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Scialt
Universal Sanitation Corporation
15
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Posted - 2017.02.21 21:20:12 -
[121] - Quote
Salvos Rhoska wrote:
A) Yes, if you manufacture a product that is worth less than the value of its constituent minerals, that is a real loss.
B) Nobody is stating that self sourced minerals should be considered as having 0 value
C) But they are nonetheless free to someone that has acquired them without cost. They gain that asset (and hence its market value), for free, without cost.
The MINING operation gets that value. Not the manufacturing.
If you mine 100 million isk worth of minerals, you made 100 million mining.
If you then make a ship and sell it for 90 million isk using those materials, you lost 10 million manufacturing.
Those minerals have value... and using those minerals instead of selling them incurs a cost to your manufacturing operation.
We call that an "opportunity cost".
See how it works?
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Salvos Rhoska
2254
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Posted - 2017.02.21 21:21:09 -
[122] - Quote
Cade Windstalker wrote:You lose out on the 10m you could have made..
You never made it, hence you never lost it.
Again, you are applying the concept of opportunity cost retrospectively and backwards, whereas it is part of the assessment process in making a choice between opportunities beforehand, not after.
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Jeremiah Saken
The Fall of Leviathan
657
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Posted - 2017.02.21 21:33:35 -
[123] - Quote
I really hope Salvos don't manufacture anything. The minerals he mines are free to him.
"I am tormented with an everlasting itch for things remote. I love to sail forbidden seas..." - Herman Melville
If you need a scout mail me.
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Salvos Rhoska
2254
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Posted - 2017.02.21 21:40:52 -
[124] - Quote
Scialt wrote:Salvos Rhoska wrote:
A) Yes, if you manufacture a product that is worth less than the value of its constituent minerals, that is a real loss.
B) Nobody is stating that self sourced minerals should be considered as having 0 value
C) But they are nonetheless free to someone that has acquired them without cost. They gain that asset (and hence its market value), for free, without cost.
The MINING operation gets that value. Not the manufacturing. If you mine 100 million isk worth of minerals, you made 100 million mining. If you then make a ship and sell it for 90 million isk using those materials, you lost 10 million manufacturing. Those minerals have value... and using those minerals instead of selling them incurs a cost to your manufacturing operation. We call that an "opportunity cost". See how it works?
I specifically answered these already in the very post you quoted.
1) In an extended chain, from sourcing internally to manufacturing internally, if the materials are sourced without cost, that is carried forward in the margins. If I give you a stack of minerals, your margins increase according to the value of the materials I gave you.
2) Nobody has stated those minerals do not have value, only that acquiring them does not incur cost, if done yourself. The minerals have market value, but they cost NOTHING to you, if sourced yourself, rather than purchasing them at market value.
3) I specifically said in a previous post, that if you attempt manufacture of a product of which the market value is below that of its constituent minerals, you are taking a net loss. That is just stupid, unless in extremis and you really need a product otherwise unavailable.
4) You are confusing the cost of acquiring something, with its market value. They are not directly congruous. If Im walking along a stream, and glimpse a gold nugget, and pick it up, that nugget has real market value, but my cost of acquiring it, was zero. It was free for me, but is not free to the market into which I introduce it.
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Cade Windstalker
852
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Posted - 2017.02.21 21:42:03 -
[125] - Quote
Salvos Rhoska wrote:Cade Windstalker wrote:You lose out on the 10m you could have made.. You never made it, hence you never lost it. Again, you are applying the concept of opportunity cost retrospectively and backwards, whereas it is part of the assessment process in making a choice between opportunities beforehand, not after.
Yes, you did, you had 100m in value in the form of a commodity. You then used it to make something worth 90m. Net change in value owned, -10m. |
Salvos Rhoska
2254
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Posted - 2017.02.21 21:42:59 -
[126] - Quote
Jeremiah Saken wrote:I really hope Salvos don't manufacture anything. The minerals he mines are free to him.
Free to me, but not to you.
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Jeremiah Saken
The Fall of Leviathan
657
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Posted - 2017.02.21 21:50:51 -
[127] - Quote
Salvos Rhoska wrote:Jeremiah Saken wrote:I really hope Salvos don't manufacture anything. The minerals he mines are free to him. Free to me, but not to you. Only if you sell them directly, if you use them to manufacture they not. Some items are even better to sell than use to manufacture.
"I am tormented with an everlasting itch for things remote. I love to sail forbidden seas..." - Herman Melville
If you need a scout mail me.
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Salvos Rhoska
2254
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Posted - 2017.02.21 21:57:04 -
[128] - Quote
Cade Windstalker wrote:Salvos Rhoska wrote:Cade Windstalker wrote:You lose out on the 10m you could have made.. You never made it, hence you never lost it. Again, you are applying the concept of opportunity cost retrospectively and backwards, whereas it is part of the assessment process in making a choice between opportunities beforehand, not after. Yes, you did, you had 100m in value in the form of a commodity. You then used it to make something worth 90m. Net change in value owned, -10m.
You only "lost" it compared to another choice that you did not make, and which hence never became real.
This speaks to the fact what the concept of opportunity cost is, as part of the assessment process BEFORE making a choice.
Not retrospectively, as you apply it. Its a tool, a calculation, of cost, not an actual cost, despite its name.
The irony here, is that I have been accused of unduly focusing on the "cost" part of opportunity cost, whereas its you that does so, as the "cost" of an opportunity you chose NOT to pursue.
If you chose the course of using 100mil in value to manufacture a product worth 90m, that is your own stupid choice. You then clearly failed the opportunity cost analysis beforehand, in that you choose that.
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Jeremiah Saken
The Fall of Leviathan
657
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Posted - 2017.02.21 22:00:05 -
[129] - Quote
What is the difference in value between minerals mined by me and buyed by me on market?
"I am tormented with an everlasting itch for things remote. I love to sail forbidden seas..." - Herman Melville
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Salvos Rhoska
2254
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Posted - 2017.02.21 22:01:16 -
[130] - Quote
Jeremiah Saken wrote:Salvos Rhoska wrote:Jeremiah Saken wrote:I really hope Salvos don't manufacture anything. The minerals he mines are free to him. Free to me, but not to you. Only if you sell them directly, if you use them to manufacture they not. Some items are even better to sell than use to manufacture.
Of course.
I addressed this earlier.
If the material value exceeds the value of the end product, it would be folly to produce that, unless you intend to sell it later if you expect the market to adjust favorably.
But when someone mines their own materials, they are free. That does not mean the materials do not have value. It means they are free in that their acquisition incurred no cost.
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Salvos Rhoska
2254
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Posted - 2017.02.21 22:02:05 -
[131] - Quote
Jeremiah Saken wrote:What is the difference in value between minerals mined by me and buyed by me on market?
You have to pay isk for the materials from the market.
You dont have to pay isk for the materials you mined yourself.
That the materials you mined yourself have the same exact value as those on the market, is not relevant. Those materials on the market are ones you dont have. The ones you mined yourself, you do, at no cost.
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Jeremiah Saken
The Fall of Leviathan
657
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Posted - 2017.02.21 22:08:54 -
[132] - Quote
Salvos Rhoska wrote:Jeremiah Saken wrote:What is the difference in value between minerals mined by me and buyed by me on market? You have to pay isk for the materials from the market. You dont have to pay isk for the materials you mined yourself. That the materials you mined yourself have the same exact value as those on the market, is not relevant. Those materials on the market are ones you dont have. The ones you mined yourself, you do, at no cost.
The TAX.
It doesn't matter if you have 10 mil and spend it on materials or mine 10 mil worth of materials because those materials (value of them), not matter how acquired, will go into manufacturing job.
"I am tormented with an everlasting itch for things remote. I love to sail forbidden seas..." - Herman Melville
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Max Deveron
Deveron Shipyards and Technology
280
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Posted - 2017.02.21 22:24:56 -
[133] - Quote
Scialt wrote:Salvos Rhoska wrote:
A) Yes, if you manufacture a product that is worth less than the value of its constituent minerals, that is a real loss.
B) Nobody is stating that self sourced minerals should be considered as having 0 value
C) But they are nonetheless free to someone that has acquired them without cost. They gain that asset (and hence its market value), for free, without cost.
The MINING operation gets that value. Not the manufacturing. If you mine 100 million isk worth of minerals, you made 100 million mining. If you then make a ship and sell it for 90 million isk using those materials, you lost 10 million manufacturing. Those minerals have value... and using those minerals instead of selling them incurs a cost to your manufacturing operation. We call that an "opportunity cost". See how it works?
It does not work that way in EvE, 100 million in minerals mined divided by the 17.2 i said earlier = a multiplier of 5.814
so that 100 million in minerals = 581.4 Million ISK manufacturing; because resources in EvE are never ending, RL comparisons can be a thing for experience sakes but that is where the line stops. Past that point RL comparisons have nothing to do with EvE because they do not match the actual in game play experience.
And because of that, the mainstream idea of what oppurtunity cost means is actually different in EvE.....simply because at basic level...everything is worth more at some point than its current value from when you acquired it, ie Drone AI. |
Salvos Rhoska
2254
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Posted - 2017.02.21 22:30:05 -
[134] - Quote
Jeremiah Saken wrote:Salvos Rhoska wrote:Jeremiah Saken wrote:What is the difference in value between minerals mined by me and buyed by me on market? You have to pay isk for the materials from the market. You dont have to pay isk for the materials you mined yourself. That the materials you mined yourself have the same exact value as those on the market, is not relevant. Those materials on the market are ones you dont have. The ones you mined yourself, you do, at no cost. The TAX. It doesn't matter if you have 10 mil and spend it on materials or mine 10 mil worth of materials because those materials (value of them), not matter how acquired, will go into manufacturing job.
1) Tax is a good point.
You will always incur additional costs, beyond the value of the minerals you mine yourself, when you acquire them from the market, due to fees.
This further confirms that minerals acquired yourself are not only free, but also cheaper than those bought from the market, as they incur no fees.
2) Manufacturing process dont care about the cost of a material. Manufacturing process only care that you input sufficient quantities of the required materials.Its up to you how you make that profitable.
3) The value of materials is market based. The value of manufactured products is also market based. Both are also interlinked and in flux between supply/demand of both.
4) The value of materials and products is in constant flux on the market.. But if you source your materials yourself, you are inured against that, because you already own them. You can leverage your stockpiled, self-earned, FREE materials, without cost, when the market suits you. Whilst others scramble to fulfill their own requirements subject to the whims of the market.
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Jeremiah Saken
The Fall of Leviathan
657
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Posted - 2017.02.21 22:43:22 -
[135] - Quote
Salvos Rhoska wrote:4) The value of materials and products is in constant flux on the market.. But if you source your materials yourself, you are inured against that, because you already own them. You can leverage your stockpiled, self-earned, FREE materials, without cost, when the market suits you. Whilst others scramble to fulfill their own requirements subject to the whims of the market. So you telling me the minerals that your mine have 0 value because they are free and you can adjust your profit margin by their cost? I wish you good luck Salvos with your manufacturing carrer.
If you didn't understand my previous post I have no idea how to explain so simple thing with my imperfect english.
"I am tormented with an everlasting itch for things remote. I love to sail forbidden seas..." - Herman Melville
If you need a scout mail me.
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Salvos Rhoska
2254
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Posted - 2017.02.21 22:50:55 -
[136] - Quote
Jeremiah Saken wrote:Salvos Rhoska wrote:4) The value of materials and products is in constant flux on the market.. But if you source your materials yourself, you are inured against that, because you already own them. You can leverage your stockpiled, self-earned, FREE materials, without cost, when the market suits you. Whilst others scramble to fulfill their own requirements subject to the whims of the market. So you telling me the minerals that your mine have 0 value because they are free and you can adjust your profit margin by their cost? I wish you good luck Salvos with your manufacturing carrer. If you didn't understand my previous post I have no idea how to explain so simple thing with my imperfect english.
It is you that is misunderstanding me.
I have repeated said that the minerals have value (on the market), but that their cost of acquisition if done yourself is zero, ergo:free.
You are confusing the cost of acquiring the mineral, with its value. They are not the same. If you mine them yourself, it costs you nothing, and you own them. If you buy them off the market inorder to own them, it costs you isk+fees and it may not be at the best possible moment.
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Jeremiah Saken
The Fall of Leviathan
657
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Posted - 2017.02.21 23:00:00 -
[137] - Quote
Salvos Rhoska wrote:I have repeatedly said that the minerals have value (on the market), but that their cost of acquisition if done yourself is zero, ergo:free. If you by "free" mean that mined minerals is free of tax then yes.
"I am tormented with an everlasting itch for things remote. I love to sail forbidden seas..." - Herman Melville
If you need a scout mail me.
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Salvos Rhoska
2254
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Posted - 2017.02.21 23:04:03 -
[138] - Quote
Jeremiah Saken wrote:Salvos Rhoska wrote:I have repeatedly said that the minerals have value (on the market), but that their cost of acquisition if done yourself is zero, ergo:free. If you by "free" mean that mined minerals is free of tax then yes.
Free of tax and free of cost.
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Marcus Binchiette
Federal Vanguard
85
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Posted - 2017.02.21 23:05:00 -
[139] - Quote
mkint wrote:How does someone who wants to be a producer, especially at such a high level of production, completely fail to understand production? I'm getting the feeling this is a SI toon PLEXing a rorq. And a FOTM chaser on top of it. There's no other way any of this makes sense.
What I like most is that there are no arguments for why the prices of these drones need to be cheaper except "I wannit, waaah!" No analysis of the history of the mineral basket or producer price indices. No logical appeal to empathy or emotion. Not even a basic understanding of production costs and markups. No understanding of how supply and demand work, no suggestions for a real, effective price adjustment. Just a tantrum.
... and yet here we are. Four pages later. Still discussing it. |
Neuntausend
GoonWaffe Goonswarm Federation
1585
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Posted - 2017.02.21 23:16:32 -
[140] - Quote
Salvos Rhoska wrote:I have repeatedly said that the minerals have value (on the market), but that their cost of acquisition if done yourself is zero, ergo:free. No, it is not. If the time and resources spent to acquire the ore were actually without value, there would not be the slightest reason for the ore to have any market value at all. If it actually was free, everyone could just grab all the ore they want. Nobody would ever need to buy ore, because they could just get it for free.
But they can't get it for free, which is why they are willing to pay money for it.
Just imagine the following situation: In front of your local grocery store there's a stand where they hand out samples of a new soda pop for free. Next to that stand there's a guy who takes those samples and tries to sell them for a dollar each. Do you think he will sell any? He won't. Because they are actually free, and there's no reason to pay money for them. |
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Jeremiah Saken
The Fall of Leviathan
657
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Posted - 2017.02.21 23:21:28 -
[141] - Quote
Salvos Rhoska wrote:Salvos Rhoska wrote:I have repeatedly said that the minerals have value (on the market), but that their cost of acquisition if done yourself is zero, ergo:free. Jeremiah Saken wrote:If you by "free" mean that mined minerals is free of tax then yes. Free of tax and free of cost. Ok, If your minerals are free, can you mine them and build a raven with them? Then sell it to me for 30 mil?
"I am tormented with an everlasting itch for things remote. I love to sail forbidden seas..." - Herman Melville
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Zakks
Caldari Provisions Caldari State
102
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Posted - 2017.02.22 00:10:35 -
[142] - Quote
Neuntausend wrote:Salvos Rhoska wrote:I have repeatedly said that the minerals have value (on the market), but that their cost of acquisition if done yourself is zero, ergo:free. No, it is not. If the time and resources spent to acquire the ore were actually without value, there would not be the slightest reason for the ore to have any market value at all. If it actually was free, everyone could just grab all the ore they want. Nobody would ever need to buy ore, because they could just get it for free. But they can't get it for free, which is why they are willing to pay money for it. Just imagine the following situation: In front of your local grocery store there's a stand where they hand out samples of a new soda pop for free. Next to that stand there's a guy who takes those samples and tries to sell them for a dollar each. Do you think he will sell any? He won't. Because they are actually free, and there's no reason to pay money for them.
The guy with the free pop doesn't even need to go to the grocery store
Nobody has yet addressed the logistical moving of materials to/from market. That is opportunity cost right there. |
Atomic Virulent
Dark Matter Industrial
183
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Posted - 2017.02.22 00:29:27 -
[143] - Quote
Dark Lord Trump wrote:How exactly is confiscating blueprints going to help? All that's going to do is leave a massive black mark on CCP's record, and increase the price further as blueprints leave circulation.
BWAHAHAHAAAA! CCP and blackmarks involving blueprints. THAT has NEVER happened before.... |
Atomic Virulent
Dark Matter Industrial
183
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Posted - 2017.02.22 00:32:50 -
[144] - Quote
Don't be silly. The market is not nearly as player driven as the lie they propogate. If the market were as legitimate as some would have us all believe then there wouldn't be so many modules/items (T2 for example) that are less expensive than the sum of the parts to produce them.. much less the skills/infrastructure involved in producing them.
It's almost like CCP has an agenda to catalyze mass purchases of PLEX to trade in-game for ISK. CCP would NEVER do anything that sketchy... |
Tau Cabalander
Retirement Retreat Working Stiffs
6684
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Posted - 2017.02.22 01:51:53 -
[145] - Quote
Jeremiah Saken wrote:What is the difference in value between minerals mined by me and buyed by me on market? None.
If you mine minerals that sell for 10m, or buy minerals for 10m, or steal minerals that sell for 10m, you have 10m of minerals.
Even if you personally for whatever pants-on-head reason don't value the minerals, that still doesn't make them without a market value.
What it costs you to harvest minerals:
* Skill training time * Equipment costs: purchase of mining ship and fittings (possibly also including insurance, repairs, crystal & drone replacement) * Time to mine (including travel time) * Time to reprocess (time to haul ore to refinery) * Reprocessing tax
The last three being a recurring cost, and the ones most commonly referred to. Your time investment being the majority. Time is ISK.
The instant the ore is harvested, it has value. There is nothing you can do to change that. |
Neuntausend
GoonWaffe Goonswarm Federation
1585
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Posted - 2017.02.22 01:58:44 -
[146] - Quote
Zakks wrote:Nobody has yet addressed the logistical moving of materials to/from market. That is opportunity cost right there. That is very true, like the issue with the market fees and tax. However, like those fees, transport fees are very, very low. Just put up a courier contract with peanuts for a reward, and somebody will take it - the space truckers seem to be quite desperate.
Just all those little fees don't make the bulk of the mineral price. Most of it comes from the fact that miners need a reward for the time they invested in mining them, otherwise there would not be a reason for them to do it. |
Economo 3000
Ingress Resistance
0
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Posted - 2017.02.22 02:03:27 -
[147] - Quote
Atomic Virulent wrote:Don't be silly. The market is not nearly as player driven as the lie they propogate. If the market were as legitimate as some would have us all believe then there wouldn't be so many modules/items (T2 for example) that are less expensive than the sum of the parts to produce them.. much less the skills/infrastructure involved in producing them.
It's almost like CCP has an agenda to catalyze mass purchases of PLEX to trade in-game for ISK. CCP would NEVER do anything that sketchy...
You're trying too hard to make an apples to apples comparison.
What you need to do is consider EVE PLAYERS' time preference, value scales, and the significance to them of judgment errors when making a sale/purchase... not try to transfer the way they feel about those things in the real world concerning the real market directly into Eve's market.
Players of a game are going to tend to have value scales prioritizing whatever they think is fun much more highly than what they think is necessary, are going to tend to have a stronger time preference (they don't usually want to have fun next year... they want to have fun now), and are going to be less willing to put a lot of effort into making market decisions so as to reduce their error.
Those differences between the real world and New Eden go a long, long ways to explaining some of the seemingly-dumb **** you see on the market in game. |
Bjorn Tyrson
EVE University Ivy League
217
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Posted - 2017.02.22 02:18:11 -
[148] - Quote
Atomic Virulent wrote:Don't be silly. The market is not nearly as player driven as the lie they propogate. If the market were as legitimate as some would have us all believe then there wouldn't be so many modules/items (T2 for example) that are less expensive than the sum of the parts to produce them.. much less the skills/infrastructure involved in producing them.
It's almost like CCP has an agenda to catalyze mass purchases of PLEX to trade in-game for ISK. CCP would NEVER do anything that sketchy...
That is player driven actually. With multiple causes.
1) looting. Not every module t2 of otherwise is being sold as a direct result of manufacturing. Someone pops someone else. and loots them. They are more likely to go for a quick sell them bother figuring out the exact material cost... after all the only thing they spent on it was their ammo.
2) "if I mine it then it's free" you might be surprised at exactly how common and widespread this belief is. And not only with newbie industrialists. And since they didn't "spend anything" on the materials they price it however the hell they want. Regardless of the value of those minerals.
3) from your complaints it sounds like you are a HS industrialist. And yes. Having spent almost 5 years doing HS industry it can be very hard to compete. Especially solo. Those infrastructure costs you mentioned. Well the benefits for having that infrastructure only increase as you move out towards nul. Not only are the bonuses to material costs improved. But the secondary benefits of having a pos or citadel become more important. And thus more valuable. |
Neuntausend
GoonWaffe Goonswarm Federation
1585
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Posted - 2017.02.22 02:18:37 -
[149] - Quote
The reason why there are so many modules being sold on the market for less than the sum of their parts is not that the market is secretly being manipulated by CCP, but the lack of basic business sense in some of the players. There are many idiots (for lack of a euphemism) that do not value the time spent mining their own ore and consider ore mined "free". The last few pages of this thread prove that they exist, and this topic comes up surprisingly frequently. And as you can also see in this thread, it's next to impossible to teach them the value of their own time and effort. And as long as they are around, you will see this phenomenon on the market.
Then there's the "undercutting game". All that is needed to drive prices down in some cases is one manufacturer who sells below cost price, and people who just happen to have a couple of those modules lying around, maybe they looted them from a battlefield or found them while cleaning out their hangars will start undercutting each other to sell their **** quickly. They don't know what went into making them or what they are actually worth - they just look at the market, and try selling for less than what the lowest seller is asking. |
mkint
1491
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Posted - 2017.02.22 03:02:16 -
[150] - Quote
Neuntausend wrote: Then there's the "undercutting game".
I did this on accident once. I was a rookie and really really dumb. I was hanging out in Amarr space near a storyline agent that wanted raw Kernite. It was going for around 600 isk per unit making it better than most nullsec ores at the time. Me being dumb, I undercut by too much and, on my own, knocked 1/3 of the value off it for everyone else before I realized what I was doing. Don't be like me. Either be patient or be willing to play the .01 isk game.
Maxim 6. If violence wasnGÇÖt your last resort, you failed to resort to enough of it.
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