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Chantao Naies
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Posted - 2008.02.11 21:52:00 -
[1]
So, I've lately started doing some trading in order to make a little money on the side. I've identified a market for my items, got the BPO, crunched some numbers and determined that I'll be able to make a profit selling this item.
My question is, how much of a profit should I be looking for, versus the amount of time/money I put into making the item? Don't have the exact numbers with me right now, but if I put roughly 60 mil into manufacturing, I clear about 10 mil when all is said and done (again, these are rough estimates).
Is this about par for the course? Should I be looking at raising my sell price a little, or even choosing something different to make?
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Ambo
2nd Outcasters
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Posted - 2008.02.11 22:07:00 -
[2]
The profit you look for depends on tons of different factors.
About the best piece of advice I can give is to look at the approx isk/hour you can expect and base everything on that.
Buying a pirate implant for 400 mil then selling it for 500 mil is great but if it only happens once every couple of weeks, it's nota great revenue stream.
Conversley, you may only have a profit of 10 k on an item but if the volume is high enough and you can shift 1000's of units per day then it's worth looking into.
In other words, absolute profit and even percentage profit are only useful to a point, always consider the big picture.
In the end, it all comes down to personal choice, what you can handle, what you have the capital for, how low you're willing to go on the profits, etc.
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Jaarlax
Ratty Corp PLC Confederation of Independent Corporations
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Posted - 2008.02.11 22:15:00 -
[3]
personal choice realy, personaly for manu if i don't make at least 10% pure profit, i don't make it. 10m profit on 60m build seems ok, i just hope you dont have all your isk sunk into that one project. if you can make good profit, sooner or later someone will come along and spot it and be willing to make slightly less profit than you. spread your risk as much as your able.
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Ramblin Man
Empyreum
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Posted - 2008.02.12 03:23:00 -
[4]
Crunch the numbers for a 'standard empire miner' char. That's probably your bottom end, as you could always mine. Of course, there are tons of reasons not to, but in terms of profit:time that seems like it would be a nice standard.
In terms of actual profit, I'd just compare between trading/building opportunities that you would enjoy and have the time to follow through.
In short, 10%+ is probably a good absolute baseline for anything involving more than a bare minimum of work.
Welcome to the dark side old friend. .Shar Where we hate people through words. |
Shadarle
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Posted - 2008.02.12 03:39:00 -
[5]
31.68% is the level you should aim for in all cases.
Stacking Penalty / Resists Explained |
Danari
Amarr Viper Squad Triumvirate.
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Posted - 2008.02.12 03:43:00 -
[6]
Edited by: Danari on 12/02/2008 03:43:32 What's the item? What are the numbers? If you set market history to 1 month, what's the maximum # on the scale? I'll go over it for you.
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Kwint Sommer
Incoherent Inc Otaku Invasion
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Posted - 2008.02.12 04:04:00 -
[7]
As a long standing rule I don't touch anything that nets under 25M per hour and under 5% monthly on the invested capital.
These days my minimum is 100M an hour and 10% monthly but I'm much more aggressive with my investing than I use to be. My current goal is, which I should be realizing once my next business is up and running, is to earn half a billion a day and I know there are a fair number on MD that make more than that. I'd hazard that half a billion a day is pretty much "par for the course," at least among the older and regular members of MD.
5% Mining & Manufacturing Implants |
Relyen
Caldari Digital Fury Corporation Digital Renegades
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Posted - 2008.02.12 04:47:00 -
[8]
This thread makes me cry.
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Raskor
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Posted - 2008.02.12 05:01:00 -
[9]
Don't forget to consider opportunity cost. You say you procure the materials for 60m and sell the item for 70m.
But how much could you sell those materials for in a similar amount of time? If you could sell the finished product for 70m, but sell/resell the materials for 75m...
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Danari
Amarr Viper Squad Triumvirate.
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Posted - 2008.02.12 05:03:00 -
[10]
Originally by: Raskor Don't forget to consider opportunity cost. You say you procure the materials for 60m and sell the item for 70m.
But how much could you sell those materials for in a similar amount of time? If you could sell the finished product for 70m, but sell/resell the materials for 75m...
...then buy 130mil in minerals and sell the lot for 145mil. 2 market slots will outperform one.
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Shadarle
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Posted - 2008.02.12 06:21:00 -
[11]
Originally by: Danari
Originally by: Raskor Don't forget to consider opportunity cost. You say you procure the materials for 60m and sell the item for 70m.
But how much could you sell those materials for in a similar amount of time? If you could sell the finished product for 70m, but sell/resell the materials for 75m...
...then buy 130mil in minerals and sell the lot for 145mil. 2 market slots will outperform one.
Except this isn't a fair point as you can't always double the size. I know because I deal in billions+ of raw materials, be them minerals, moon mins, etc. I buy/sell the max available... there is no way for me to do both sell half and build with half as I am able to sell 100% of everything I get, so there are no leftovers to build with.
When someone sells me 1.73 billion isk worth of a raw material (as just happened earlier today) I can't say I'll build with half of it and sell the other half... as I'd need to have the other materials in relevant quantities to produce things. It sucks having to get equal amounts (relatively) of each mineral when building, it's always much easier to get more of some than others... and there is no reason not to take the max possible for each as long as you know where to get rid of everything.
Stacking Penalty / Resists Explained |
Danari
Amarr Viper Squad Triumvirate.
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Posted - 2008.02.12 07:08:00 -
[12]
Originally by: Shadarle
Except blah...
You're a regular excuse faucet of fail. Sorry it was too complicated to follow.
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Zaphood Al'Darion
Garoun Investment Bank
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Posted - 2008.02.12 12:42:00 -
[13]
Isk/hour is the key here. More specifically I value the number of hours of active work needed, not the time it takes between aquiring the item and actually selling it. If it takes 2-3hours of effort, 2 months to sell and is worth that 2-3hours spent, I'm in.
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Prodigal
Caldari New Genesis Project
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Posted - 2008.02.12 16:48:00 -
[14]
Isk/hr is a good gage to how well you are spending your time in relation to mining Isk/hr.
When it comes to manufactured goods however, I follow a general rule that, if I cant get 5x the cost to build that item, then that items market is not worth my time.
Volumes are also a huge factor here also.
You have to decide for yourself really what your threshold for profits are.
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Motivated Prophet
Zerodot Schools Power Corrupts Industry's
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Posted - 2008.02.12 18:36:00 -
[15]
Anything less than 0% isn't worth my time.
Other than that, I'm flexible.
MP --
Proud steward of 47 billion isk in public money, and counting. Ask me about mineral compressionexpansion! WTF? |
Raskor
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Posted - 2008.02.12 21:10:00 -
[16]
Originally by: Zaphood Al'Darion Isk/hour is the key here. More specifically I value the number of hours of active work needed, not the time it takes between aquiring the item and actually selling it. If it takes 2-3hours of effort, 2 months to sell and is worth that 2-3hours spent, I'm in.
Ok sure you make a good "salary" for your effort, but if it takes 2 months to sell --- that is 2 months your investment is tied up doing absolutely nothing for you.
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Non Such
Non Combatant
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Posted - 2008.02.12 22:50:00 -
[17]
Originally by: Raskor Ok sure you make a good "salary" for your effort, but if it takes 2 months to sell --- that is 2 months your investment is tied up doing absolutely nothing for you.
^^This
RL 'active' time is one thing, and the actual time the capital is tied up is another, and both factor into the 'value' of the investment I'd say. 2 months is an eternity, but if you're putting like in like 1-2 hours 'real' time and making 400% or something, then it might be worth it.
But that's assuming you either don't have the time/desire to trade with it, or you're at some isk/freetime critical mass where you can't leverage your liquid assets any better. And that situation is probably not one that a new producer is in, I reckon.
= "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." = Adam Smith |
Ulstan
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Posted - 2008.02.13 17:57:00 -
[18]
Profit margin isn't as important as total profit per day. Moving a lot of low profit goods can leave you better off than moving a single item with 30% profit.
But the most important stat for a new trade to track is isk earned/hour spent playing the market, in my opinion.
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Alz Shado
Ever Flow
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Posted - 2008.02.13 19:42:00 -
[19]
Margin. Turnover Rate. Total Isk.
Just some of the factors to consider when you're investing in the market. For more advanced traders, another issue to consider is Opportunity Cost -- ie, is the cost of investing on X now keeping me from making more money on Y.
If you only have 10m isk to invest, is it wiser to turn it over for 15% profit in 24hours, or keep it in the market for a week and double your money?
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Stephannus Calimben
mUfFiN fAcToRy Sex Panthers
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Posted - 2008.02.13 21:21:00 -
[20]
Originally by: Alz Shado Margin. Turnover Rate. Total Isk.
Just some of the factors to consider when you're investing in the market. For more advanced traders, another issue to consider is Opportunity Cost -- ie, is the cost of investing on X now keeping me from making more money on Y.
If you only have 10m isk to invest, is it wiser to turn it over for 15% profit in 24hours, or keep it in the market for a week and double your money?
^^this. also always remember that you need to cover broker fees/taxes, and watch out for price gaps that will be quickly closed by a deluge of traders.
just remember your opportunity cost. are you investing each isk where it is earning you the most?
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PaddyPaddy Nihildarnik
Gallente MASS Ministry Of Amarrian Secret Service
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Posted - 2008.02.15 01:06:00 -
[21]
Edited by: PaddyPaddy Nihildarnik on 15/02/2008 01:07:49 Ive been looking into t1 ship manufacturing and distribution. Now normally I have produced and traded in 0.0, usually with very healthy profit margins and moderate turnovers but from what I can see from the empire markets ive looked at, you will be lucky to be making 5-8% profit margins for t1 ship sales. That figure seems pretty par from frigs right through to battlecruisers and across all racial hubs.
Am I missing something here? I dont know how people manage 30% profit margins in empire on trades or manufacturing. In fact ive seen quite a few ships being sold at cost prices ( I have near enough to perfect researched bpo's and am purchasing minerals off low buy order amounts)
Peace WithinSo if the theory of relativity is true, shouldn't i arrive at my destination before i warped in the first place? Neon GhostYou do, but this is compensated for by lag |
Kwint Sommer
Incoherent Inc Otaku Invasion
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Posted - 2008.02.15 01:13:00 -
[22]
As far as manufacturing T1 mods go you are not missing anything. That is done near costs and has been for years. It should, however, be obvious how people make high percents trading. buy low, sell high. For some things there is a big gap between buy and sell orders. I personally prefer a much more active means of generating income, namely running reactors but that's just me.
5% Mining & Manufacturing Implants |
Mephistocles
Red Frog Investments Blue Sky Consortium
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Posted - 2008.02.15 01:21:00 -
[23]
Originally by: PaddyPaddy Nihildarnik Edited by: PaddyPaddy Nihildarnik on 15/02/2008 01:07:49 Ive been looking into t1 ship manufacturing and distribution. Now normally I have produced and traded in 0.0, usually with very healthy profit margins and moderate turnovers but from what I can see from the empire markets ive looked at, you will be lucky to be making 5-8% profit margins for t1 ship sales. That figure seems pretty par from frigs right through to battlecruisers and across all racial hubs.
Am I missing something here? I dont know how people manage 30% profit margins in empire on trades or manufacturing. In fact ive seen quite a few ships being sold at cost prices ( I have near enough to perfect researched bpo's and am purchasing minerals off low buy order amounts)
If you are talking about producing and selling in one spot you are correct. Certain ships can give you a healthy margin in empire, you just have to be flexible and either manufacture in different locations or ship your finished products. It's a lot more work and you have to have some type of logistical ability, but it can be done. From my experience it's something that can burn you out pretty quick though.
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PaddyPaddy Nihildarnik
Gallente MASS Ministry Of Amarrian Secret Service
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Posted - 2008.02.15 04:21:00 -
[24]
Originally by: Mephistocles
Originally by: PaddyPaddy Nihildarnik Edited by: PaddyPaddy Nihildarnik on 15/02/2008 01:07:49 Ive been looking into t1 ship manufacturing and distribution. Now normally I have produced and traded in 0.0, usually with very healthy profit margins and moderate turnovers but from what I can see from the empire markets ive looked at, you will be lucky to be making 5-8% profit margins for t1 ship sales. That figure seems pretty par from frigs right through to battlecruisers and across all racial hubs.
Am I missing something here? I dont know how people manage 30% profit margins in empire on trades or manufacturing. In fact ive seen quite a few ships being sold at cost prices ( I have near enough to perfect researched bpo's and am purchasing minerals off low buy order amounts)
If you are talking about producing and selling in one spot you are correct. Certain ships can give you a healthy margin in empire, you just have to be flexible and either manufacture in different locations or ship your finished products. It's a lot more work and you have to have some type of logistical ability, but it can be done. From my experience it's something that can burn you out pretty quick though.
Yeah Im definately finding that. I mean, by the time ive factored in collection of minerals, shipping to manufacture point- than distribution to retail the margins are terrible. I would make more isk simply selling the bought minerals back into the market and go run a lvl 4 mission. Now the obvious answer is "well go do that than" and I might. My point of exasperation is why would anyone bother with such low margins? Obviously people are, im competing against their sales. Peace WithinSo if the theory of relativity is true, shouldn't i arrive at my destination before i warped in the first place? Neon GhostYou do, but this is compensated for by lag |
Stefan F
Enrave
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Posted - 2008.02.15 22:55:00 -
[25]
Originally by: Mephistocles
Originally by: PaddyPaddy Nihildarnik Edited by: PaddyPaddy Nihildarnik on 15/02/2008 01:07:49 Ive been looking into t1 ship manufacturing and distribution. Now normally I have produced and traded in 0.0, usually with very healthy profit margins and moderate turnovers but from what I can see from the empire markets ive looked at, you will be lucky to be making 5-8% profit margins for t1 ship sales. That figure seems pretty par from frigs right through to battlecruisers and across all racial hubs.
Am I missing something here? I dont know how people manage 30% profit margins in empire on trades or manufacturing. In fact ive seen quite a few ships being sold at cost prices ( I have near enough to perfect researched bpo's and am purchasing minerals off low buy order amounts)
If you are talking about producing and selling in one spot you are correct. Certain ships can give you a healthy margin in empire, you just have to be flexible and either manufacture in different locations or ship your finished products. It's a lot more work and you have to have some type of logistical ability, but it can be done. From my experience it's something that can burn you out pretty quick though.
Or just buy finished ships low from market, ship them and sell them high. This option you always have will cause the added value of your product (ship) will always be at most sellprices in the station of production. Never more, as you could also apply other activities that incraease value on you product to products that you buy on the market.
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Mephistocles
Red Frog Investments Blue Sky Consortium
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Posted - 2008.02.15 23:03:00 -
[26]
Originally by: PaddyPaddy Nihildarnik Yeah Im definately finding that. I mean, by the time ive factored in collection of minerals, shipping to manufacture point- than distribution to retail the margins are terrible. I would make more isk simply selling the bought minerals back into the market and go run a lvl 4 mission. Now the obvious answer is "well go do that than" and I might. My point of exasperation is why would anyone bother with such low margins? Obviously people are, im competing against their sales.
I don't think you can play down the psychological or role play aspect of ship manufacturing and sales. There are a lot of people out there that don't really look at the bottom line, they might just do something for the enjoyment or role play factor. Building a huge mega shipyard is something that I think appeals to a lot of players.
Not to mention it's easy for small/young corps to incorporate this into their mining and you always have the "what I mine is free" mindset.
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Kwint Sommer
Incoherent Inc Otaku Invasion
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Posted - 2008.02.16 00:05:00 -
[27]
My guess is it's a combination of people that are just starting to learn manufacturing, the "what I mine is free" crowd and people that bought the BPO's from NPC's and would rather produce stuff for 5% profit than sell the BPO's for a loss. I'd guess people start out in the first two categories and then when they get wise they don't want to loose ISK on the BPO's. It's hard to know when to sacrifice a small but steady longterm profit in exchange for freeing up capital.
5% Mining & Manufacturing Implants |
Danari
Amarr Viper Squad Triumvirate.
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Posted - 2008.02.16 00:32:00 -
[28]
Originally by: Kwint Sommer My guess is it's a combination of people that are just starting to learn manufacturing, the "what I mine is free" crowd and people that bought the BPO's from NPC's and would rather produce stuff for 5% profit than sell the BPO's for a loss. I'd guess people start out in the first two categories and then when they get wise they don't want to loose ISK on the BPO's. It's hard to know when to sacrifice a small but steady longterm profit in exchange for freeing up capital.
5bil a month profit against 19bil capital selling primarily t1 says the shipyards know something you don't.
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Chantao Naies
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Posted - 2008.02.16 07:02:00 -
[29]
Wow, I didn't expect this many answers to my topic. Guess I posted something interesting :)
For anyone who's interested, my little foray into the high-stakes world of trading went pretty well, for the most part. I managed to get a decent chunk of my inventory sold at a nice markup before a few other people noticed what I was doing and dropped their prices to compensate - we got into a nice little price war before I sold the rest of my items (still at a decent profit though!)
Anyways, I did what I set out to do - build some items for myself, because all the ones on the market were at insane prices, and made some ISK along the way. Now that I have what I needed in the first place, I'll be out of the business - until the next time, that is ;)
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