19 July 2011

(Not) owning that market

There was a comment outlining a method of owning the glyph market. This is my deconstruction of it.

For the record; I have played the deep undercut game.  I have been both the dominant seller, and the quiet mouse.  I have played with glyphs - owning all the recipees since Mid 2010.  I have posted with 3 toons, and posted with one.

A few weeks 1 competitor will give up. After a few more weeks the second one will give up. And so on and so on. When they leave u gain market share. increase the ceiling to 40g, then 50g then 60g. Dont be greedy or else they will come back. - Critical Goblin

My understanding of the deep undercut method is that you drive other players out of the market with a very low margin sustained campaign.  After a while they will give up; and loose interest; change proffesion, or server change.  Once your competition has given up, you can then raise prices and have large profit.

There are a couple of problems with this strategy.
  • What if you are running deep undercutting for months and they still have not given up?
  • What if you are up against a farming goblin; who is willing to farm his own herbs and sell glyphs below a herb price sustained by alchemists?
  • What if your competitors have a range of alts with different crafting professions?
  • What if you can make more gold by being greedy and allowing the competition to come back?
If you are prepared to play hard; accept that there might be others prepared to play harder.

Back in the dying days of lich king, I sustained a very deep undercut pricing of glyphs.  I knew what herbs I could buy, and what glyphs needed what parchments.  I bought all types of herbs and inks; buying whatever was cheapest (including old world herbs as well as northrend ones).  The profit margin on glyphs was 50s to 2g per glyph over careful purchasing of herbs.  This was done for two months.

My stated goal was to discourage scribes.  It did discourage the younger kids seeking a quick bit of gold, it ran out the gold sellers.  I know of scribes that left the market because of our deep undercutting.  However, there were stubborn toons that matched me - Breevok and Bankzoors, and a few others.  Even in this market a new player joined; you may have heard about him - Moonvengence; starting out with only vendor taught skills, but picked up his daily research and glyph books.


Since Cataclysm dropped, we had months (not weeks) of glyphs being at (or under) herb costs; driven by Moonvengence.  I am happy to work for minimal profits; I am not happy to work for a loss.  I lost a lot of gold buying guild banks (not tabs - banks) of cheap herbs of the AH; sitting on them watching deflation erode my wealth).  I dropped out of the Alliance market and moved over to the Horde market (via the neutral AH), and raised my profile in other tradeskills (a notional win for Moonvengence).  However, herb prices started to fall, and glyph prices were being chased down to follow them. That is Moonvengence was 'allowed' to own the market at a loss, but not at a profit. Wherever there were small profits (as little as 2g/glyph); there was competition.  It was during this period that a new competitor - Neoriv entered the glyph market.

You can play with the cost of milled herbs such that inferno inks are allocated the majority of the cost; but even then, 1 blackfallow has a minimum value of 1/10 of inferno ink; and with the introduciton of trinkets; blackfallow vs inferno is more like 3:1  instead of 10:1.  Regardless, spending your time milling unloading inks can be profitable if you drive the price of glyphs down far enough; if only for levelling scribes that dont want to grind Therazane rep.


Don't get me wrong - I still will deep undercut; where it suits me.  I just have an expectation that I will reduce a market to a handfull of players instead of driving them permanently away.

Where my sales expectations are not met, I will do what it takes to drive sales. For me; this has meant : getting out of bed earlier and posting glyphs before work; finding new markets (horde ah); deep undercut; followed by a very very distant AH camping.

I can not currently sell a glyph in the evening at my current prices.  Within 1/2 hour, I get consistently undercut.  Getting up 1/2 hour earler and posting 12 hour auctions before work; and I won't be undercut for 8 hours (but Breevok will - he still goes to work hours before me).  To make things interesting - there are some mornings I won't (or even can't) post in the morning.

By previous rounds of undercutting, we weeded out many less committed scribes.  We still have several determined scribes.

 
At the end of the day I am left with the following choice:
  • 2 months of 200 glyphs per day at 2g profit each =  24k gold profit
  • 2 months of 40 glyphs per day at 5g profit each =  12k gold profit
  • 2 months of 20 glyphs per day at 100g profit each = 120k gold profit

By not undercutting, over the space of 2 months, I will earn an additional 96k gold.  The higher prices will encourage new competition.

As circumstances and competitors change, I will change my strategy.

10 comments:

  1. I am happy to work for minimal profits; I am not happy to work for a loss.

    I have always wondered... were you happy to work for minimal profits out of principal? Did that become "the game?" I mean, if the goal was solely wealth accumulation, surely there were other markets out there that would post better returns with the same amount of time being funneled in.

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  2. To clarify : I am willing to work on minimal profits to secure a market that I think has long term benefits.

    But it also is an acknowledgement of my previous behaviour. I have no problems with very high volume, low margin sales; providing I can streamline it. One method I have historically used to assist with this is to hire out the parts that I don't like to do. (For the record I have paid in game players with in-game gold.)

    And yes; markets become the game. We become emotially tied to them. Other blogs have talked about owning markets - especially glyphs and gems. Some players become very wealthy by doing so.

    AH PVP is as rewarding as PVE. If you do it right you even get achievements and shiny purple loot.

    At the moment I am seeking better returns.

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  3. Ok ok Critical will take the bait and give away another secret.

    Alot of readers are focusing on the wrong Carrot (reward) of this strategy. The objective of the Critical method is yes to own the market and drive out other players but everyone is mistakenly thinking that the Reward for driving out other players is that you can increase the top ceiling and earn moar profits.

    Yes this is a positive side effect that I encourage you to capitalize on when you drive out competition but this is NOT the reward for all your hard work. If your competitors come back then bring your top ceiling down again low enough so they go away eg drop it to 30g or even lower thats fine. The objective is to make the market unattractive to competitors as much as possible.

    The real reward is the other positive side effect of making mass glyphs. Thats right, mass infernos. And what does mass infernos mean? Super Darkmoon trinkets ftw.

    Here's some homework for scribe readers. Go to your server's TUJ, look up darkmoon trinkets and do the following few calculations using the Mean values (which is over the last 2 weeks):

    Average Darkmoon Trinket (ADMT) = (tsunami + earthquake + volcano + hurricane + hurricane)/5

    Average Darkmoon Card (ADMC) = ADMT/8

    Profit = ADMC - 10 infernos - 30 lifes - 0.5g

    I will bet my fantastic mr fox reputation that on your (the reader's) server Profit = positive. If not boo hoo hoo, go learn vertical integration from Azuriel.

    Of course /shrug this is just papercrafting and I have no hard evidence. Also you probably already know all this Foo yea?

    /sigh I donno why I share these million dollar insights with such sour pusses.

    So anyway there you go. Stop trying to "win" by lifting the top ceiling too high, Critical already told you they will swarm back like flies to a smelly ass. Just air that ass occasionally and when the flies come back swat them hard. The real gold is correctly going all the way herb>pigment>ink>card>trinket. For the love of god, DONT sell infernos and DONT sell cards. The goblin on your server is laughing his ass off selling trinkets right under your nose.

    DISCLAIMER: CRITICAL HAS 4 MILLION GOLD. I DARE JUST ONE READER PER SERVER TO TRY MY PATENTED METHOD AND TELL ME IT DOESNT WORK ON YOUR SERVER. IF YOU CANT DO STEPS 1-20 RIGHT, DO YOURSELF A FAVOR: DONATE YOUR GLYPHS TO THE CG OWNING YOUR ASS AND GO BACK TO EZYWIN GEMS. YES I SAID IT. GEMCUTTERS = EZIWIN. LEAVE GLYPHS TO THE BIG BOYS.

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  4. Trinkets are another topic, requiring a new post (coming soon)

    CG, you appear not to have read the post. I had a few questions for you:
    * What if you are running deep undercutting for months and they still have not given up?
    * What if you are up against a farming goblin; who is willing to farm his own herbs and sell glyphs below a herb price sustained by alchemists?

    You assume that by playing agressive, you can own a glyph market. This is arrogance.

    Playing agressive is a reasonable strategy. It works on some markets; but it has counter strategies.

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  5. Critical I have over 4 million gold too. I have tried your method. Seriously all I can say is if you're still making big profits on trinkets then that's because there's no real competition on your server.

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  6. To add to my last comment, on my server there's so many idiot campers selling trinkets it's actually more profitable and a whole lot less work to sell *them inferno ink.

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  7. If trinkets are so profitable why arent you just turning blackfallow inks into infernos. The work involved in doing this in the glyph market is fairly heavy. It also will vary per server(standard fair). Trinkets on my server sell fairly poorly. I found it easier to make my gold doing well in the glyph market and selling inferno inks. Inferno prices have changed over the course of the expansion. The fact that you have 4 million gold doesnt mean your method is the best method but it does mean it worked for you on your server vs your comp. There are many ways to make gold.....time and effort are two of the key factors. My server I did the opposite of you, sold glyphs and inferno inks. Sure I am not at 4mil...not that far behind though.

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  8. My dear Foofy: my comments answers both those questions. 1. You do not want the market to recover, I am telling you to crash and maintain a low profit market. 2. Glyphs are not the money maker, let the herber sell below your bottom ceiling.

    Moxxy: If you can't sell trinkets because of campers you should spend more time figuring out the counter than trying to discredit the almighty Critical on blogs.

    Brent: my Critical method is a cheap way to control the majority of the inscription market on any server. It only requires enough capital to craft 20 x 344 glyphs

    Quick calculation for Brent.
    20 x 344 = 6,880 glyphs total
    6,880 x 15g = 103,200g
    For 100k Critical is handing you a lucrative portion of the AH game. Cheap in any goblin's eyes.

    Why so critical pplz. Is it cos Critical has 5 million gold? If you work as hard on the inscription market as you are bagging Critical you too would have 5mil.

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  9. As someone who - at my peak had 40 of each glyph, (as a lead up to 4.0), maintaining 20 of each glyph is not an issue.

    Lets for a moment assume I am clueless. Either that or I am 'fishing'. Take your pick.

    CG. Don't go looking for insults; regardless of whether they exist or not. I find your arguments interesting; the size of our relative epeens less so.

    CG. Just to be clear; my understanding is
    * Selling cheap glyphs to generate an excess of inferno ink
    * Starve your competitor of inferno inks to sell darkmoon cards
    * Make large profits from darkmoon faire cards?

    So, you cross subsidise the sales of glyphs with the profits from darkmoon faire cards, and in turn dry up the supply of inferno ink.

    For the rest of the audience; I traditionally have been the very deep undercutter on our server, and have recently taken a high price strategy. I find it an interesting exercise arguing against it.

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  10. Yes yes yes! Well not quite but at least you are trying.

    Minor corrections to your interpretions:
    * sellIng cheap glyphs makes inscription unsavory to old and new scribes.
    * starving competitors of infernos is impossible as they can buy herbs and make pure infernos. But to replenish a shop full of glyphs your glyph machine will consume alot of herbs which will raise herb prices slightly adding another constraint for your competitor's goal of maximizing profit.
    * make profit from dm trinkets not cards. Don't sell cards. You need all to make trinkets. Also no, you won't make 10k profit per trinket but when you sell a full bank tab of dm trinkets, it ain't coppers in your pockets.

    Lastly no, dm cards/trinkets don't subsidize glyph sales. Glyphs should be sold at profitable price points therefore are profitable on their own.

    Good questions, happy to answer more for genuinely interested readers. The more I describe in detail my method the more convinced I am that this is a strategy which will work on all servers. Obviously with the disclaimer: max 1 CG sustainable per faction+server.

    Hmmm actually why could there not be 2? There's always a no 1 and 2 that control majority share in all categories (coke+pepsi etc).

    Interesting indeed.

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