the product.
2) because they're not very aware of the product and its actual price
3) to send a message. like "this is my niche and I can afford to undercut by this much you find something else to sell"
Understanding why you're being undercut will help you work out what to do.

Feint undercutting.
I like this one.
Lets say someone is really aggressively undercutting me.
By millions. I've got 2 products up competitor has got 1 and they've undercut down to 7m
Product#1 Mine 10m
Product#2 Mine 8m
Product#3 Comp 7m
What I would do is undercut product#2 to 6m.
-if they undercut it, hike my price back up to 10m. then see what they do.
If they've only got 1 product to sell, usually I'd let them sell it.
This is where you need to know who is a regular competitor and who is just a frustrated seller.
Cancelling and reposting your sale is also a little like this.

Walling
This is where you've got someone who wants to send a message to their competitors.
They'll undercut massively with a large quantity to try and annoy others out of the market.
I've never used this tactic personally I don't think its very smart.
With this, I keep a few products up to overcut them and keep their margins down while you work on selling something else. Wait them out.
Its always good to diversify if you have a really problem undercutter.
Remember you're there to make money.

[VydarrTyr]

I was referring to the obscene part. Undercutting me by a few gil, few thousands or 10,000 is one thing. Undercutting by multi-millions so you are selling your item at the price it cost you to create it is more my point.

Why is this bad? And what does economics have to do with it? Can you elaborate please?

[Req]

Selling and undercutting

Walling
This is where you've got someone who wants to send a message to their competitors.
They'll undercut massively with a large quantity to try and annoy others out of the market.
I've never used this tactic personally I don't think its very smart.
With this, I keep a few products up to overcut them and keep their margins down while you work on selling something else. Wait them out.
Its always good to diversify if you have a really problem undercutter.
Remember you're there to make money.

I think someone took your advice and are doing this with felt bracers right now. Literally undercutting for 60% of the normal market value in mass. If you guys want felt bracers buy them now because they are going for less than what the mats would cost to just make them.

[Kirku]

Everyday I'm undercuttin~

[Babydoll]

Undercutters only hurt themselves lol

I hope the "current price" thing disappears in 2.0 because wow some people are retarded who undercut by a massive amount...meanwhile I wait about 10 minutes and my stuff sells at 10x their price. Hurrrrrr.