Undercutting

[Sardonia]

Is it me or has under-cutting gotten to the extreme. I do not mean by just a few gil, I mean by a huge margin. For example, something selling for 35K and then some one puts it up for 9K. Granted I could buy it out and relist it but I hate to reward someone for doing that.

Just to test it out for laughs I created a replica High allagen piece. One was listed for 5M on the board. I listed mine at just a few gil below. A couple of hours later someone listed another one 500K cheaper. Just to see how far it would go, I relisted mine a few gil cheaper. Hour later that other person lists again 500k cheaper. so now down to 3.5M. I relist a few gil cheaper. Come back an hour later, someone else had listed slightly cheaper than the other guys but he then listed it again By the time I had enough it was down to almost 1M.

It just seems like undercutting has really gotten to the extreme. Maybe it is just me but it sure seems that way.

[PirateCat]

There are a bunch of reasons why people might undercut something by a large margin:
- They think the current price is high enough that it's discouraging sales and want to set a new price point so the item will sell faster.
- They got the item via a method where they didn't have to put a lot of effort into it (quest reward, quick venture) and they care more about offloading it quickly than getting the best price for it.
- They don't want to play the babysitting game that would result from small undercuts and would rather just get to the point, or send a message to competition that they won't be undersold. (I've done this on occasion if something has taken a long time to sell.)
- They're trying to edge out competition for that market by pricing at a loss to begin with.

Your options are price match/undercut yourself, buy and relist, or hold out and hope the undercut gets bought out and isn't replaced. This will work better if the item was a one-off freebie than if someone's trying to corner the market or if it's a real price correction.

Dropping from 5M to 1M is a pretty steep cut, but 5M is a lot for one glamour item. If the mats for the piece cost less than 1M then that's probably just competition causing the item to settle at a more realistic price point. That one listing for 5M was probably priced that way because it was the only one listed for sale and the seller might as well try to get a lot of gil for it, but they may very well have been expecting the price to go way down before it actually sold.

[Nyalia]

High value items have limited demand. There might be one or two people who will shell out an absurd amount of money for a super expensive item, but quickly the value drops to what the next person is willing to pay. The key to making money from crafting is to get your stuff sold, and the key to making lots of money from super-expensive endgame crafts that were just released is to get your stuff sold first. Or at least, before all the people who want one have one. If everything is sitting at 5m and no one is buying, and then someone undercuts to 3m and it sells, that person did not just lose 2m. They gained 3m, where the people who were sitting at 5m gained nothing. With the undercut product sold, they can go back to listing their stuff at 5m, but if it didn't sell before, it's still not going to sell now.

Most importantly, it's important to understand that an item's value to you is not the same as its value to another. People undercut for all sorts of reasons, and people do large undercuts for all sorts of reasons. If a product is selling very sparsely at 5m and someone is undercutting you by 1gil every time you undercut them by 1gil, but you have a full time job and only play a couple days a week, you aren't going to ever be able to sell your item at that price. You need the item to come down to a price where multiple people will purchase the item in short order so after the undercutter's product sells, yours sells before they have a chance to re-craft and re-list. Or, you have to lower the price to a point where the item isn't attractive to full time gamers who undercut so they'll move into another market. That'll slow the undercuts and allow your product to sell, even if you don't log in every day.

People with fewer sale slots and less inventory space also value throughput more than people who have purchased tons of retainers. If you could sell an item that costs you 2m to craft at 5m once a week, or sell that same item for 3m five times a week, selling it for 3m makes you more money over time than keeping it so expensive few people want to purchase it.

Dealing lucratively with the markets in a game like this involves figuring out the calculus of supply&demand throughput offsetting the craft's cost in gil and time. Different people do that math differently from you. I'm someone who undercuts by 1m at a time if the item is selling for 5-10m and someone undercuts me by any amount for reasons explained above, until the item is around 2m. Then I only undercut by 500k. I'd much, much, much rather sell 10 items at 1m profit each than 1 item at 10m profit.

[Malicewolf]

Sometimes it's simply because you could wait 10 days to sell 1 item for 5M or you could sell 10 of them for 800k in that same time frame. And you will probably notice, lots of people like to keep even numbers... So they will cut down by a even based number. Yes, you could cut something at 1M for 999,999. But usually, you'll see the next price at 990,000. Why cut that much? Because it's simple and it's still high. Not everyone is looking to maximize their profit, some are just looking to get quick money (and some are simply being smart about speeding up the buying process. Lower prices means faster selling usually and if they have excess...).

Sure, you may not want to reward under-cutters by buying it out and reselling, but if you choose to do that, you also must take into consideration that if more start selling that item, they often price at the lowest current price (which means it will continue to be undercut until someone man's up and buys).

[StouterTaru]

Just to test it out for laughs I created a replica High allagen piece. One was listed for 5M on the board. I listed mine at just a few gil below. A couple of hours later someone listed another one 500K cheaper. Just to see how far it would go, I relisted mine a few gil cheaper. Hour later that other person lists again 500k cheaper. so now down to 3.5M. I relist a few gil cheaper. Come back an hour later, someone else had listed slightly cheaper than the other guys but he then listed it again By the time I had enough it was down to almost 1M.

Would you rather they constantly undercut you by 1 gil? You're playing the same game they are, they're just playing to win and drive you out. If you think your 1 gil is a meaningless nothing, then next time list for 1 gil more than their price.

[Dave_TV]

The obvious solution is to buy him out and relist. But a word of caution, just because the prices are low or high, means little. What have people actually been paying for them? If the item is currently selling for a high price, but the history all shows sales for about 1/2, then the other seller is simply supplying the market at the price it moves at.

[Nyalia]

I find that high value items, at release, tend to halve in value (or maybe quarter?) each time one sells until it hits a stable point. So, there will be 1 listed at 10m that sells, then 5 more go up for 10m and none sell. Then someone lists it at 5m, or undercutting brings it down to 5m, and then another sells. And then it drops down to 2m before selling again. Unless supply is extremely limited such that only about one of the item per week appears on the MB, or the item costs a lot to make.

And then there are other factors. Back when someone figured out the gardening recipe for Blood Peppers, I grew as many as I could as fast as I could with only five gardens to work with. The minute I obtained some, I knew the supply was about to spike as other gardeners found out and shifted their gardens to growing Blood Peppers. So, even though they had been selling for like 2m, I listed mine at 500k, and when someone undercut, dropped it to 300k super fast. Someone undercut me again, I put them down to 200k. And I sold my whole first batch, and second, before the other growers' supply got such that their value dropped to 50k. If I had kept trying to sell at 2m, they wouldn't have sold, and then the value would have tanked and I would have gained nothing.

If you stubbornly keep your prices high with zero sales, you're not being a good businesswoman no matter what you think about undercutting.

[BloodPact]

People undercut for all sorts of reasons, and people do large undercuts for all sorts of reasons. If a product is selling very sparsely at 5m and someone is undercutting you by 1gil every time you undercut them by 1gil, but you have a full time job and only play a couple days a week, you aren't going to ever be able to sell your item at that price. You need the item to come down to a price where multiple people will purchase the item in short order so after the undercutter's product sells, yours sells before they have a chance to re-craft and re-list.

This is my take on it. I don't play all day. And whenever I craft something expensive or get a good item via retainer or drop I usually list it just under the price of the cheapest. But almost always there are sellers watching the market like hawks (you can see them re-list theirs like 3 minutes after I put mine, that sort of stuff). The time I spend in game I'm most certainly not going to spend in from of the market board. So, I'm okay with making half of it, most of the item they aren't, and if they are, cool, the price keeps rolling down. My FFXIV experience is 0% reliant on Gil.

[Rawrz]

Grand Company sales are not taxed. If they have the same Grand Company as you. it is better for them to go just a few gil shorter. If they have a different Grand Company than you, they could go cheaper (500k is a little much.) Do I think that a such an easy Glamour item is worth 3-5Mil? No. Not when the mats a pretty attainable and easily crafted. ARM/GSM/LTW Spec.

[Nyalia]

Grand Company sales are not taxed. If they have the same Grand Company as you. it is better for them to go just a few gil shorter. If they have a different Grand Company than you, they could go cheaper (500k is a little much.) Do I think that a such an easy Glamour item is worth 3-5Mil? No. Not when the mats a pretty attainable and easily crafted. ARM/GSM/LTW Spec.

It's not GC related, it's city related. If the retainer selling the item is located in the same city as the marketboard you are using, buying the item will not add a tax to the cost for the buyer. The buyer never sees that money. Unless I'm mistaken about how it works in 3.0, certain cities (or just Ishgard?) get discounts from time to time for the tax on the seller. which is taken directly from the sale price. Sometimes the discounts are complete, sometimes they're half, but in all cases, the tax the seller pays happens regardless of where the buyer buys the item.