What is an item worth?

[IndigoHawk]

With that said, I made a decent profit from a crafting business in the first month of ARR. I compared the costs of raw supplies to the going rate for the crafted good. Then I purchased supplies from the AH, crafted them, and resold them for significant profit. It didn't really matter if the prices were fair or sustainable, just whether or not the market would move the item.

There was so much profit to be made from buying dumped raw supplies and crafting them that it wasn't worth the time to gather raw supplies.

I have no idea what the crafted items are actually worth, as the first month of ARR was a gold rush, with high demand for crafted goods and vast amounts of dumped supplies. Things will have to settle down more to get a better idea of market value, and see if there is room for crafting businesses, or if it's going to be an xp service economy, like many other MMO economies.

[Wazabi]

*snip*

Thanks for the article, it was a good read.

<off topic>
I won't debate the validity or take a morality stance on weather it is right or wrong for WalMart (WM)to pay lower wage and benefits to its workers. What I see however, is that there is a demand for low priced goods in the market, and WM found a way todeliver just that. If these workers could get a higher paying jobs by setting up or working in smaller stores, then why are they still working in a lower paying job? If the general public is willing to pay a higher price for their goods by shopping at somewhere else, then WM will be forced to change their corporate strategy. If its hapenning, good. If not, I couldn't really care much either. Someone is benefitting from WM now, and someone else is getting the shorter straw. If someone can show me a conclusive quantitative analysis on the net economic efficiency and deadweight loss, I'm all ears.

To me, it's just the market game, and as a trader/merchant/businessman, I need to determine how much is the market going to pay for a certian service/goods, and try to make that happen. When a new tech displaces a particular group of work force, yes, it encourages growth in another, but for those with the obsolete skill, their quality of life decreases as well...much like the WM case. If WM close shop tommorow due to the issues you've mentioned, I don't have any problem with that as well...just like my opinion towards displaced workers. It's a fact of life, it's survival of the fittest.

<on topic>
The game world is slightly different. To a certain extend, there are labors to exploit, mainly the gatherers...but you don't starve to death if you don't gather/craft. It also doesn't cost you anything but time to gather, which supplies the basic materials. Every item will have a cost...but the worth is debatable because it depends on each person's needs at different point in time...so there will never be a "worth" that everyone will agree about...and hence I think the act of trying to determine the "worth" of an item to be pointless.

Everyone has their own trading strategy...so whatever that works for them. Those that are better at trading will be able to guage the market sentiment, thus more likely to set a price that will clear the market. Couple that with inventory planning, business acumen and enterpreneur spirit, they'll how much to buy, how long to keep an item in their inventory, how much liquidity to maintain, and most importantly, have the balls to execute those trades. Those are the few key attributes of a successful trader/businessman...and a video game economy is far less complex to get these things right.

[Nova_Dresden]

Logic

Completely agree with most of this, but in the grand scheme of things it really comes down to this:

An item is worth what somebody is willing to pay for it. No more, no less.

That's the deciding factor on what I think something should cost. If I'm willing to pay the price set on the item, then it's worth that price. I understand the NPC sell price as well as making a minor profit on the mats+production costs, but if I can price out the items it takes to craft the item in question and the total is less than 5-10% of the asking price then I won't pay it. Tank stuff never really dropped in dungeons for my group, so I tried buying from the AH to patch holes in my outdated gear. What I found was 2-3 weeks after a new game is launched on a new server there were NUMEROUS people pricing a level 20 shield in excess of 150k. Food was 8k each. A weapon for a level 20 Gladiator was equally out of the realm of good logic. The value of the item to the seller was exponentially different than my (the consumer's) value of the item. I decided it just better to outlevel my group, use quest rewards or NPC bought gear, and just level sync down to them instead of paying an exorbitantly ridiculous price for a temporary item.

If what you need is of no use to anyone, it will sit on the AH for a while until someone needs it, or you would be forced to NPC it. At least in FFXI you could Desynth items and get materials back.

Soulbind it and sell the Materia. It may not exactly be desynthing, but it is your option if the item just will not sell.

A can of Arizona Ice Tea is $0.99
If i buy it, or don't, it costs $.99, if it goes unsold and passes its expiration date, it gets tossed out, but it was still worth $.99 until that point.

A can of Arizona Iced Tea is priced at $0.99 to the end consumer. Its cost to the distributor is likely considerably less than that and probably closer to $0.50 or $0.75. Its cost to the end consumer is still $0.99 due to the price being printed on the can itself to prevent overpricing and customer gouging, but if it is tossed out its worth isn't $0.99 it's either $0 or a loss due to the costs of storage/refrigeration.

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?

It falls to the supply side of Supply-and-Demand economics. If they make too many of them and the cost to store them is depreciating the item in question then the price may eventually fall. However, in the real world a luxury item like a Ferrari is not an item produced for a mass market and so it is solely produced, marketed, and sold to a select small clientele and its intention to sell to a middle-class citizen is roughly in the region of never.

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.

If the item is continued to stock at 250g, then the price is currently 250g. If no one continues to stock at 250g and 500g is the lowest price (or some ass buys all the 250g items and relists them) then the price is currently 500g. Consider it a holiday or Black Friday sell where an item is sold at a lower than normal price point, but then returns to the market average.

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

A buyer is always willing to pay 0. That's the floor of demand: Free. Reasonably selling something for production costs with a relistic profit is acceptable. Selling something for 25x the cost of production is not. The game is setup where I can level EVERYTHING, and if I don't want to pay your prices I can happily level EVERYTHING and never have to pay you anything. Other MMOs had limitations to crafting professions requiring some sort of outside sourcing for materials, but that's not an issue in this game. Everyone can supply everything for themselves, and at some point in the future of this game everyone may effectively never need to buy from someone else.

[Kazamoto]

@Nova, I agree with just about all of this ^ and we have both now said, there will always be buyers willing to pay 0, so to say "An item is worth what somebody is willing to pay for it. No more, no less." is not the whole story.

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

Thanks for the article, it was a good read.

<off topic>
If someone can show me a conclusive quantitative analysis on the net economic efficiency and deadweight loss, I'm all ears.

Try this perhaps: "Walmart wages are so low that many of its workers rely on food stamps and other government aid programs to fulfill their basic needs, a reality that could cost taxpayers as much as $900,000 at just one Walmart Supercenter in Wisconsin"

http://www.huffingtonpost.com/2013/0...n_3365814.html

Walmart has 4,118 stores currently in the US.

[Zigkid3]

Try this perhaps: "Walmart wages are so low that many of its workers rely on food stamps and other government aid programs to fulfill their basic needs, a reality that could cost taxpayers as much as $900,000 at just one Walmart Supercenter in Wisconsin"

http://www.huffingtonpost.com/2013/0...n_3365814.html

Walmart has 4,118 stores currently in the US.

That article solely focuses on a specific segment and does not represent the economy as a whole.

This starts getting into the debate of whether or not minimum wage should be raised.
You're trying to debate about workers wages which is not representative of an economy as a whole. Yes it is part of it, but not all of it.


If the minimum wage is raised, then the costs for a company would increase. If the costs for a company increase, it will either have to find other areas where it could cut costs or increase the price (and produce less). so now the prices have increased on a said product because it costs more to make, handle, deliver, etc... So now lets look at two types of consumers the minimum wage worker and the middle class worker. The minimum wage worker will have increased wages yes, but also an increased price on products either way it made no difference to them all you did was increase the numbers but proportionally its about the same. The middle class worker was already above minimum wage so their salary hasn't changed, but now they experience an increase in product prices, so the middle class worker loses out. Overall this bad.

This is because even though while wage might have increased, their real wage which is the amount of buying power they now have is actually different. So you have to look at Wage/Price (depending on the product(s) you're looking at) to see if the increase of wage was actually beneficial or harmful. to see if it is beneficial or not you will need to compare the increase in wage versus the Price x Marginal Production of labor. if W > PxMPL then it's good, if W < PxMPL then it's bad.
------------------------------------------------------------
Though I don't see your point in trying to bring up Walmart wages when wages don't really have anything to do with a game economy, the closest you could get to arguing that is the time investment that people make to gather/craft, but thats more subjective to each individual rather than a specific wage policy.

[Kazamoto]

---On topic ish---

the closest you could get to arguing that is the time investment that people make to gather/craft, but thats more subjective to each individual rather than a specific wage policy.

That's the exact point I was making earlier. In both FFXIV and Walmart's wage and employment policy, the labor is worthless.

Walmart will always have applicants and they can afford to replace any worker at any time.


---off topic---

If the minimum wage is raised, then the costs for a company would increase. If the costs for a company increase, it will either have to find other areas where it could cut costs or increase the price (and produce less).

This makes the assumption that the company is attempting to make revenue or profits a constant value. Every company is always trying to increase profits, so they already try to cut costs and increase market share. To suggest that a company would look at its ledger and say "yup, these profits are good, lets stop here" is silly. And with the two biggest, or at least most frequently complained about companies, McDonalds and Walmart, both could increase their employee wages and still have very healthy profits. There is no incentive for these companies not to do this, unless there is some outside force or requirement that they pay a living wage to their employees, they have no reason to, and would not.

So now lets look at two types of consumers the minimum wage worker and the middle class worker. The minimum wage worker will have increased wages yes, but also an increased price on products either way it made no difference to them all you did was increase the numbers but proportionally its about the same. The middle class worker was already above minimum wage so their salary hasn't changed, but now they experience an increase in product prices, so the middle class worker loses out. Overall this bad.

The Middle class worker already feels the increased prices through tax burden.
The low wage worker, in addition to surviving on government benefits is likely tax exempt, especially if they have children. The middle class worker is forced to pay higher taxes to cover the entitlement programs that keep the lower class workers alive.
(I'm going to skip going into upper class tax burdens because that is a whole different ball of wax)

This is because even though while wage might have increased, their real wage which is the amount of buying power they now have is actually different

This direct relationship is really only true if the only place they can buy from is Walmart (which granted, could be the case). When workers have more to spend, it increases demand for goods, and luxury purchases become a possibility. As is often said, a rising tide lifts all ships.

The only time an economic policy is truly bad, is when it stops or slows the circular flow of money. People who have limited means always have things they need or want to buy. A slight jab at wealthy people, they don't generally keep the money moving. They still need housing, and transportation. But if a person have 10x the average wage, do they consume 10x the goods? Do they buy or rent 10 houses? Do they buy 10 cars, eat out 10 times as often, buy 10 times as much clothing?
This is all possible, but what happens when that ratio hits the average hits 380 times their average employee's pay? Do they buy 380 times more goods, and produce 380 times more demand?

A strong economy requires people to be spending money, and a people need to have money to spend.

[Zigkid3]

This makes the assumption that the company is attempting to make revenue or profits a constant value. Every company is always trying to increase profits, so they already try to cut costs and increase market share. To suggest that a company would look at its ledger and say "yup, these profits are good, lets stop here" is silly. And with the two biggest, or at least most frequently complained about companies, McDonalds and Walmart, both could increase their employee wages and still have very healthy profits. There is no incentive for these companies not to do this, unless there is some outside force or requirement that they pay a living wage to their employees, they have no reason to, and would not.

If a company is going to have a permanent increase in cost in some way (increasing workers wages), a good company that wants to maximize profit will try to offset it in some way if possible.
I don't see how you interpreted my post as suggesting a company would say "yup, these profits are good, lets stop here" when i specifically stated that they would react to any large changes such as a change in the minimum wage.
Yes they could increase their wages and still have profits, however it won't be as much as it should have been, which is a loss in potential income. If their income statement shows lower performance compared to previous years (even if it's still a positive) it will cause investors to worry which will cause their stock to go down, which means their equity goes down which means their assets go down (since assets = liabilities + equity). So in short, a company will do what it can to maintain as high profits as possible, even if they'd still be well off if they just accepted the change like it was nothing, a company wants to be efficient and thus they will react to the change.

This direct relationship is really only true if the only place they can buy from is Walmart (which granted, could be the case). When workers have more to spend, it increases demand for goods, and luxury purchases become a possibility. As is often said, a rising tide lifts all ships.

I was talking about if the U.S. decides to increase the minimum wage since the Federal government sets a a minimum wage guideline while the States set their own minimum wages at or above the Federal level.
Walmart will just choose the legally lowest they can depending on the state of that store's location.

The only time an economic policy is truly bad, is when it stops or slows the circular flow of money. People who have limited means always have things they need or want to buy. A slight jab at wealthy people, they don't generally keep the money moving. They still need housing, and transportation. But if a person have 10x the average wage, do they consume 10x the goods? Do they buy or rent 10 houses? Do they buy 10 cars, eat out 10 times as often, buy 10 times as much clothing?
This is all possible, but what happens when that ratio hits the average hits 380 times their average employee's pay? Do they buy 380 times more goods, and produce 380 times more demand?

A strong economy requires people to be spending money, and a people need to have money to spend.

I agree on this point, though it has nothing to do what we were talking about in the first place.
(now we're really starting to get off topic though)

[Kazamoto]

If a company is going to have a permanent increase in cost in some way (increasing workers wages), a good company that wants to maximize profit will try to offset it in some way if possible.
I don't see how you interpreted my post as suggesting a company would say "yup, these profits are good, lets stop here" when i specifically stated that they would react to any large changes such as a change in the minimum wage.
Yes they could increase their wages and still have profits, however it won't be as much as it should have been, which is a loss in potential income. If their income statement shows lower performance compared to previous years (even if it's still a positive) it will cause investors to worry which will cause their stock to go down, which means their equity goes down which means their assets go down (since assets = liabilities + equity). So in short, a company will do what it can to maintain as high profits as possible, even if they'd still be well off if they just accepted the change like it was nothing, a company wants to be efficient and thus they will react to the change.

Where I said the "yup, these profits are good, lets stop here" part I was trying to imply that the actions you are talking about would not happen in a reactionary fashion, companies would always be cutting costs and trying to maximize profit. They may be slightly more agressive about it were minimum wages to go up, but there isn't much walmart doesn't already do to cut costs.

How many times have you been to a walmart where the lines are 10 people deep, but out of 20 checkout counters only 3 are open?

[Zigkid3]

Where I said the "yup, these profits are good, lets stop here" part I was trying to imply that the actions you are talking about would not happen in a reactionary fashion, companies would always be cutting costs and trying to maximize profit. They may be slightly more agressive about it were minimum wages to go up, but there isn't much walmart doesn't already do to cut costs.

How many times have you been to a walmart where the lines are 10 people deep, but out of 20 checkout counters only 3 are open?

Exactly, hence why the only other option would be to increase prices.

[Whhambulance]

1. Vendor Price

2. Cost to obtain

With gathered mats this is a cost of repairs to gear. One can argue that one's time should have a cost associated with it but everyone values their time differently. Even mind numbing activities like farming shards only incur a base price of the damage/cost to repair your gear once one is done farming. Any additional cost is just that - something appended onto the price artificially.

3. Cost to list

When using the market board one needs to recoup at least as much as they incur in items 1 and 2. Current MB taxation is listed at 5%.

Like to add the most materials up to lv15~ and armor/gear up to lv45~ or something can be bought from vendors thus setting a "price ceiling" to prevent out of control inflation to new leveling players. This works since if the materials between 15-45 inflate at a large amount they can now be sold by leveling players to afford the vendor gear