FFXIV ECONOMICS 101

[Darksword]

I actually did something last night that inspired this topic.

I sent a nasty tell to a guy who was cutting my throat with undercuts. I had spent most of the day sick and cranky, and after watching him drive the price of my current item down from 4k to 2500 over a couple hours I mentally flipped a table and typed out a nastygram.



Long story short, what resulted was an undercut war that drove his price all the way down to 1100gil. ...at which point I bought him out and pulled all of my items off the MB to sit on the whole pile. Following this we had a lengthy conversation via /tells (much more pleasant then the one I had sent), and he turned out to be a pretty decent guy. But he didn't have much of an idea how economics work. So here we go:

The First Core Rule: -Everything- has a value in gil.

The Second Core Rule: The speed of selling is based not only on UNIT price, but also on total STACK price.

So what does it mean to say that "everything has a value in gil"?

Exactly what it says on the tin, but lets extrapolate. Say I'm cooking Buttons in a Blanket to sell on the MB. The current going rate is 2000gil each for NQ, 3000 for HQ. Stack sizes vary from 10 to 25 (this will be important later). Taking the NQ as an example, we say the "value" of one Buttons NQ is 2000gil.

But what are Buttons made of? Five each of fire and water shards. Midland cabbage. Clove oil. Three button mushrooms. Desert Saffrom. Tomato sauce. Those items all have "value" in gil also, before you synth them.

Lets say we check the market board, and Fire and Water shards are 100gil apiece (pretty typical on my server). Well that's 1000gil just in shards you're using just to make buttons. Desert Saffron is worth 200gil, cabbages are 250 gil, tomato sauce is 25 gil, and clove oil is 100 gil. We're at 1575 gil just in materials, NOT COUNTING the button mushrooms! Add three of those and lets say our total "value" in mats hits 2100gil.

Houston, we have a problem. The Buttons that we can exchange for a "value" of 2000gil, are actually costing us a "value" of 2100 gil. A loss of 100gil ON TOP of the time lost sitting down and synthing them! You should have just sold all the damned mats on the market board!

What does that tell some people (namely undercutters)? Well there are two very common mistakes that get made. One is from people who gather the mats for their own synths. Since the mats were "free" as in didn't cost any gil out of pocket, they don't perceive any loss in value despite the math we just did. And the other is to forget that TIME has a value in gil also. If you're out gathering Button Mushrooms worth say 250 gil apiece, why sell those at a loss of 100gil value by synthing them? You could instead use the SAME GATHERING TIME to gather something more expensive and sell it directly on the market board. Same time spent, more gil earned. You could even then BUY the button mushrooms from someone else and pocket the difference if you insist on synthing them!

Everything. Has. Gil. Value. EVERYTHING.

Some times there are easy solutions to these problems. In the case of our Buttons example, we could just use a macro to HQ them. Now we've got from a net 100gil loss in value to a gross 900gil gain.

Or is that really a solution? Macros take TIME to run, don't they? In the amount of time you could craft say, 30 HQ Buttons with a macro, netting you a "value" profit of 27,000gil, how many expensive items could you have farmed up with your Botanist? What would THEIR value be? More or less than 27,000? If it would be more, then you should be out farming instead of synthing HQ Buttons.

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The speed of selling is based not only on UNIT price, but also on total STACK price.

This means that when people buy things on the Market Board, they're looking at more than just what each item individually costs. What they're REALLY looking at is: "How much gil is going to come out of my pocket when I click this button?"

In pactical terms, this means that UNDERSTACKING, is just as good, and maybe better, than undercutting for getting your items to sell faster.

If the MB has 27 stacks of HQ Buttons in a Blanket up for sale, in stacks of 10 to 25, for 3000gil apiece, what looks more attractive to the buyer:

A: You put up a stack of 15 HQ Buttons for 2800gil?

B: You put up three stacks of 5 HQ Buttons for 3000gil?

In option A we have a total price of 42000gil. A savings of 3000gil compared to your competitors.
In option B we have a total price of 15000gil. A savings of 15000gil over your next lowest competitor.

Now we know that it isn't really "savings" perse, since the buyer would have to buy two of your stacks to get the same amount, totalling the same gil. But it DOES save them value in out of pocket expensive, because they don't need to spend all that gil at ONCE. Many, many more people can afford to toss 15k out of their pocket for some food for a quick Coil run than those who can do the same with 30k. By understacking, you've essentially opened your sales up to a poorer market, giving yourself many more potential buyers. This means that your smaller stacks will sell faster than the larger stacks of your competitors, and you don't have to undercut and lose value to do it.

[Arkista]

Undercutting sucks, But let people do it. I've made so much gil just by buying up cheap stuff and waiting for the price to go back up. It does suck when people put up stuff you need in stacks of 50-99 when you only need a few.

[KingOfAbyss]

Sigh I almost read it all..

The current going rate is 2000gil each for NQ, 3000 for HQ. Stack sizes vary from 10 to 25 (this will be important later). Taking the NQ as an example, we say the "value" of one Buttons NQ is 2000gil.

Who decided on these 'fixed' prices? Humans behind their keyboards.

If you check the sales value from each item sells for x gil, that is a value that SE inserted.

Yup, I am among those that gather my stuff, and then even if I put TIME which has a value, I am enjoying the game doing so, and up my challenge log for bonus.. 'gil' every week.

So that said.. ridiculous prices on the MB will always ensure I will undercut them with pleasure.

If! We stop being a greedy bunch (this isn't real life) and start thinking helping the community to help you in return..

Everyone could have access to everything in this game, the way it should be, except for the part where you need 'real skills' AKA Coil Drops.

Then up your game and voila, you will get what everyone has.

This has been on a debate for many years for MMOs, and one in which the DEVs enjoys with popcorn the people going against each other, trying to be 'unique'

I enjoy Gathering and crafting, a bit less than battle. I will be happy that you will buy my wares at a lower prices so that you can resell and make a profit, without having wasted an enormous amount of time.

So I will have my shares and happy, and so are you. (You might be a gillionaire, and not me but guess what? Kudos for you, some people just don't care.)

My goal in this game is not to be the richest, I am an achiever and I'll get that title, in due TIME.

Let have fun ^^

It does suck when people put up stuff you need in stacks of 50-99 when you only need a few.

As Arkista said, that's another point. Making me want to do it by myself, and then it's settled.

[Sadana]

I think an item's worth is what people will pay for it. If the price is too high, folks will just go and gather their own or work out a deal with friends. The market would stagnate. We'll agree though that undercutting so much on stuff that moves at the higher price is just silly. Dropping price on items that AREN'T selling makes sense.

[Zantetsuken]

When people complain about 'undercutting', what they are actually advocating FOR is 'price fixing'... which is illegal IRL (for good reason).


Undercutting, especially severe undercutting is really a fantastic buying opportunity, which the OP obviously took advantage of.

Nothing much else to see here though...

[JTribal]

I didn't even get halfway through this before I stopped reading because... yeah.

The First Core Rule: -Don't send nasty tells to random people because you are mad they put something on the MB that costs less than your product.
The Second Core Rule: -If you're that passionate about selling items at the price you want, open a Kwik-E-Mart in real life and stop harrassing other people that sell the same thing for less than you do.

[Surian]

I think an item's worth is what people will pay for it. If the price is too high, folks will just go and gather their own or work out a deal with friends. The market would stagnate. We'll agree though that undercutting so much on stuff that moves at the higher price is just silly. Dropping price on items that AREN'T selling makes sense.

This

A crafter might find that their Buttons in a Blanket is worth 2000 gil for a NQ and 3000 gil for a HQ because he put atleast 2100 gil of "value" in it (outside of the things he gathers for free), but the buyer doesnt percieve it this way.

The worth of an item isnt equal to the cold hard math a crafter does to calculate what works for him and what does not. The worth of an item is equal to what the buyer feels is a reasonable price for them.

2000 gil for Buttons in a Blanket? I'll pass. Why? Because there's more than one item i could buy. And if there's something much cheaper for a minimal loss in stats, that is a much more preferable alternative.

Outside ofcourse of the whole fact that, If someone can sell Buttons in a Blanket for 2000 gil and make a profit because he farmed up the items himself, and you cannot because you bought the ingredients off the market boards, THAT is economics. It's not a question about if he could get more value out of his time spend. That would only work if you play this game for a living, and craft to make a steady amount of gil you must reach each day due to expenses, opposed to craft a little between dungeons if you have the time or care for it. If i sell something, great! I get some extra money. If i dont get to craft and thus not get to sell something, i personally couldnt care less. So i could have farmed instead of sat around and could have made -more- money than that one item i made? Why would i care. I, and i really hope you as well, am playing this game to relax or to have fun. I have no expenses i must pay each day ingame that i can only fund with crafting, nothing that simply running the dungeon itself pays for already that is.

In modern day life it's not any diffirent, if a contractor A can do something in 10 months for $ 400.000 and another called B can do it in 12 months for $ 350.000, who would get it? If you purely look at value vs. time then A would win out, but B will always get the contract because he's cheaper. Why? It's a minimal loss in time ("value") that could have been spend diffirently, for less costs. And it will be even more of a no-brainer if both can do it in 10 months. That's the basis of a free economy. People can ask whatever they want, and people can decline to buy things if they seem rediculous.

If your rival crafter can sell something cheaper and still make money, kudos to him. Could have have spend his time better? Sure.

But if you're thinking like that, why not think big? Set up a syndicate, get crafters together, agree on prices for items depending on expenses to make it, and who crafts what, and let no one else into the market but you guys. They can join you, share in the profits on their own items of their choosing or they can go down. Collectively you can buy up anything people put on the market and either re-list it or find other creative ways to do your things.

[KaiKatzchen]

I actually did something last night that inspired this topic.

I sent a nasty tell to a guy who was cutting my throat with undercuts.

Well first, I'm not trying to be rude but you were in the wrong for sending a nasty tell to the player, seeing that is player harassment they could report you for doing that. This is a free market, and people are allowed to put up items for how ever much they wish to sell it for, even if it seems stupid to you.

Also some players base their prices off 'last sold', not the price that a person has it up for. If you have something up for 4k, and I look at the Sold History and see that same exact item was sold the last 3 times for 3.5k then I'll put it at 3.5k because that is more so the going price people are willing to pay.

But how can you fix this or play the market game:

1)Either leave it up there for the price, if you're not in a rush. It will sell eventually.
2)Undercut as well if you need it sold asap.
3)Buy the under cutters items, put them back up for the price you want and make profit.
4)Base it off sold history (if you're not already doing that) and try to match what others have been willing to pay.

Edit: Also I read the person above me and I have to agree with them, I have every crafter and gatherer up to 50, and I am big about NOT buying my supplies off the market. If I look at the board and I see something sold for 2k and the next seller has it for 4k - I'd rather just go gather and spend a bit of time and probably end up with more than I would have bough on my own terms then spend that much.

[vyaku]

I actually did something last night that inspired this topic.

I sent a nasty tell to a guy who was cutting my throat with undercuts. I had spent most of the day sick and cranky, and after watching him drive the price of my current item down from 4k to 2500 over a couple hours I mentally flipped a table and typed out a nastygram.

I didn't bother reading most of your post because it quickly appeared to be the drivel of another person with zero understanding of economic theory complaining about why the invisible hand isn't fixing market prices to your liking. I guess you've never actually had an economics class or you would know that a person's willingness to sell is subjective and the value of a particular good is not determined by YOU but rather by the market.

As more people farm the same mats or produce the same goods, then naturally the equilibrium price will fall until 'economic profit' (accounting profit minus opportunity cost) theoretically reaches zero. At that point players will begin to leave that particular market once the price is driven below their willingness to sell (Just like how you left the market because the sell price was driven below your willingness to sell). This mechanism persists in every single real or virtual economy and complaining about it when it doesn't go your way is naïve. Just because you don't like the particular prices that arise from these forces doesn't make them any less credible.

[Ryans]

I don't think you've done enough studies on the human psyche to know what is more appealing to the masses in terms of quantity vs. price. I've had stacks of 10 and 20 of the same item on the market board at the same price and had all the stacks of 20 sell and none of the stacks of 10. Using your logic, the stacks of 10 should have sold first. Not everyone is as poor as you might think and they are willing to buy larger stacks for a little less gil per unit because they know they'll use them all eventually or can resell them for equal value.

You also don't seem to understand that time spent isn't always the same value for each individual. I can craft 30 HQ items in 30 minutes, on average. That does not mean I am not doing something else that I consider being of equal or greater value while I am crafting. I'll use your same numbers of 900 gil profit per HQ. If I was going to read a book, watch a tv show, or eat a meal in that 30 minutes regardless of whether or not I am crafting, I have effectively gained 27,000 gil with no real time investment.