What is an item worth?

[Kazamoto]

...but the decision to sell or not is still theirs...

On this, we are in full agreement.

This is also the heart of the issue with undercutters. The fools are deciding to sell at a price they shouldn't.

Once again you display the delusion that you are the only customer in the market. The Ferrari dealer will decline your generous offer because he has plenty of customers willing to pay much more.

Fair, but if I bring along 10 friends? 100 compatriots? 500 facebook buddies?

And we all offer $3.50? How many 'what buyers are willing to pay' does it take to lower the value of something?

If last week they were $233,509 and only 4 people bought them, and now 500 want them for $3.50, does this not change what it is worth?

If sales were being made at 500g, and now someone has undercut to 250g, is it worth 250 or 500? It has buyers at both price points.

[Conradus]

On this, we are in full agreement.

This is also the heart of the issue with undercutters. The fools are deciding to sell at a price they shouldn't.

You can only control *your* decision to sell or not. You can't control others. That decision is theirs, and you can't take it from them. You can only deal with it. If the price really *is* lower than the market price (AKA "what the customer is willing to pay"), you can profit from it. As I said, as far as I am concerned, you are perfectly free to find someone willing to sell you his labor for $0, and complete that deal with him if you find him. I control when I am willing to sell my services. I do not control when other people are willing to sell theirs.

[bwalker36]

I find it to be a pretty simple formula at its base

You have the cost of materials + your value of time to determine the price of something. That is it at its base. But then things get complicated if you want them too. Rate of sales is a big one. If I can under cut you by 25% and sell 5 full stacks within an hour, while gathering another 5 full stacks to replace what was just sold I would gladly do that then increase my profit margin but lower my revenue due to slower sales.

Nothing is as simple as placing the opportunity cost onto it or valuing your time (which everyone will do differently). Now selling at a loss is people either not paying attention, just paying for their xp thus they relist lowest to make some of it back. If you not looking to pay for xp and you are crafting for profits it is materials+time. Time is not a constant so everyone's value is different but since we can see everyone's we know the average value of time.

I tend to sell a lot of base materials way lower than everyone else because I can sell them at a much faster rate and while I may make 5k less per stack then them, I sell 10 more stacks per day. I have sold 10 stacks of ore for 50% of what the market average was and came back the next day to see a lot of the same stacks up. (Now they could be different stacks but factors made me think they were the same). I will continue to do this and make more money for my time because my stacks don't sit there. I have no issues making a smaller margin but bigger revenue.

[Conradus]

Fair, but if I bring along 10 friends? 100 compatriots? 500 facebook buddies?

And we all offer $3.50? How many 'what buyers are willing to pay' does it take to lower the value of something?

If last week they were $233,509 and only 4 people bought them, and now 500 want them for $3.50, does this not change what it is worth?

No, because you're going at the wrong end of it. It doesn't matter how many people are willing to pay a low price. If the dealership has enough people willing to pay a high price, he has what he needs.

If sales were being made at 500g, and now someone has undercut to 250g, is it worth 250 or 500? It has buyers at both price points.

It has buyers at both price points, but there will be *more* buyers at 250 gil. If there are enough buyers at 500 gil to buy the entire supply, then buy the 250 gil and resell it at 500 gil. Free money. What you have here is the concept of the "market clearing price." As the price rises, you'll have more suppliers. As the price falls, you'll have more buyers. Thus, there will be a price at which you have an equal number of suppliers and buyers and the market clears. If people are selling below the market clearing price, you'll be able to buy what they're offering and resell it at a higher price. If you can't do that, then they're not selling below the market clearing price.

[Kazamoto]

You can only control *your* decision to sell or not. You can't control others. That decision is theirs, and you can't take it from them. You can only deal with it. If the price really *is* lower than the market price (AKA "what the customer is willing to pay"), you can profit from it.

There is nothing here I disagree with, but I think that was intentional. And deal with it we all will, but the point of threads like these are to discuss, and honestly mostly bitch about people who sell items for less than 'what the buyer is willing to pay', AND less than the cost to produce.

The buyer in all of these situations is always willing to pay the least amount he possibly can.
This is a simple fact, no matter what the item is, once someone has decided to buy an item, they will always want the lowest price possible.

Sellers on the other hand should spend a little more time paying attention to demand for products, supply on the market, and cost to produce.

It has buyers at both price points, but there will be *more* buyers at 250 gil. If there are enough buyers at 500 gil to buy the entire supply, then buy the 250 gil and resell it at 500 gil. Free money. What you have here is the concept of the "market clearing price." As the price rises, you'll have more suppliers. As the price falls, you'll have more buyers. Thus, there will be a price at which you have an equal number of suppliers and buyers and the market clears. If people are selling below the market clearing price, you'll be able to buy what they're offering and resell it at a higher price. If you can't do that, then they're not selling below the market clearing price.

And we will still have those that dump goods on the market at that lower cost for a quick sale, causing a chain reaction of price reductions by other sellers, who can change their prices without penalty. To counter this, one or more people would have to constantly camp every sell-able good, to buy and resell.

In another pair of multipage debate threads there were two concepts from the FFXI auction house mentioned that would slow or at least provide a disincentive to this cycle.

FFXI was a blind auction house.
You could not actually see the posted price of an item, this meant while sellers could still sell for what ever they wanted, buyers had to refer to the sales history to find an items value.
The buyer then bid at or around the previous sale prices, or even way below. If a buyer wanted to spend their time to find the absolute minimum price, they could, but in that time, they wouldn't usually change the over all market price that drastically. As the sellers could not see their competitors prices.

FFXI charged the auction house taxes when the item was posted.
Sellers were free to take their items down and relist them, and pay the tax again. This discouraged overpricing items, for fear of having to relist the item, it also discouraged every seller from adjusting their prices down with every undercut or fluctuation.

[Hwasung]

I was going to say this post is Zigkid3 and Bizzybeast/MentalPoison bait

Not bait, a response to the multiple threads started daily crying about lowering prices.

Anyone who thinks that there is no problem with the current level of undercutting and degree to which things gets devalued must also feel that Walmart is good for a local economy.

Not so. I think walmart has a detrimental effect on employment but has no corollary in this game. In this game both employment and resources are effectively limitless, only bounded by the time spent gathering them.

When someone doesn't care that they are selling at a loss.

In this case they are selling at a loss only if they procured their logs through other people's labor. A key staple point of mine is that price isn't predicated on the relative prices of its components in a market as rapidly shifting as this one is currently.

[Hwasung]

This is wrong. The time spent farming is an opportunity cost. ... If you farm shards for profit, then shard price has to be competitive with gil you would make doing something else.

I won't be so naive as to try to argue that there is not an opportunity cost associated with farming in time. My counter point to you is what is a given unit of time worth in in-game currency? And do you suppose that you can transpose that derived cost onto every other activity in the game?

Others have commented (although they used different terms) that the utility gained from the crafting experience may be payment enough for an act.

All participants are gaining utility from their actions in the marketplace - some through increased gil income, some from experience, and some from storage space woes incurred from over farming.

TL;DR - Time doesn't have a fixed value when translated to in-game currency.

[Kazamoto]

What is an item worth?

From this discussion, we have answered this pretty well I think.

An Item is worth what someone will pay for it,
Unless
Someone will pay more for it,
Unless,
The seller wont agree to the price.

Not so. I think walmart has a detrimental effect on employment but has no corollary in this game. In this game both employment and resources are effectively limitless, only bounded by the time spent gathering them.

For Walmart low skill labor, and people willing to work for minimum wage is an effectively limitless resource, especially with our current unemployment rate.

As I mentioned in my walmart post:

"The resource being abused in both situations is Labor.
Walmart forces its competitors to close their doors, laying off their staff as they cannot afford to compete at walmart's price points.
This in turn, creating a higher demand for low skill, or low pay jobs.
In the current FFXIV market, labor has no value."

[Bizzybeast]

I skimmed the thread, but I cant stomach another long winded Walmart/High End Car Dealership argument of circular logic.

The topic: An item's value is what is sells to the vendor to. Its worth is the cheapest one (s) currently available in the amount you need.

In several threads it has been explained that overpaying for materials does not make everyone out selling you "an idiot". For instance I usually stick to selling high end stuff, because I can afford to strangle most out of my market, but god help the Mythril Ingot people when I get a few thousand ingots. My cost is around 75-125 gil PER ingot. The market, without me, sits at 1k per ingot. When I get a bunch, I dump them for 333-666.

I dont ask everyone if this hurts their feelings, I dont check the market board every 5 seconds, I dont both with it. I make huge profits (4x average!) and they sell almost instantly. But in my wake is late to the party undercutters trying to sell singles at 500-777, cutting the market in half for a few days.

Endlessly people on the forums will say im killing the market, im selling at a loss, its broken, mythril is worth only 1500 per and nothing else! Its like so much talking about wrong things.

So to conclude, an Item's Worth is the cheapest one it posted on the Auction House at the time.

[IndigoHawk]

Opportunity cost is important for a crafting business. However, many items are not produced by crafting businesses.

Instead, items are waste products. The low level crafting economy is mostly a service that sells crafting xp. Players purchase raw supplies to level crafting. They dump crafted goods. They mine for xp and dump ore.

Dumped goods compete with businesses. Businesses can't compete without profits, so they close.

The xp service economy depends on new capital and new players to produce items, because xp is the primary profit from producing items. Items are worth even less gil than the OP suggests: they have no gil value, not even repair costs. Severe undercutting will remain rampant.

The goods have some value to the players who want to buy them, but it would take a real business to find a competitive and sustainable price. That won't happen if the market remains saturated with dumped goods.