SencneS
Rebellion Against Big Irreversible Dinks
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Posted - 2009.07.27 23:38:00 -
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Edited by: SencneS on 27/07/2009 23:40:45
Large volume sales at low profit margins is actually more efficient in EVE then one might think.
The price of material goes up and down, while your goal may be make the most ISK, it can also lead you to zero in sales.
Take something like a cruiser for example - Selling a Cruiser at something like a 5% margin for quick sales, then turn around and build another, after 20 sales, you can build 2 cruisers. Now you're building 2 at 5% margin, it only takes 10 cruises to be able to build yet another cruiser.
So now you've sold 30 cruisers, and you can build 3 and make a 5% margin. Which is three times as much as before, trying to sell 1 Cruiser at 15% margin may take a long time. The thing to consider here is price of build materials.
As mentioned above prices can go up and down, a large margin is gambling on the fact that material will go up in price. They place a 15% margin on their cruiser, if material goes up 10%, they are matching the margin for the manufacture that sells a low margins. Anything larger then 10% and they are now cheaper then the high volume low margin price.
However, like all manufactures there is a pressure to keep material cost low, so it's better to gamble on the fact material price will go down. A high volume, low margin seller will sell their cruisers are a more variable rate. This allows them to grow and shrink with the market easier then the low volume high margin seller.
It could get to the point where the material drops so far in price the 5% margin sellers sales price is actually less then the 15% margins manufacture cost.
Volume also does one other thing, kinda nasty but it does saturate the market. The poster above said it makes it more difficult and less attractive to enter the market for that item. However, it also makes it less attractive for resellers. Large volume low margin items and keeping them that way keeps away resellers from buying up your stock and re-listing it at a higher margin. If you constantly sell at the same margin the reseller will unlikely attempt to control that product.
Amarr for Life |