WoW Economic Collapse

There was a guy on Burning Blade (my server) that did corner the market on pretty much all BoE epics and many other high price items. He eventually accumulated so much money that his bank account capped out. Apparently you cannot hold more than 75,000g (yes, not 7.5k, but 75k) on a single character. His name was Blademasta, an alt of Killbot, a rogue.

Funny thing though, with all his money he was still terrible. He was crap in PvE, BGs, real world PvP, and duels.

He has since moved to another server, during a free transfer period well before the implementation of paid character transfers and the 5k gold for a level 60 limit, most likely ruining the economy there for casuals as well.

One of my guildies actually farmed his way to over 10k, way back last year when Eye of Divinity and DM Librams sold for lots (he was an incredibly well-geared warlock and could solo the mobs necessary to farm both). It was actually an issue when that guild moved servers a couple weeks ago since he had to split the money amongst a few people.

I've personally crafted many a Lionheart and probably earned around 15k gold over the course of my career (however as a high-end raider and an incredibly generous friend I spend ridiculous amounts of gold from pots and repair bills and helping my friends out, so I generally only hover around 100g-1000g).

Generally the pecking order for richest people on the servers go:

AH market speculators > Super high-end crafters > super epic farmers > gold ebayer farmers > normal farmers > normal players.


The ironic thing about controlling the market like that was that it hurts the casuals the most since it is what they need to progress with gear and enchants, whereas the raiders were hardly affected. Why would a hunter raider with Rhok'delar care about overpriced Blastershot Launchers, afterall? Why would people in large guilds care about enchanting mats with their guild banks having their back?
 
Neurofreeze said:
There was a guy on Burning Blade (my server) that did corner the market on pretty much all BoE epics and many other high price items. He eventually accumulated so much money that his bank account capped out. Apparently you cannot hold more than 75,000g (yes, not 7.5k, but 75k) on a single character. His name was Blademasta, an alt of Killbot, a rogue.

Funny thing though, with all his money he was still terrible. He was crap in PvE, BGs, real world PvP, and duels.

He has since moved to another server, during a free transfer period well before the implementation of paid character transfers and the 5k gold for a level 60 limit, most likely ruining the economy there for casuals as well.

One of my guildies actually farmed his way to over 10k, way back last year when Eye of Divinity and DM Librams sold for lots (he was an incredibly well-geared warlock and could solo the mobs necessary to farm both). It was actually an issue when that guild moved servers a couple weeks ago since he had to split the money amongst a few people.

I've personally crafted many a Lionheart and probably earned around 15k gold over the course of my career (however as a high-end raider and an incredibly generous friend I spend ridiculous amounts of gold from pots and repair bills and helping my friends out, so I generally only hover around 100g-1000g).

Generally the pecking order for richest people on the servers go:

AH market speculators > Super high-end crafters > super epic farmers > gold ebayer farmers > normal farmers > normal players.


The ironic thing about controlling the market like that was that it hurts the casuals the most since it is what they need to progress with gear and enchants, whereas the raiders were hardly affected. Why would a hunter raider with Rhok'delar care about overpriced Blastershot Launchers, afterall? Why would people in large guilds care about enchanting mats with their guild banks having their back?
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bull. u can have over 100k, ive seen it.

no hunter in his right mind would want a blastershot launcher

plus its bop, so its not an ah item.
 
Martyr said:
no hunter in his right mind would want a blastershot launcher

plus its bop, so its not an ah item.
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He probably meant core marksman rifle. Anynow its his point which matters, not the item.

Legit new casuals players are those hurt most by these AH monopoly manipulations.
 
I'm in the midst of setting something up. I've checked the last few comments posted here as well. I agree that most monopolies at the AH hurt the normal starting player. In our case, we plan to keep everything artificially low which in turn helps the average player by keeping the end cost down. It's not about personal enrichment at getting 10,000 gold pieces. It's about macroeconomics and control. We get a bigger kick getting 10 silver and owning a market segment than by gouging the consumer.

Anyway, we'll keep a diary and take some screenshots of our efforts and see if we can't track some of this stuff over the long run. At the very least, you can be kept in the loop. Hey, if you have suggestions, let us know and we'll try 'em out.
 
No offense brother, but you really sound like a 1st semester MBA student who has just started to learn some buzzwords--I was there not too long ago myself.

As for your approach--it certainly sounds like you are enjoying tooling with the market, but this is neither a novel approach nor anything like a futures market. Furthermore, you are buying what amounts to commodities on the open market, thus you have no traditional supply chain..and there is no magic supply chain wizardry that you eluded to...

It's nice that you are enjoying being a businessman, fyi.
 
Yeah and try this on eve. From what i understand, alot of people in that business play eve for fun, corporate vp's, stock brokers, ect.
 
Martyr said:
bull. u can have over 100k, ive seen it.

no hunter in his right mind would want a blastershot launcher

plus its bop, so its not an ah item.
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Actually I meant Dwarven Hand Cannon. For some reason I always mix up those two items. It was all the rage back in the day before every hunter had their Rokh'delar/Lok'delar.

As far as the absolute gold cap neither of us have shown any proof.
 
After a quick meeting this morning, we went over several higher priced commodity items. One that we identified is Thorium which was mentioned in the thread earlier. We think that it has greater potential over something like Dreamfoil and probably has a better profit margin for us. We're running the numbers to see what the inventory and initial buy-in would be, but my friend is pretty confident that it's possible. We'll be taking screenshots of the market before and after and try to get some numbers to y'all about the pricing before and after our takeover.

We're going to do it first on our smaller populated server because it has lower requirements for a takeover. Then we can try it on a larger server after that.
 
Shodai said:
No offense brother, but you really sound like a 1st semester MBA student who has just started to learn some buzzwords
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Ugh, you should hear the beancounters here. Want some buzzwords? It's all about EBITDA, market revitalization, expanding the market in China and entering India in the next year. It's just fun to get back to basics if you will with a simulated marketplace. I've been doing real-world supply chain for so long, this is a welcome break. For us, it's interesting to see how real-world WoW is or isn't in terms of the economy it employs.
As for your approach--it certainly sounds like you are enjoying tooling with the market, but this is neither a novel approach nor anything like a futures market.
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Novel? Oh no. It's been done before. It's not like we've discovered some secret that no one else has ever thought of. We're just employing a common method in a slighly different way. In the real-world it would be illegal and called market dumping. Similar to the Korean SIMM makers a few years ago when they were dumping RAM in other markets to drive other players out.
Furthermore, you are buying what amounts to commodities on the open market, thus you have no traditional supply chain..and there is no magic supply chain wizardry that you eluded to...
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No, we make most of what we sell. Some of that making does require some magic skills. ;) I know that's not what you're talking about. WoW doesn't translate directly to the real-world, but it's close enough in most respects. Thanks for the feedback.
 
Martyr said:
Yeah and try this on eve. From what i understand, alot of people in that business play eve for fun, corporate vp's, stock brokers, ect.
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Its already been done on Eve. For example, on the Tech II market.. There's a bunch of people that continuously try price cutting, say some tech II ammo, that its at the point its just about not worth r&Ding and producing from scratch anymore.. Although if osmeone tries to raise the price back up, someone else will come in and do the same... since there's plenty of players.


Also, since the universe is so big, that sometimes, its worth paying extra cash just to buy something a little more expensive closer to you if you far away.. So you might be able to
sell less, but at a higher price.. vs more at a lower price.. blah blah.


or, there just may be too much being sold, that its almost impossible to buy out the entire market.. although I myself have captalized on local market trends, and bought out, say pratically all the certain skills in one low price selling region, move it over to a region thats out, and sell it at a relatively high price (not outragious though, well, at least for that regions market history avg). If someone tries to undersell, I sometimes just wait them out.. Sure they might get the immediate sell, but eventually, they'll run out of stock, and then people will be forced to buy the skills from me... Especially for stuff like skills, where they can't be manufacturered.. just have to wait for the universe to release them out again.

Or sometimes, if they are insanely low(like pratically free, no way they can really make a profit) I'll just buy them myself and reflip it myself. The Eve universe is generally big enough that you'll eventually find willing to pay extra for it.. especially if you sell it physically somewhere else. Or if it gets bad, you'll probably can flip it back at the same price, and just lose tax and trading costs.


Finally, alot of people realize the futality of cutting price wars in Eve.. Someone almost always always willing to go lower.. and someone is almost always wiling to pay more for convenience. So they have sorta of an agreement on what sane prices are. and whine about the undercutters.. heh. This especially works on stuff that can only be built by other players, who have plans of limited copy in the universe.. basically, that stuff isn't bought and sold as a public commodity anymore.. Only select players in corps have access to build them.


Now I heard that there are Tech II warp drive stabalizers, but supposidly a certain pirate corp has bought all the plans to make them out, and refuses to release them to the public.. to make piracy easier. Dunno if thats true or not.


I dabbled in Eve for a few months.. In the end, i think I was making about 10 to 100 million a day of profits personally flipping things on the market, spending an hour or two a day, depending on the market, luck, and deals....while i was waiting for skills training. and I probably only scraped the surface. It just started feeling like a drawn out boring timesink, especially with skills training, so I quit. It was just taking way too long to train to get to the more interesting ships.. That, and I honestly just didn't really care about the universe itself.
 
Torgo said:
we make most of what we sell. Some of that making does require some magic skills. ;) I know that's not what you're talking about. WoW doesn't translate directly to the real-world, but it's close enough in most respects. Thanks for the feedback.
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This is where the system breaks down. On any reasonable sized server you can't make most of any item with real demand. Certainly not with a 20-30 minute time investment.

This whole system depends on you being such a large producer that you get to set the price. That's only possible for a short time unless your production capability exceeds global demand. That's simply not possible for stuff like thorium.

The whole system seems trivial. Basically what you are doing is flooding the market with below market-price items to cause temporary disruptions to the market.
 
So you can control the market... so what? You've stated numerous times now that the goal is not to make money, but simply an experiment in economics. Economics, however, is about making money (in the end at least). If you are not doing this to make money you are just playing with yourself. :p

So, congratulations, you can ruin the game for low level, casual players, and maybe piss off a few farmers. In the end that's all you've really accomplished.
 
You won't be able to keep high demand items such as dreamfoil artificially low. People KNOW what these goods should cost. When they see you dump a bunch of low priced <whatever> on the market they're going to instantly buy it up either to make potions, for their guild, or to resell. Even people who are not alchemists will buy it for the above purposes, because it is a popular item and people know what it should cost. Playing the AH you will nearly never find things such as dreamfoil for sale at very low prices, because as I mentioned people know what a stack of dreamfoil sells for so they're not going to screw themselves over, so you would have to farm it if your hope to keep it at a very low price. That will take A LOT longer than 20-30 min a day, 2-3 hours per day at the very minimum.
 
ilkka said:
This is where the system breaks down. On any reasonable sized server you can't make most of any item with real demand. Certainly not with a 20-30 minute time investment.

The whole system seems trivial. Basically what you are doing is flooding the market with below market-price items to cause temporary disruptions to the market.
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You don't necessarily need to flood the market completely. You do have to have an adequate supply, but using proper pricing you can tie up large quantities of product that other people produce. This has been done.

Let's say JoeBlow has 100 auction items of Thorium in stacks of 5. That's 500 bars of Thorium tied up in the market. If he has those priced at 25 gold for each stack (I'm totally making up prices here), I can enter the market with as few as 100 bars as long as I price and package my items correctly. Consumers see our items first (as it being priced lower) and choose our items first. It's very possible to tie up other people and their inventory with a smaller inventory as long as you price and package the item right.

Oh yeah, one other thing. We're doing long-term auctions. Short-term auctions do require more maintenance, but with long-term you really only need 30 minutes to manage the entire process. Seriously.
CodeX said:
So, congratulations, you can ruin the game for low level, casual players, and maybe piss off a few farmers. In the end that's all you've really accomplished.
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Go back and read the thread again. How do low prices hurt the low level, casual player? Why is pissing off a few farmers bad? I'm sorry, I don't live in Bizzarro World like you.
dotK said:
You won't be able to keep high demand items such as dreamfoil artificially low. People KNOW what these goods should cost. When they see you dump a bunch of low priced <whatever> on the market they're going to instantly buy it up either to make potions, for their guild, or to resell. <snip> ...so you would have to farm it if your hope to keep it at a very low price. That will take A LOT longer than 20-30 min a day, 2-3 hours per day at the very minimum.
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We'll see, won't we, with Thorium. We discussed it yesterday and think that we can make a profit of 2 gold per bar using our system. Now, I kept the last part of your post because you're correct. Sometimes to maintain an adequate supply you do need to farm a bit. It depends on the commodity and how you are maintaining supply. It also depends on your character and how he's built.

However, once you have the initial supply, you can use the auction house to your advantage. Sure, people could buy your inventory and resell it for higher. Go back and read some of my posts. They buy your inventory, but you've already made a profit because you don't immediately sell at cost. You price it initially to be just below enough their price to really make people take notice. You also don't put your entire inventory out there. You keep some reserve.

So what happens is one of two things. 1) They buy out your inventory and resell it. Or, 2) They reprice their auction. Either way you win. If Option 1 occurs, just put out more inventory and force them to buy your stock. Keep it up and eventually they invest in so much inventory that they can't sell it. They have a inventory glut. Then they're forced to dump the excess inventory which then puts you into Option 2. Once they reprice their goods, you're in a bidding war. You eventually push their prices so low that they are now selling at a *loss* in order to force you out. If you studied how to effectively create a supply, your cost of manufacturing goods is lower than theirs. There's a point where you just buy their inventory yourself (especially nice if they bought your inventory in the first place) thus getting back your goods in the first place, and you've just restocked yourself and taken out your competitor. Now he's forced to go back and get more inventory. Until then, you've got the market to yourself. Just keep the price low enough and painful enough and you've won.

It's as easy as that. It's incredibly simple and nothing really new as people have said. It's just that it always fails when people get greedy and jack up the prices again to captialize on profit margins. That's when you open the door to competitors.

I'll post again in a bit on another way to get people to supply you without knowing it. My friend discovered it and I dubbed it the "Meth Method".
 
One little trick that my friend decided to employ involves some simple social engineering.

Problem: Need to find a good supply of goods for the auction house.

Answer: Trick other people into doing your work for you.

Essentially, you play the role of a drug dealer. Get other people hooked on your product and have them provide you with a supply later. In this case, my friend has had the deviant fish market monopoly for what? About a month now? Anyway, he'll hang out at one of the lower level fishing holes where a bunch of n00bs are hanging out. These guys don't quite have the skill to catch or cook the fish yet. So my friend will hand out "samples" to the n00bs.

"What's this?"

"Just eat it and find out. It's great."

Well, they munch on it and they morph into pirates or ninjas or whatever. They're all excited because some nice guy showed 'em how to use deviants for polymorphing. He'll hand over a few more "samples" with the request that in return they give him 50 deviant fish when they are able. So once "hooked" these guys willingly fork over 50 fish later.

Okay, to head off the comments I already see coming, I'll just pre-empt them for you.

Q: Do they really give back fish?
A: Yeah, most of 'em do. Those that don't, my friend remembers. Since he has the deviant monopoly at the neutral and horde auction houses, if they try and screw him, he'll end up with their inventory anyway through the auction house.

Q: You're just screwing over the lower level player.
A: How? By giving away cooked fish? If anything, we're creating a market for our product and the payment back in fish isn't like we're demanding 50g or a troll will bust your kneecap.

Q: Dude. Doing this you just end up making competition for yourself.
A: Not really. Since we have the monopoly, there's no real profit in fishing anymore. They usually get tired of doing all the work and would rather just buy fish from my friend.

A: There's a hole in your theory. You see....
Q: There probably is a hole. Let me know so I can patch it.
 
Hey, my good buddy popped over to my office and wanted me to clarify something. I've talked about using raw goods. That's not exactly correct. What we're doing is using processed raw goods. These are goods that are one-off from the raw source. It isn't the raw ore, but the metal bars. It isn't really the deviant fish, but the cooked deviant fish that we're selling. Being one-off from the raw good (what we call a processed raw good) helps us cut down on any farming that we would need to do.

This is also what makes Thorium more attractive than Dreamfoil. Thorium bars are just one off from ore, whereas Dreamfoil is not only a true raw material, but a drop as well.

So for those people who say we can't be doing what we're doing without investing hours and hours of time are partially correct. If we were dealing only in the raw raw raw materials, then yes, we would be spending more time. Instead, we're one step up from that which cuts time, and maximizes what profit we do make.

Sorry if there was any confusion.
 
Yes, another post. This time about Cost. Earlier above, dotK stated the following:
dotK said:
People KNOW what these goods should cost.
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I wanted to delve into that thought a bit more than I did previously. dotK is correct. People do know what these goods should cost. But why is it that they know that? I mean, who is it that says to everyone "This item costs X amount"? What makes Dreamfoil worth 20g a stack verus 90c? Who sets these prices?

Initially, these are set by the NPC vendors who set an initial high and low point for pricing. Of course, these guys have a built in limited inventory, but they serve their purpose for setting a baseline and for an outlet for a simple economy. One of the flaws of the vendors is that their prices from what I understand are fixed. Meaning, they don't fluxuate with supply and demand. If Blizzard were to implement some economic AI into these guys they could actually control the economy a lot better than what it is now. (If you want to "fix" anything, Blizzard would need to start there.)

Moving on... so the pricing end up actually in the hands of the people. Any upward movement in pricing is determined by supply and demand, or so you'd think. Establish servers will see ever increasing inflation over time as long as the rate of supply remains the same. This is because the total amount of money available in the game increases due to looting, drops and what not. It's like printing money in the real world. The more money that is in the hands of the people, the more that prices go up.

In the real world, the federal reserve is the mechanism for controlling the flow of money in and out of the system. They can take money out of circulation or they can print more money. They have other tools like interest rates and other boring stuff to make you fall asleep too. WoW doesn't really have a mechanism for economy control. The most that Blizzard ever does is tweak drop rates from what I know and that's doesn't really work on a large scale.

So you have goods that are created and consumed, but the money supply is always increasing. Factor in two more things: demand and greed. Everyone pretty much gets the demand element. If people demand an item, then they're going to want a lot of it, putting upward pressure on prices. The screw job that happens is the greed factor. In the real world, we call it price gouging or war profiteering. You can bitch all you want about gas stations charging $5.00 a gallon after Katrina or movie houses that charge $4.00 for a Coke. Everyone else is doing it, so they get away with it.

Well, until the people get fed up and use the government to slap a fine on 'em for unfair competition or some other practice. The real world has plenty of controls to prevent vendors and merchants from hurting the consumer. WoW has... well, what does it have? If all the players are charging a 200g premium on an item and everyone goes along, then you can't do anything about it. Blizzard mostly just slaps people on the wrist for most infractions.

So why does a good cost a certain price? Because I say that's what it's worth and everyone pretty much goes along. Get a bunch of greedy bastards and inflation and the result is what you see today. That's short of it. That's why things are so darn expensive.

The only thing that I see that we're doing differently is that we're doing Walmart economics and seeing if it translates into WoW. So far, so good. It's still an experiment that might end up failing. Some folks tried a new strategy on one server to try and break the monopoly, but failed. It was very interesting and helped us prepare for future takeover attempts. But overall, forcing a deflation in the marketplace seems to really be fun. Organized on a guild level, you control market prices, the money supply and has the potential to turn a guild into a dominating server force.
 
Torgo said:
Go back and read the thread again. How do low prices hurt the low level, casual player? Why is pissing off a few farmers bad? I'm sorry, I don't live in Bizzarro World like you.
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Because the low level crap you are talking about is mostly SOLD by low level characters. Artificially deflating the market for these items makes it very difficult for low level chars to make money. I am sorry if that was a little too hard for you to understand without an explicit explanation.
 
The only thing I keep scratching my head about is, that from your posts its as though you assume that by undercutting the farmers that the farmers will in turn undercut you until the price is driven so low that they will move onto a different item. What's to prevent the farmers from buying out all your underpriced goods and putting them at a price that others are willing to pay?

Scenario:
  • Server average price for Thorium Bars are 5g a stack.
  • You are trying to sell Thorium Bars for 2g.
  • I know the average is 5g so I buy all your Thorium Bars and put them back on the auction house for 5g per stack.
  • I make 3g profit per stack.

It seems as though the only way your situation will make you own the market is if:
  1. Noone does anything to prevent it.
  2. The only people who buy your goods are people who intend to use them.
 
Jason Isom said:
The only thing I keep scratching my head about is, that from your posts its as though you assume that by undercutting the farmers that the farmers will in turn undercut you until the price is driven so low that they will move onto a different item. What's to prevent the farmers from buying out all your underpriced goods and putting them at a price that others are willing to pay?

Scenario:
  • Server average price for Thorium Bars are 5g a stack.
  • You are trying to sell Thorium Bars for 2g.
  • I know the average is 5g so I buy all your Thorium Bars and put them back on the auction house for 5g per stack.
  • I make 3g profit per stack.

It seems as though the only way your situation will make you own the market is if:
  1. Noone does anything to prevent it.
  2. The only people who buy your goods are people who intend to use them.
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I have tried a bit of his post out in game and found that the scenario of colapse can only be sustained if you have a continuos supply coming in so that as they buy your goods out you simply post more at the same price so their's doesnt sell and they are forced to lower their price. Also other people will start to undercut you in an effort to sell their product which results to some degree in a lowered price sustained over time.
 
Jason Isom said:
Scenario:
  • Server average price for Thorium Bars are 5g a stack.
  • You are trying to sell Thorium Bars for 2g.
  • I know the average is 5g so I buy all your Thorium Bars and put them back on the auction house for 5g per stack.
  • I make 3g profit per stack.
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That's a valid observation. That's why before you pull this off, you need to evaluate the market to gauge the total size of the market place (are there 500 Thorium Bars for sale at one time or is it just 100 bars?) so you can get an estimate of the inventory you'll need to sustain a price war. As I mentioned above, don't place your entire inventory out at once. That's a common mistake. It's one that you're counting on the other guy to make.

The primary goal is not to just have him buy you out, but cause him to relist his items. If your inventory is bought out you probably priced too low to begin with. So in the above scenario, I wouldn't drop down to 2g at first, but start at 4 or 3.5g. There's psychology involved. You want him to think twice about buying you out and relisting (and incurring those auction fees). And if he does buy you out, not a big deal. You still made a profit. Just bleed him out. This is also just one person doing this. Enlisting more than once person or an entire guild would dominate. (We're always trying new ways to try and sustain supply.)
It seems as though the only way your situation will make you own the market is if:
  1. Noone does anything to prevent it.
  2. The only people who buy your goods are people who intend to use them.
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Well, no one has prevented it so far. Hey, I'd love to see someone do it. Then we'll know that we're just another bunch of lamers trying another hairbrained idea. Your second bullet point is totally on target. That's why choosing your market is important. You want to choose items that people will want to use. That's why we're focusing on processed raw goods. Even higher level characters will need a component from one of these items to make a potion, enchantment or whatever. It also partially protects us from server patches that affect drop rates or adjustments. Since we're not focusing on luxury items so much, if Blizzard adjusts the drop rate of Foozle Wuzzle Gems so they become commonplace, then we don't really care. Besides, if we're talking long term, eventually everyone will have those luxury items and demand goes down. But there will always be a market for components.
CodeX said:
I am sorry if that was a little too hard for you to understand without an explicit explanation.
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No apology necessary. You can't help it that English is your second language. You've finally explained yourself so I can address your point. If the market prices are artifically depressed, does it prevent the lower level character from using the Auction House to make money?

I don't have any hard stats on how many low level characters are actually using the Auction House. I'm totally pleading ignorance on this. On the surface, I'll say that it affects everyone equally. The higher and lower level characters are both unable to make large profits. However, does this impact them both the same?

The answer is no. Since the "cost of living" for a lower level character is lower, any lost profit isn't felt as hard as it would for the high level character that's needing his equipment maintained. An argument can be made that since prices are now lower it ends up being a wash since goods are now cheaper for the lower level character. He might be shut out of the fish market, but he can afford that bolt of silk that's extra cheap now. I'll ask around and do some research and see exactly how many lower level characters use the Auction House and what the impact really is.

Oh, and pain.angel gets brownie points for trying this out. Thanks for your observations.
 
dotK said:
There's no real point to it, unless you just care about money. Let's say you make 10,000 gold... there's nothing to spend it on. All the good gear comes as drops.
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Well, gold isn't entirely useless. Materials for potions and crafting some of the high end resistance gear for raiding can be acquired with gold rather than by mindless hours of grinding.
 
You're talking nonsense man. You really do sound like a junior executive dropping buzzwords left and right but you haven't been able to make a reasonable response to the very astute criticisms that have been put forward.

How will you respond to having your inventory bought out and immediately relisted at a higher price? You've repeatedly mentioned holding back some of your inventory, what does that mean? As soon as you put the rest up the same thing will happen again. Without an endless supply of goods available to you for cheaper than your selling price you are losing money on every transaction. As a casual player you do not have any magical endless supply unless you find and exploit a hack, which renders your whole experiment pointless anyway. A single mid-level player can not supply the entire market for a high demand item himself, that is why professional farming firms exist.

In any MMO the ultimate scarce commodity is TIME. You cannot compete with Chinese farmers because they operate 24/7. Any advantage you discover will be duplicated and exploited all day and all night wiping out your supply-side advantage.
 
AceTKK said:
How will you respond to having your inventory bought out and immediately relisted at a higher price? You've repeatedly mentioned holding back some of your inventory, what does that mean? As soon as you put the rest up the same thing will happen again. Without an endless supply of goods available to you for cheaper than your selling price you are losing money on every transaction. As a casual player you do not have any magical endless supply unless you find and exploit a hack, which renders your whole experiment pointless anyway. A single mid-level player can not supply the entire market for a high demand item himself, that is why professional farming firms exist.
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i think he is saying it worked for him with an item like silk because he could create it...if he were trying to do it with an item of actual value, like one he could not easily create/collect then this probably wouldnt work
 
AceTKK said:
In any MMO the ultimate scarce commodity is TIME. You cannot compete with Chinese farmers because they operate 24/7. Any advantage you discover will be duplicated and exploited all day and all night wiping out your supply-side advantage.
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This is the killer point. If we take Thorium bars as one example, in order to corner the market you'd need to farm for days in advance to get a massive supply so that you could both dump some of your inventory on the market and also retain a large stock to keep undercutting people who buy you out. The problem is that your large stocks will eventually run out and the market will return to normal, or you'll have to keep spending a *lot* of time farming Thorium nodes in competition with the hundreds of other people on the server. Fair enough you could possibly do this, for one commodity out of hundreds. There's no hope the economy will even blip, let alone collapse. It's certainly in no way self sufficient.

Alternatively (as another random example of many I could think of) you could solo farm Scarlet Monastery for large numbers of greens and disenchant them, putting the dusts and so forth on the market. The problem is, you'd be selling components for mid-level enchants that end-game players don't need i.e. a limited and unprofitable market.

While I'll freely accept that with time you could corner the market in a small number of things, there is no way you can in any way destroy the economy unless you can come up with some method of finding hundreds of bind on equip world drop epics and selling them for 10g a pop. All other methods need time and are unsustainable and would in any event be dealing with amounts of gold that are too low to have any effect.
 
FIRST: I would like to say how much I enjoy this thread. I'm an econ/international finance guy and a wow addict... the fact that I can do both here is just awesome.

Now.. the Thorium Issue.
Thorium is farmed not for thorium, but for arcane crystals that drop from thorium veins. any wow market can only sustain a certain amount of thorium before the prices bottom out. If he deflates his price and someone buys out all of his bars to relist and sell at a higher price, he can just flood the market more. (this of course depends on your supply which you will need a vast amount of) I've been burned like this before on speculation of the AH. The problem still remains.. regardless of what your supply is, there is always more coming in. The unlimited supply chain is what is going to ruin this for you. No matter how many thorium bars you control, since the real goal are the arcane crystals, people will still farm thorium veins.
 
I'm also enjoying this. going to start playing WoW when my rma card returns and makes me smile :)

But till then. It would seem a lot of you have a grasp. anyone wanna donate a noob a few gold? :D then I can get started and kick some but.. although I plan to be a warrior hehe.

game seems entertaining and addicting enough < main reason i dont play yet hahahaha.. :D
 
Not to mention there are massive fluctuations in the pricing of things from time to time. I've seen arcane crystals go from 35g to 25g back to 35g. So, the whole "drop the price down slowly" thing happens naturally for a while, but it always goes back up.
 
sorry, your idea. doesn't work. AT ALL.


go ahead. sell thorium for 4g a shot. I will buy it all and sell it for 5g. Sure you dont have your whole market up there. Great put up your market and then come back and put up more. Ill keep buying it and reselling it. It would be near impossible to put up more then I can buy, as if i sit in the AH I can buy yours before anyone else does and resell. These are high demand items, not "luxury" items as you say. People will be buying, and they will be buying the only thing available to them, the higher price.

The problem is, as a reseller who makes profit on each sale, my supply is ALWAYS as great or greater than yours. I can buy as much as you put up and resell it, how are you supposed to come up with more to control the market. You can farm it as much as you would like, I'll simply buy it and resell it again.

Go ahead and sit by the bank and AH and post your auctions and Ill sit there and buy and repost them. With your inventory ONLY shrinking (all your gains are gold, you cant buy more supply because they prices would be higher than you wish to sell), and my inventory equaling whatever I buy from you. My inventory can consistantly grow with yours. See who runs out first.

The only thing that can slow me down from buying your inventory is gold, if I spend all of my gold in a price war and eventually you have more supply then I did gold, thats fine. However this is very hard to accomplish, and if you do so it is only for a very short period of time. Currency is much easier to acquire then a gathered item, I know you are talking thorium bars not thorium ore, but you cant get the bars without ore. You cant get the ore without mining. If you do manage to control the market for 1 week, thats it, your done and your whole inventory is cleared extremely fast. I know im not explaining this perfectly, but im sorry, your method wont work.



The reason walmart is able to sell goods so cheaply is that they buy them so cheaply. They resell from manufacturers or make goods from cheap materials and sell them barely over cost. In WoW your cost is time, which has a limit MUCH smaller then the materials purchased by walmart. Sorry but you can't do what they do, becuz they make profit on each sale without a limited supply
 
AceTKK said:
How will you respond to having your inventory bought out and immediately relisted at a higher price? You've repeatedly mentioned holding back some of your inventory, what does that mean?
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As I said above, if your inventory is immediately bought out, then you probably priced too low to begin with. If you do have your inventory bought out, as long as you have a good cost of goods made ratio, you've made a profit no matter what. Go back and start again.

Example: OldMacDonald has his 500 metal bars priced at 5g each. You come in at a 3g price point with 100 bars. If he buys you completely out, then you get 300g and he is trying to move 100 more bars, but he'll only get 200g profit from it.

If you held back some inventory as I suggested, come back in at 4g. Let's say, I jump back in at that price with 100 more bars. He buys me out again. Now, he's out 700g from buying from me, I'm up 700g and he's got 200 bars of excess inventory that he can only make 300g profit off of.

So what's the net effect from this scenario? OldMacDonald has 700 metal bars priced at 5g. You've made 300g. However, what people don't think about is now OMD has some pressure to move his product. He's got too much investment tied up at this point. He needs to turn all those metal bars into currency so he can put it on Ebay. So not only have you made some gold, you've depleted his cash reserves and put pressure on that market segment to lower prices so he can move inventory.

AceTKK said:
Without an endless supply of goods available to you for cheaper than your selling price you are losing money on every transaction.
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This is what I call a "no duh" statement. Endless supply or not, if you sell an item for less than you acquired it you're losing money. I don't think this is what you intended to say though as I read the rest of your paragraph.
As a casual player you do not have any magical endless supply unless you find and exploit a hack, which renders your whole experiment pointless anyway. A single mid-level player can not supply the entire market for a high demand item himself, that is why professional farming firms exist.
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I wouldn't dream of using a hack. Neither does my biz partner. That part actually comes down to using character skills and using in game items to produce processed raw goods cheaper than anyone else. My friend just happend to figure out how to do it, as I'm sure many other farmers have. We just happen to do this as part of our jobs in real-life: figure out how to make our products as cheap as possible. This project does take a few days to set up, but the entry criteria is probably less than you think it is and it's possible for a low-level character to pull it off. My friend said that his level 27 alt just managed to take over the Deviant Fish market on another server. Can a single person hold it? It's difficult and people have come close to breaking us. I'm sure with an organized effort, it might be done, but that's still pretty good considering it's just you against a horde of others.

One other thing to consider; you need to know your market. If OMD above has 500 bars in the auction place, but only 25 bars are sold a day, you don't need 100 bars. You just need to make sure that those 25 bars sold are yours and not his. Tying up competitor's inventory is a great strategy.
In any MMO the ultimate scarce commodity is TIME. You cannot compete with Chinese farmers because they operate 24/7. Any advantage you discover will be duplicated and exploited all day and all night wiping out your supply-side advantage.
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No argument on time. For people working in shifts on a single character... yeah, you can't really compete with that on a time scale. Could they duplicate our supply-side advantage? Sure, and I'm positive that they figure that out a long time ago. My counter-point is that's only half of the equation. They want prices to be high as possible to maximize profit. We want prices as low as possible. I will always beat them on price. They'll break before I will. Why spend time on one server messing around with two guys doing an experiment when I could be making real money on a different server? That's what's happened so far. The farmers would rather lose that one server rather than waste time and money on it. They'll just redeploy to another box. Even if they don't leave, we're still having fun playing with their minds and they're all pissed off because of this time sink we've created.
Gongo said:
The problem still remains.. regardless of what your supply is, there is always more coming in. The unlimited supply chain is what is going to ruin this for you. No matter how many thorium bars you control, since the real goal are the arcane crystals, people will still farm thorium veins.
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Hey, great observation. Let me restate to make sure that I'm following you. Since people want arcane crystals, rather than buy bars from me, they'll just mine or obtain thorium ore and then make the bar themselves and go from there. Skip the middle man right?

Sure, that's plausible. But most people go for convienence. Why wait nine days to make and cool down your Thorium bars when you can just walk over and buy it from my friend for pennies on the dollar? (Or is that coppers on the gold?)

Excess supply will not necessarily ruin the entire thing, since the real goal is to cause a deflation. Just now, my buddy came over and he was talking about potions. He was saying that often potions will sell for less than the components that make up the potion. The reason being is that with all the alchemists making excess potions, there's a glut of 'em out there. The potions are being created because alchemists need to make them because of their profession, not because someone is necessarily trying to make a profit.. There will always be a demand potions, but the supply will always exceed it.

If there's a horde of ore out there, there's not a big concern. People will find that it's just easier to skip buying the ore and just buy the bar directly from us. Because (as far as I know) there isn't a reason to mine ore just to mine it other than trying to eventually profit from it, if we have the Thorium Bar market monopolized, we somewhat control the demand for ore (because we'll eventually be the number one buyers of ore) we indirectly control the price of ore. To explain it fully would probably require another post, but to sum up, an ore flood can be accounted for.

Lastly, let me comment on this:
mulpsmebeauty said:
While I'll freely accept that with time you could corner the market in a small number of things, there is no way you can in any way destroy the economy unless you can come up with some method of finding hundreds of bind on equip world drop epics and selling them for 10g a pop. All other methods need time and are unsustainable and would in any event be dealing with amounts of gold that are too low to have any effect.
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We were just talking about this. I think everyone would agree that BoE items would be extremely difficult or nigh impossible to monopolize. That being the case, does that mean the economy is therefore impossible to collapse? No, it's still possible, but something on such a grand scale would take the cooperation of a large guild.

NOTE: I do not advocate doing this. While possible, you'd certainly attract the wrath of Blizzard. You'd basically be creating a mafia group. You'd have a Don/Godfather type figure who basically is the money manager/federal reserve chairman or what have you. Once you have the guild in place and have control of the processed raw goods at all three auction houses (yes, you'll need both Allied and Horde members) you can move into the luxury goods market. Because of the volume you're pushing in the processed raw goods, you'll have enough money to have "loss leaders" in the luxury items. You can sell that BoE item at below cost because you make up for it in the other areas. This puts downward pricing pressure on the market. Eventually, a guild can control the economy buy hording currency and not spending it outside the guild.

By creating an economy within an economy, you've effectively made a place to take money out of circulation. If you're able to take it out of the game faster than the game can produce it, you've got major deflation. No one outside of your guild will have money to buy the luxury items. Since you have all the money, you can slowly (this would take months to pull off) bleed the server dry. High level characters still have a daily cost of living, with armor maintenance and what not. You'll affect them too.

You could transfer characters over to the server that have money, but you'll find that people will be leaving the server rather than stay and stick it out. Hey, people do it now when prices get to high on other servers. They leave, cause the demand to go down and those servers stabilize. If a guild controls everything, you can keep the deflation in place or you can cause hyperinflation. Since your guild now controls the entire server economy at this point, you can jack all the prices to an insane level. At this point, it doesn't matter if someone tries to undercut you. You'll have more money than God at this point. Maintenance alone will kill the server.

All that is a lot of extrapolation, but I'm thinking its still feasible. A lot of hot air at the moment. We'll see how Thorium goes and leave the pipe dreams to Marion Berry.
 
Boardin087 said:
sorry, your idea. doesn't work. AT ALL.
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It's worked so far with other goods. The proof is in the pudding right? I'll have my friend keep a diary and take screenshots of our efforts.

Also, just read my above post for a response to the inventory buy-out problem.
 
No offense, but if you haven't made it to 60 and raided quite a bit you have no idea how the game works, what there is a demand for, and why. If you knew more about the game you'd find it won't work that well.
 
This thread is fascinating. Kudos to you Torgo for sticking to your guns and explaining (quite rationally I might add) how exactly you are going about all of this. I look forward to hearing more about your thorium conquest.
 
A blog on your experiment would is an awesome idea for others interested in the economics side of World of Warcraft.

If you take that route, please share the link so I can bookmark it
 
i control the market by sheer volume and by inflating prices... hehe
(i learned from the best, the farmers)
 
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