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Arialla
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Posted - 2007.01.19 01:45:00 -
[1]
Hi,
Just to get a feel for manufacturing I decided to pick a product to manufacture and do a cost/profit analysis. I picked Bloodclaw Light Missiles and this is what I came up with.
BPO Cost 135,000.00
Materials (me, base) Tritanium 84, 68 Pyerite 53, 43 Mexallon 3, 2
Total price that I can sell the above materials for in my region: 771.54, 615.78
So with a 0% profit margin I have to sell 100 Bloodclaw Light Missiles for 771.54 (7.72 per missile)
Even with optimal mats I have to sell 100 Bloodclaw Light Missiles for 615.78 (6.16 per missile)
There are about 400,000 selling for less than 7.7 in my region and 1,000,000 selling for 8.00 or less.
Working with a 20% markup on the optimal materials I can sell for about 7.40 per missile. I have to sell around 100,000 missiles to pay for the BPO, that is 1000 manufacturing runs with a run time of 2min means a total time of 33h20m.
Install cost 1000.00 Hourly rate 2048.00 Total station cost for 34h = 69,632.00
I think it is safe to say I am better off selling the materials. It will take me around 2000 runs just to pay off my BPO using optimal materials.
Q1: How do I minimize material waste? I know I have to train Production Efficiency to 5 but there still is another wastage factor I don't fully understand.
Q2: What other production costs are involved or did I cover it all?
Q3: How can I reduce my manufacturing costs?
Any help appreciated,
Arialla
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GC13
Caldari Derelik Trading Company
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Posted - 2007.01.19 01:54:00 -
[2]
Your first and third questions are related, and for your second question: you are not missing anything.
Other than researching your BPO's material level and getting your Production Efficiency skill up, you cannot do anything to reduce your costs. Realize though that especially with ammunition, you are not competing with prices across the entire region; rather, you are mostly competing with other sellers within three jumps at most.
The logic of the above statement being that people do not enjoy flying all over the place to save a buck or two, and would rather pay a small premium for convenience. Try it, and you'll find that you don't need to be the cheapest in your region if you're the cheapest in your area.
--
Science and Industry guide plus A Newbie's Guide to Caldari Ships Eve and RPG blog |
Arialla
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Posted - 2007.01.19 02:22:00 -
[3]
Edited by: Arialla on 19/01/2007 02:19:17 Thanks for the reply GC13!
I think I will make a trial account and train Production Efficiency to 4 (about 4-5 days) and give manufacturing a shot. While it is training I can research a BPO and be ready to start manufacturing when my training completes.
2nd account here I come :)
EDIT: Nice guide!
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MorbidPenguin
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Posted - 2007.01.19 03:25:00 -
[4]
You really should download the program EVEMEEP and give it a try - import your XML and it will tell you how many minerals it will take for a blueprint, give you mineral prices according to the Matari Mineral Index, and also tell you how many runs you'll have to make before you see a profit. Great program. It's somewhere on this forum. Do a google search and it should be in the first few results.
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Lynak Nathonson
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Posted - 2007.01.19 11:41:00 -
[5]
Apart from Production Efficiency (ideally at 5) you can help improve your returns by reducing the Brokers Fees and Sales tax using Broker Relations and Accountancy.
Also check the hourly rate on the factory you are using. They differ.
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Arialla
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Posted - 2007.01.19 11:43:00 -
[6]
More good advice :) Thanks everyone!
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altambra
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Posted - 2007.01.19 12:11:00 -
[7]
Originally by: Arialla
There are about 400,000 selling for less than 7.7 in my region and 1,000,000 selling for 8.00 or less.
This is your problem. Look for something else that isn't so well supplied, but there is actual demand for. This may be hard to determine - haul some in from a trade hub and sell at a 5-10% markup to determine demand before investing in BPOs.
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Imaldris
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Posted - 2007.01.19 14:39:00 -
[8]
It will take you a long time to research your bpo. Lab slots are alway full with a long wait list.
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Gadfly Hawke
G-Tek Confederation of Independent Corporations
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Posted - 2007.01.19 15:42:00 -
[9]
It isn't always worthwhile to research a BPO. Frequently, the minerals saved don't justify the research expense and especially don't justify the time and hassle. Unless research will significantly reduce the more expensive minerals it's better, in my opinion, to just skip it, unless you're planning to copy the BPO and sell the BPCs. I think this is especially true of the small ammos and smaller modules, which frequently don't use significant amounts of the more expensive minerals.
G-Tek is recruiting |
Arialla
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Posted - 2007.01.21 20:59:00 -
[10]
Thanks everybody.
I ran into the research slot problem...was looking for a research slot and the earliest I could find in 2 Regions was a 16 day wait that cost 4k+ per hour.
Hauling some of the product and selling it just to gauge the market seems like a really good idea. I might give that a shot.
Getting setup for manufacturing seems like it is going to take a long time.
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Kesh McCall
Caldari Malkalen Enterprises
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Posted - 2007.01.21 21:29:00 -
[11]
Take the following things into consideration 1. Your Production-Skills 2. Your Trade- Skills 3. Your Faction Standing towards the Station owner 4. The Material ( Waste ) and Production Efficence on the BPO ( Time ) 5. Your Mineral Prices
In the end its safe to say, that waht ever you do, you wont make a huge profit with that BPO or any other T1 BPO as long as you dont have a really large supply of extremly cheap Minerals along with alot of Money to produce HUGE amounts of thoose. To own such BPO's is more the benefit of beeing independant from everyone else. Unless of course you have a steady and needy customer's base like if youre the only producer in your close to mid distance region.
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Kua Burrow
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Posted - 2007.01.21 21:34:00 -
[12]
I haven't look into manufacturing much, but many have said it isn't so profitable. It seems you're encountering the same problem. Does it always take a long time to get a return on your investment? Or are there some items out there that really do pay off? Perhaps BPCs see a quicker return(?) Presumably if you have to wait so long to make a profit on a BPO, when you do the profits are huge.
Well I don't want to ignore this section of the game. But nothing I've heard so far has attracted me to it.
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Kesh McCall
Caldari Malkalen Enterprises
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Posted - 2007.01.21 21:53:00 -
[13]
Originally by: Kua Burrow Edited by: Kua Burrow on 21/01/2007 21:34:29 I haven't look into manufacturing much, but many have said it isn't so profitable. It seems you're encountering the same problem. Does it always take a long time to get a return on your investment? Or are there some items out there that really do pay off? Perhaps BPCs see a quicker return(?) Presumably if you have to wait so long to make a profit on a BPO, when you do the profits are huge.
Well I don't want to ignore this section of the game. But nothing I've heard so far has attracted me to it.
Well perhaps an out and out industrialist could describe it's appeal to me.
That allways really depends on my above mentioned points. And of course your customers. For example: You have a really loaded Missionrunner Hub with a few LV 3 and LV 4 Agents. You can probably make some nice Profit there with selling Heavy Missles, Cruise Missles, Torpedos and maybe even other Ammo. The point is to offer large amounts to a considerable price. I for myself never buy below 25k of what ever Ammotype and i hate it to get into my hauler and jump around to gather all thoose. So i usaly pay a little bit more but have them right into my Hangar. Alot of Mission runners do the same. So here is the first step to gain a little Profit. The next logic step is to make some serious math about items and their true mineral worth, then setup buy orders for thoose on the very same station. buy large amounts of thoose, recycle em back into materials and build ammo again. After some time its getting routine and a steady income is like granted.
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AvatarADV
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Posted - 2007.01.21 22:55:00 -
[14]
So the real trick to manufacturing profit isn't to beat out the best price in the wider market, but to form a local niche - find a point demand, fill it at slightly above-market prices, and try to obtain your minerals at below-market to widen your margin. Neat!
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Arialla
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Posted - 2007.01.22 02:40:00 -
[15]
Originally by: Kesh McCall The next logic step is to make some serious math about items and their true mineral worth, then setup buy orders for thoose on the very same station. buy large amounts of thoose, recycle em back into materials and build ammo again. After some time its getting routine and a steady income is like granted.
This seems like a good way to pick up some really cheap minerals.
I've been playing around with MEEP and it looks like it will be quite useful. 1. Re-processing information so you can plan what to place buy orders for and how many. 2. Market data import so you can analyze the kind of mineral buy orders you can expect a return on. 3. Manufacturing profit/cost analysis.
If you get mineral market details in a region and dump it into MEEP and load up your BPO for manufacturing you can quickly get a feel for how much money you can make. Just set your BPO cost to 0 and amount to manufacture to 1. Then plug in a sell price that undercuts the market slightly and you have your profit per item.
You need to put a lot of planning in though. So far I am asking the following questions:
- How cheaply can I buy/courier the required minerals?
- How cheaply can I buy items to re-process?
- Cheapest manufacturing facility charges?
- BPO cost
- Product sell price
- Profit margin
- How many sales for a profit on my total investment?
- Startup capital required
I see a lot of analysis and searching in my future. Building an industrial power house from the ground up is going to be a long and hard road. Especially breaking into the cut-throat over supplied Tech 1 market when you are under skilled and under funded.
But I will soon be bringing you products at great prices, even if it means cutting me own throat, as my mentor used to say.
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zibelthurdos
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Posted - 2007.01.22 07:14:00 -
[16]
are you mining the minerals yourself? if so your cost per unit on those missiles is 0.69632 per unit. so anything above this is cake.
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Arialla
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Posted - 2007.01.22 20:59:00 -
[17]
Originally by: zibelthurdos are you mining the minerals yourself? if so your cost per unit on those missiles is 0.69632 per unit. so anything above this is cake.
This is not quite true. You have to weigh up the total amount you can sell all your minerals for against the profit you can make from manufacturing.
If you can sell the minerals for more than you can sell your manufactured product minus expenses, then why bother manufacturing?
It is best to keep the two separate. Your time spent mining should be used to try and maximize your income from mining. Are you going to be mining Tritanium?
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