Come on people. This is how economics works in the real world.

Undercutting always happens, and at some point, it will go too far in a market. At that point, businesses will start losing money and they'll start shedding jobs and going under (recession). At some point, enough businesses will leave the market so that other (generally better run) businesses can start making money again and growth begins anew (expansion). This assumes no government intervention to keep poorly run companies in business.


In an MMO, this just happens at a higher rate of speed. One of the harder issues is determining marginal cost of production. If you harvest everything yourself (shards, items, etc), your marginal cost is quite low (repair costs + time). If you buy everything off the market, you're competing at a disadvantage and would be losing money. Now, FFXIV allows you to do everything and anything, so people willing to do everything can price much more competitively. In an equilibrium market, they would likely be able to price just a few gil short of everyone else and make a healthy profit; however, we're not talking about a world made up of business men trying to maximize their profits. We're talking about a world made up of teens, adults, college students -- many of whom don't understand marginal cost and marginal profit much less care. "I want to level carpenter, so I'll make 99 walnut lumber and sell them for whatever I can get". This will lead to much faster undercutting than in the real world, but it should also lead to much faster adjustments as they spend all their gil making their items and making no profit and boom, they decide crafting is stupid and quit crafting.

I price my items based on how I feel about them. For example, HQ steel dolabras were selling at 15K recently but I felt 12K was a reasonable price, so I did 12k. HQ Silver ingots dropped as low as 600 a piece, but I still price mine at 1.2k. It takes awhile longer to sell, but they do eventually. I play the market not based simply on other people's prices and the price history, but based on what is actually needed. There are alot of lancers, gathering is really difficult without HQ gear, crafting is much more beneficial with HQ gear. So, I make things that target those areas and price the items based on what I would pay for them taking into account rarity of the items (leather items get a price boost, velveteen too).

Also, you should notice that frequently the undercutters are selling large quantities of items. 99 steel ingots for 150 gil, for example. I don't want to buy 99 steel ingots very often, so I doubt most other players want 99. If you put up say 5 for 250, you'll get the sale because while the marginal cost per unit is higher, they won't end up with a ton of extra inventory left over.

The demand side could use some addressing. I generally don't bother trying to sell most battlecraft gear because there's not a demand for it. I target items needed for quests, gathering, or crafting as those are the only pieces of gear where the HQ items are a real upgrade that people are willing to shell out for. A re-balancing of item drop quality versus crafted quality and a reduction in the number of items handed out via quests (replace them with allagan so they can afford gear) would help crafters immensely, but I'm holding my breath on that one. Until then, crafting provides me gil via levequests and keeps my battleclasses outfitted with full sets of pretty good gear. (Having a full HQ set as soon as you hit a level is pretty valuable and then you only have to upgrade if/when you find a better dungeon piece)