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Peci
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Posted - 2007.11.12 12:53:00 -
[1]
Hi everyone!
First I want to salute the whole EVE community as this is my first post and I'm a new player (4 weeks or so, including trial period)in this game, and I'm totally addicted
I absolutely fell in love with the economic system of this game, as it is what I study and work with in real life. This post's purpose is to help myself releave the pressure and frustration and hopefully open some discussion about the topic.
The end of small talk.
I'm a local trader in the Jita system feeding some profitable market niches from the nearby regions. I noticed a profit opportunity in a certain weapon projectile - just 1 other seller who had set his price double the regional price (about 150% profit) and I followed his/her example.
During the peak hours I got 21mil profit in one hour with just one Badger I cargofull of products and that was just about 10-20% of daily regional market turnover. I quickly bought another load and put it on sale.
Then the unthinkable happened.
Someone else put the same item on sale almost on half the price -> profit dropped from 150% to 20%. And there were absolutely no other competitor than myself and the volume he sold was exactly the same as mine. I would have bought him out but I didn't have the cash at the moment.
Now I'm asking _why_? Jita is a kind of system people buy stuff with almost any price - as long as it is sold there. Jita is there for comfort (if you forget the lag I would have remotely understood if he had a massive volume to sell and having a great percentage of his capital in it, but I wouln't still stop him to get the best profit for the whole load.
This kind of price inflating is not good for the consumer but it really helps to make a lot of profit. It isn't even market manipulation, just supply and demand.
So then I repeat the topic: do some players trade for charity?
Please, enlight me
Peci, a trader from Finland
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Jhanis Khamir
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Posted - 2007.11.12 13:01:00 -
[2]
This question often appears, and there are probably several answers to this.
Perhaps the person isn't just aware of the profits he's missing out of, he doesn't know the buy power of the consumers in that area, and thus think that he needs to put the price down to make things get sold. Obviously, he's wrong. But probably he's still trading for profit.
To me personally, I want my stock turnover to be as high as possible to keep the isk liquid, and thus I prefer selling high quantities with less profit, sometimes next to none - because if it isn't possible to make it turn over fast enough, I just want my cash back on my investment and make a note that this product doesn't fit my style, and invest into something else
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Fabricati Diem
Burleigh and Strong
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Posted - 2007.11.12 13:14:00 -
[3]
Suppose you had a nice, profitable market niche to yourself. You were the only trader, and you've had it long enough to build up a nice wallet off it.
Now someone new comes in and undercuts you by a little bit. You aren't interested in competing with them little by little, or really at all. You just want them gone.
How would you get rid of them?
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Jennai
Aliastra
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Posted - 2007.11.12 13:32:00 -
[4]
Originally by: Fabricati Diem Suppose you had a nice, profitable market niche to yourself. You were the only trader, and you've had it long enough to build up a nice wallet off it.
Now someone new comes in and undercuts you by a little bit. You aren't interested in competing with them little by little, or really at all. You just want them gone.
How would you get rid of them?
if I had enough time on my hands, I would play the 0.01 isk game until he goes away. massive undercutting might make him go away immediately, but there's also the chance that he'll stay in, and then someone else comes along and undercuts even more.
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Peci
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Posted - 2007.11.12 13:43:00 -
[5]
Edited by: Peci on 12/11/2007 13:45:40 I would have been totally pleased to play the -0.01 game with him, as long as the prices would have been high enough. We both would have profited.
I thought that I would contact him and suggest this, but on the other hand this could have provocated him to do even more damage to the market profits.
Now I'm trying to decide whether to lower my prices to free the ISK or to wait/buy him out. Buying him out has the risk of him getting too excited of the market and bringing more low-price stuff.
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Ambo
2nd Outcasters
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Posted - 2007.11.12 14:25:00 -
[6]
I have also encountered plenty of 'irrational' traders. Shardale will argue this till the sun falls out of the sky but the simple fact is that, in my experience, small increments give you much better profits in the long term. I've tried it both ways on tons of different items and the result is always the same.
Even though I'll only update my orders 2-3 time a day at most, I still get better profits from small increments than trying to push other players out completely with the massive price changes.
However, there have been times when I've sold items at much lower profit or even a slight loss just because I want rid of the quickly. You also have the situation where people selling loot from missions. A lot of people consider this to be '100% profit' so will happily sell for almost any price.
It's mildly annoying but rarely makes any lasting impact. Even if it does, as long as you diversify well, it should never be a major concern.
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Robacz
Essence Trade Essence Enterprises
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Posted - 2007.11.12 14:42:00 -
[7]
Edited by: Robacz on 12/11/2007 14:42:06
Originally by: Peci Someone else put the same item on sale almost on half the price -> profit dropped from 150% to 20%. And there were absolutely no other competitor than myself and the volume he sold was exactly the same as mine. I would have bought him out but I didn't have the cash at the moment.
Now I'm asking _why_?
He just wanted to sell quick without playing undercutting games. Sometimes it works (I guess it worked in your case and you waited till he sold his stuff?), sometimes it doesn't (and only effect is ruined price as other traders undercut).
Either trader in rush, lazy trader, or not trader at all.
There is a lot of items which would sell at same quantity for a lot higher price if all sellers were willing to play 0.01 undercutting.
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Peci
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Posted - 2007.11.12 16:10:00 -
[8]
Originally by: Robacz Edited by: Robacz on 12/11/2007 14:42:06
Originally by: Peci Someone else put the same item on sale almost on half the price -> profit dropped from 150% to 20%. And there were absolutely no other competitor than myself and the volume he sold was exactly the same as mine. I would have bought him out but I didn't have the cash at the moment.
Now I'm asking _why_?
He just wanted to sell quick without playing undercutting games. Sometimes it works (I guess it worked in your case and you waited till he sold his stuff?), sometimes it doesn't (and only effect is ruined price as other traders undercut).
Yes it did work on me. On the other hand Jita is so crowded that these kind of super-profits don't last long anyway and the demand is answered really quick. Now there are several competitors with the cut prices who would have profited so much more without this one social benefitter
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Shadarle
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Posted - 2007.11.12 16:12:00 -
[9]
Threads like this pop up quite a bit, though not so much in the last month or two, and the majority of people always respond in the same way. People always agree that there are a lot of stupid/lazy people out there.
There are any number of reasons he would do what he did. I personally have done similar things, undercutting someone by a large margin who has a massively inflated price. I don't have time for my items to sit on the market, especially for relatively low income items (anything under 5-10 million per). If I can make 10 million in one day selling off a load of stuff or 15 million in 3 days, I'd take 10 million in 1. I'll leave the .01 wars to you, I don't have the time or inclination to engage in them.
Sending the person a message about it is likely to be the stupidest thing you could do. I've received quite a few messages from people complaining about the way I do business. I love getting them, especially when they go on to tel me I'll never become a rich trader doing stuff like that. Nothing makes me want to destroy a market more than getting a message asking me to stop killing a market with my "stupid" trading methods.
If the price was truly too low for the supply/demand curve then you should buy it out. If you do not have the money to buy it out then you're likely on a different trading level than the person placing the order is. The bigger a trader you become the more you sacrifice small profits for efficiency and quick sales. When you're dealing in 50 different items and 10's of billions in goods you don't have time to micromanage a sale in order to get an extra 100k isk out of it. It is not profitable to do so.
Everyone has a reason for doing what they are doing (albeit a lack of intelligence some of the time). If you can make a profit by capitalizing on what they are doing then good for you. But if you cannot then they obviously are not doing anything too stupid.
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Peci
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Posted - 2007.11.12 16:28:00 -
[10]
Shardarle, I understand your point completely. Very true.
The thing is I really am on a different level. 40-70mil operation capital can't change the market a lot, and this kind of micro-profit-management can do a world for me. I must also admit that I'm very very lazy flyer, so low profit/high turnover isn't my piece of pie. My problem, I know
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tornpain
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Posted - 2007.11.12 17:04:00 -
[11]
In general, diversification allows an individual to crash margins on specific items while they maintain profits via their other areas of concentration. It's the general strategy used to drive out competition from an area.
The 0.01 isk game means that you BOTH make a profit, meaning you both have to play the 0.01 isk game forever. Sounds like someone's trying to keep YOU from making that profit, and to minimize their time spent micromanaging their orders.
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Confuzer
PBA Corporation The Volition Cult
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Posted - 2007.11.12 17:07:00 -
[12]
Often I end 0.01 wars with increasing a few 100 thousand on prices...
If I want to buy the itemfast , and I can get it cheaper, then I make offers.
I can imagine the same for sell orders just like the other say ^^ ----------------- Destiny is not a matter of chance. It is a matter of choice. It's not a thing to be waited for - it is a thing to be achieved. |
Gaius Sejanus
Gallente Federal Navy Academy
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Posted - 2007.11.12 17:34:00 -
[13]
.01 isk wars not only don't interest me at all, but **** me off when performed by someone else. So I show them what real undercutting is all about.
The amusing part is, that even slashing a price by a huge amount, my profit margin is still extremely high. I don't even bother to trade items that don't carry a 100% profit margin...and that's after the undercut.
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Ambo
2nd Outcasters
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Posted - 2007.11.12 18:46:00 -
[14]
Originally by: Gaius Sejanus .01 isk wars not only don't interest me at all, but **** me off when performed by someone else. So I show them what real undercutting is all about.
The amusing part is, that even slashing a price by a huge amount, my profit margin is still extremely high. I don't even bother to trade items that don't carry a 100% profit margin...and that's after the undercut.
So surely the other trader(s) will just undercut you again? I always do as long as I'll still be making decent money.
In which case, you've just reduced your profits for no reason at all. It dosn't annoy me when people undercut by large or small amounts, I simply undercut them and carry on. The difference is that if I did what you do on every item I trade, I would be making a lot less profit overall.
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SiJira
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Posted - 2007.11.12 19:17:00 -
[15]
attempting to rationalize everything based on your own perspective is to truly go insane ____ __ ________ _sig below_ devs and gms cant modify my sig if they tried! _lies above_ CCP Morpheus was here Morpheus Fails. You need colors!! -Kaemonn [yellow]Kaem |
Peci
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Posted - 2007.11.12 19:54:00 -
[16]
Originally by: SiJira attempting to rationalize everything based on your own perspective is to truly go insane
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SL Helper
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Posted - 2007.11.12 21:43:00 -
[17]
Try putting up your items for a 0-1% profitmargin for a while. You might get him to leave.
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Galgorth
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Posted - 2007.11.13 05:52:00 -
[18]
A lot of traders on the forum here are rather antagonistic. I have found in my personal experience that cooperating with someone can be far more profitable than entering into a price war. One way I like to do it is by 'layering' orders with the guy I'm cooperating with.
For example, if we both have 1000 units to sell, I would sell 500 on top, he would sell 500 after me, I would sell 500 after him, and he would sell the final 500 units. In addition to preserving your profit, you can oftentimes gain a new friend with whom to discuss the future microeconomic direction of your market.
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Apple Blossom
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Posted - 2007.11.13 06:32:00 -
[19]
Originally by: SiJira attempting to rationalize everything based on your own perspective is to truly go insane
I'd say it was the very definition of insanity.
Salvador Dali: There is only one difference between a madman and me. I am not mad.
Apple
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Ricdic
Caldari Corporate Research And Production Pty Ltd Zzz
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Posted - 2007.11.13 06:48:00 -
[20]
He placed his sell order up on average market price, and not based on the competition (view market details). That's my guess. Either that or he priced his to be best in region rather than best in station.
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Peci
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Posted - 2007.11.13 08:23:00 -
[21]
Originally by: Galgorth A lot of traders on the forum here are rather antagonistic. I have found in my personal experience that cooperating with someone can be far more profitable than entering into a price war. One way I like to do it is by 'layering' orders with the guy I'm cooperating with.
For example, if we both have 1000 units to sell, I would sell 500 on top, he would sell 500 after me, I would sell 500 after him, and he would sell the final 500 units. In addition to preserving your profit, you can oftentimes gain a new friend with whom to discuss the future microeconomic direction of your market.
I'm very happy to hear this! A few years back when I played Ultima Online, I suggested another miner - a total stranger - to form an ore monopoly with me. We both became quite wealthy without competing each other.
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Ambo
2nd Outcasters
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Posted - 2007.11.13 08:26:00 -
[22]
Originally by: Ricdic He placed his sell order up on average market price, and not based on the competition (view market details). That's my guess. Either that or he priced his to be best in region rather than best in station.
Hehe, indeed.
I've seen lots of occasions where a player sells items for exactly the market average without regard for the price on existing sell orders.
Some people don't seem to realise that the average market price is for both buy and sell orders.
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Wieting Foyu
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Posted - 2007.11.13 15:16:00 -
[23]
As to your question...No trader would in their right might trade to charity. The biggest problem with trading is your profit margin may be different than someone else's. Just because you can make 150% from an item you bought 1 region over doesn't mean when you get undercut the other trader isn't making 200% on the same item he found 5 regions over. You never know the costs the other trader incurs before selling their items. I personally don't like the .01isk wars so I have a personal percentage that I at least want and just put the sell order there. I have also gotten emails as to why I undercut so much to ruin the market. And that just makes me smile cause I know what will make me the most money and what/where I can sell it if you can't match my prices.
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Crazy Wong
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Posted - 2007.11.13 17:03:00 -
[24]
Some people are not interested in, or required by circumstances to, seek maximum possible profit on every market they're in. I'm a small time operator (very small time). I don't care if I make 100% profit or 90% or even 50% in a particular market as long as my goods move at a profit. I don't have stakeholders breathing down my neck.
Also, there's the PvP aspect of market control. Just yesterday I engaged in an all-day skirmish with someone on a minor (sub 20k) item. Even where it ended (after I jumped the price up by 25x the increment I had been before I went to bed) I'm still making around 90% profit off what I plan to sell the stuff for. If this person really wanted to control that market, yeah, he could've shoved me out, but he'd have to work a lot harder for it, and I'd get the fun of watching him shred his margins to keep control of it.
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