Undercutting

[Typhon66]

What i do, when i first get into a market (won't be sharing any details here, trade secrets and all), is assess how much it costs me to produce said item. Whether it be a gil amount for items that i craft, or a time investment for farmed items (i have a conversion to say how much time it worth). I will then obtain a massive amount of the item in question, after doing all the research, thousands of them. The first step is to completely kill my competition. In a world where all of the products are the "same' and i can't provide better service or higher quality items, i am left with only price as my option. So, i crash the market. I sell 1000 or so of this item (obviously less for the really rare), for a lower rate, until people realize i undercut and start undercutting me. Then i undercut them again, and the battle begins.

[Typhon66]

Eventually, because of MY goals and mission, as well as my supply and persistence, i will win the battle. I will be happy selling an item for weeks at a time with no profit, or even at a loss if i really want into that market. Because of this, people will eventually give up.

Now, my competition is gone, i have no competition, i am now the singular provider for this item on the server. Because of that, i can set prices however i want, generally this period will only last a few days or so, but for a few days, i can generally sell stuff for 10 or 20 times the original cost, making more than if i had just "played by the rules" and only undercut by 1 gil and having competition for sales. Then, i repeat the process all over again once the market stabilizes.

Crashing the market, that's why you undercut so much.

Stupid 1000 character limit....

[NyneAlexander]

What i do, when i first get into a market (won't be sharing any details here, trade secrets and all), is assess how much it costs me to produce said item. Whether it be a gil amount for items that i craft, or a time investment for farmed items (i have a conversion to say how much time it worth). I will then obtain a massive amount of the item in question, after doing all the research, thousands of them. The first step is to completely kill my competition. In a world where all of the products are the "same' and i can't provide better service or higher quality items, i am left with only price as my option. So, i crash the market. I sell 1000 or so of this item (obviously less for the really rare), for a lower rate, until people realize i undercut and start undercutting me. Then i undercut them again, and the battle begins.

Ladies and Gentlemen? Wal-mart is here.

[Beyondgrave]

So let me get this straight..it's ok to oversell something at a ridiculous price..but once someone undercuts you, it's a bad thing?

It is when the retard undercut you soo low where you can make a profit just selling the item to an npc. I've seen people selling things on the AH for 1 Gil when you can just npc it for 4-20 Gil.

[jomoru]

This thread is new and unique! I have never seen it before and am glad it was brought up!

[Giantbane]

Think of the market board as just another form of PvP. Undercutting is a great way of encouraging your competition to either find another market or enjoy reduced profitability

[DefendPopPunk]

This thread is new and unique! I have never seen it before and am glad it was brought up!

Sarcasm is new and unique! I have never seen it before and am glad it was brought up!

A person making a huge undercut that gets bought does not completely destroy the prices. One outlier does not make a trend unless the other sellers make it so.

Wow, no crap. That's exactly it. lol. This guy undercuts this guy and that guy undercuts that guy. It doesn't take much to understand how a cycle like that destroys prices. You make it sound like there are just two people selling at one time, the guy selling it at the sales history price and the guy undercutting it by 50%. Not the case most of the time. But those outliers reduce the price by a lot, and then get undercut by a few gil, then they undercut by another large amount, etc. Yeah I'm making exaggerations, assumptions, call it what you will, but you've done the same as well. The point is, there's almost never any reason to undercut by a vast amount, regardless of the "opportunity" it creates for other sellers. lol.

[Giantbane]

Wow, no crap. That's exactly it. lol. This guy undercuts this guy and that guy undercuts that guy. It doesn't take much to understand how a cycle like that destroys prices. You make it sound like there are just two people selling at one time, the guy selling it at the sales history price and the guy undercutting it by 50%. Not the case most of the time. But those outliers reduce the price by a lot, and then get undercut by a few gil, then they undercut by another large amount, etc. Yeah I'm making exaggerations, assumptions, call it what you will, but you've done the same as well. The point is, there's almost never any reason to undercut by a vast amount, regardless of the "opportunity" it creates for other sellers. lol.

If the market is able to be collapsed so easily then it wasn't all that stable to begin with. The price was being artificially inflated by an unspoken agreement between sellers to not really compete on the price.

What you're trying to advocate is to have more people participate in noncompetitive selling practices in order to keep your own profits high.

[jomoru]

Sarcasm is new and unique! I have never seen it before and am glad it was brought up!

What? Either I'm serious and this thread is serving a point or if I'm sarcastic then this thread is a waste of time because we had the exact same thing last week.

[Noll]

Gardening is a close market due to limited house available now.

I'm in the gardening market and I mainly sell two types of seed.

Of these, one had in my server a nominal price of around 120k per piece.

Being a close market, you wont see more than 4 or 5 seeds being sold per day. But the supply is also low. So there's big downtimes between a sold seed and not.

I usually undercut the last seed priced by 1 gil. This makes my seeds the first to buy before someone else undercuts me. Being a product that's sold by no more than 10 players you would imagine people understood that this is a good strategy, and that even if you undercut your seed a LOT you wont sell more than 4-5 per day.

Yet, there was a day where two or three of the sellers kept undercutting them by 5 to 10k each, without ANYONE buying the seeds. So they devalued their market for NO REASONS other than being stupid.

Now the value of the seeds is around 70k and it's still going down and down, 'cause yeah it's easier to undercut by 5k instead of 1 gil yeah?