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Downtym Amarr Ajo Heavy Industries	Posted - 2009.10.24 02:22:00 - [31] Originally by: Lui Kai Look at it this way: You need 1000 trit to build a widget. Trit, at that moment, is selling for 3 isk each. Widgets are selling for 2000 isk each. Now, since your trit is "free" you build the item, and sell it for 2000 isk. Alternatively, you value your items and time properly, and sell the trit for 3000 isk. Which one looks like the financial illiterate to you? 1000 Trit builds a Widget. 1 Widget sells for 2000 isk. Trit sells for 3 isk. Average volume for trit is V(m) units per day. The average price of Trit is P(m). Average volume for Widget is V(w) widgets sold per day. The average price of a Widget is P(w). Assume P(m) <<< P(w) and V(w) <<< V(m). Now, let's assume the price of Trit is fairly stable. Then we can fairly state that P(m) is effectively constant. However, let's assume that the price of a Widget is not stable and it's value varies wildly. Now: If you create V(w) Widgets per day and sell them onto the market for a price, let's say P`(w), where: P(w) > P`(w) > P(m) then, assuming everyone is rational the following happens: Buyers will only buy the lowest priced Widgets. Sellers will lower their prices until they reduce it below a tolerance threshold at which point they become uninterested in selling Widgets. Alternatively, Sellers if they have the capital will buy your Widgets and resell them on the market at a higher price. This increases the sold volume per day. However, this is unsustainable over a long enough time line assuming you increase production: Seller A sells Widgets for P`(w) < P(w) which Seller B sells widgets at. Seller B buys Seller A's widgets and then re-lists them for P(w). Buyer C buys Widgets priced at P(w), market sold volume is now 2V(w). Seller A then increases Widget production to meet demand, continuing to list them at P`(w). Seller B must now buy 2V(w) Widgets of which he will only sell V(w). If you continue to produce 2V(w) Widgets per day, eventually Seller B will end up with a surplus of Widgets. If you increase production in response to Seller B's action then the speed with which Seller B will create a surplus will increase. Since surplus represents non-Liquid capital that Seller B cannot get rid - unless he under prices your Widgets and takes a loss - it is unrealized. If Seller B continues using this strategy then he will eventually end up with a surplus of Widgets which he can only sell at P``(w) < P`(w) - and so he takes a loss. Thus, the most rational decision is to attempt to produce Widgets sufficient to fill 2V(w) daily trade volume and price them such that their price is barely above the price of their components - their price is above the gain of melting them down into their base components. Once you are the only producer of Widgets, may begin increasing their price until competition enters the market, at which point you again lower your prices to the threshold. It's a little more complicated because people will pay a premium for location, but, yeah, flood the market with cheap goods until you're the only game in town and then undercut any future competition if it arises. It all comes down to what's your price threshold (determined by opportunity cost (time) and production costs (money)), your ability to produce, the market's demand, locality, and the base value of the good if it was decomposed (how much of X material at P(X) price would a person get if they melted the good down?).
uperkurk	Posted - 2009.10.24 03:50:00 - [32] hmmm.... lol ok with a simple yes or no answer if one exsists. would I make more money from each ship sale if I buy the minerals needed from the market using the profit from my first ship sale. Or would I make more money per ship sale if I kept ALL the profit from the first sale and went and did some mining to get the rest? Item in question would be a drake. But what ill do tomorrow is ill see how much it costs to buy all the minerals at the market cost incuding a bpc of the ship and add it up. Then see how much the ship is selling for and if I can make a profit and how much. Then ill buy all the minerals from the market exept the trit and see if I would make more money. Time isnt money for me, I just want to make more money by doing whichever way makes me more per per sale. If it takes me 2 hours to mine the trit rather then pay 15m for it ill do it. Even if after the sale of the ship I only actually make 10m more then I would if I just bought the trit.
Lui Kai Better Than You	Posted - 2009.10.24 05:14:00 - [33] You. Make. The. Same. Per. Sale. Either. Way. Christ on a biscuit, I really can't say this more clearly. The minerals are worth EXACTLY THE SAME if you buy them or if you mine them. ----------------
Raser Moonstrider Raser Industries	Posted - 2009.10.24 06:04:00 - [34] Don't give yourself an aneurysm lui. Obviously he wants to screw himself, so who are we to stop him? It's people like this that make certain other people quite happy when their buy orders get filled for well under mineral value.
uperkurk	Posted - 2009.10.24 13:24:00 - [35] Right well everyone is saying that its either the same or cheaper to buy the trit. well I guess I wont do it then cos in my wallet is only 50m once I buy all the minerals and the bpc which cost 50m I can sell widget for 55m, so I now has 55m. But I think ill buy all the minerals and the bpc for 35m and spend one hour mining to get the trit. but wait...! I still has 15m in my wallet? so then ill sell the wdget for 55m. but hold on? that means I has 70m in my wallet? SOMEONE PLEASE EXPLAIN WHY OR HOW THE IS THE SAME, HONESTLY....
Jekyl Eraser	Posted - 2009.10.24 13:51:00 - [36] Originally by: uperkurk Right well everyone is saying that its either the same or cheaper to buy the trit. well I guess I wont do it then cos in my wallet is only 50m once I buy all the minerals and the bpc which cost 50m I can sell widget for 55m, so I now has 55m. But I think ill buy all the minerals and the bpc for 35m and spend one hour mining to get the trit. but wait...! I still has 15m in my wallet? so then ill sell the wdget for 55m. but hold on? that means I has 70m in my wallet? SOMEONE PLEASE EXPLAIN WHY OR HOW THE IS THE SAME, HONESTLY.... why would you buy the minerals if you can mine???!??111 it's more expensive to buy the minerals because it doesn't cost to mine them. doh .... we need IQ test before letting players enter this game. or in case of minerals just plain common sense test
Lui Kai Better Than You	Posted - 2009.10.24 13:59:00 - [37] Originally by: uperkurk Right well everyone is saying that its either the same or cheaper to buy the trit. well I guess I wont do it then cos in my wallet is only 50m once I buy all the minerals and the bpc which cost 50m I can sell widget for 55m, so I now has 55m. But I think ill buy all the minerals and the bpc for 35m and spend one hour mining to get the trit. but wait...! I still has 15m in my wallet? so then ill sell the wdget for 55m. but hold on? that means I has 70m in my wallet? SOMEONE PLEASE EXPLAIN WHY OR HOW THE IS THE SAME, HONESTLY.... Jesus Henrieta Christ. Last summer, I volunteered to help teach low-functioning autistic children sign language. They figured it out faster than you. Literally - you learn more slowly than toddlers who aren't allowed to use the toilet unsupervised. I give up. Mine your minerals, you'll make heaps more money. ----------------
thebarry	Posted - 2009.10.24 14:05:00 - [38] Edited by: thebarry on 24/10/2009 14:05:24 lolz...you always use the fair market value for the materials you are using in production, regardless of how you got them, because that is the 'opportunity cost' of making the item. no matter how you got the materials, you have an opportunity to sell them outright for whatever ppl are willing to pay you for them, if the minerals themselves are worth more than the item you are building, ur doin it rong. if that is the case you are better off just selling the minerals. and that is why everyone is talking about making money off of you: because they can buy your widget, reprocess it to get the minerals out of it, then sell the minerals and make a profit(which is what you should have done yourself...you're losing iskies by thinking your minerals have no value :)
uperkurk	Posted - 2009.10.24 14:15:00 - [39] EXACTLY you guys actually thought I am going to build something if once its sold dont = more then that the minerals cost in the first place? Obviously im going to make sure that the ship im building is worth more then all the minerals I paid....
Dagny Bronstein	Posted - 2009.10.24 14:19:00 - [40] Edited by: Dagny Bronstein on 24/10/2009 14:19:32 Originally by: uperkurk Right well everyone is saying that its either the same or cheaper to buy the trit. well I guess I wont do it then cos in my wallet is only 50m once I buy all the minerals and the bpc which cost 50m I can sell widget for 55m, so I now has 55m. But I think ill buy all the minerals and the bpc for 35m and spend one hour mining to get the trit. but wait...! I still has 15m in my wallet? so then ill sell the wdget for 55m. but hold on? that means I has 70m in my wallet? SOMEONE PLEASE EXPLAIN WHY OR HOW THE IS THE SAME, HONESTLY.... you buy the minerals from the market: 55m (sell) - 15m (minerals) - 50m (bpc) = -10m (you're an idiot if you do this) invested time: getting bpc, setting up manufacturing job, waiting for production to finish you say: 55m (sell) - 0m (minerals) - 50m (bpc) = 5m (phat profitz) invested time: getting bpc, mining the minerals, setting up manufacturing job, waiting for production to finish but you could have sold the minerals you did just mine instead of using them for production: 15m (minerals) = 15m (even better profit!) invested time: mining the minerals so, in this example production does always cost you 10m - whether you buy the minerals directly from the market (-10m) or whether you did mine them all by yourself (you made only 5m, when you could have made 15m just by selling the minerals, the difference is -10m). Using your numbers, mining is very profitable but you will lose money in production. Your mistake was making a mess of this and treating mining and production basically as one activity, ignoring that one can be profitable, while the other might not be profitable. PS: somehow I feel dirty having spent this much time explaining issues that really should be self-evident to any selfrespecting player of EVE. EDIT: looks, like he might have got it
thebarry	Posted - 2009.10.24 14:22:00 - [41] Originally by: uperkurk EXACTLY you guys actually thought I am going to build something if once its sold dont = more then that the minerals cost in the first place? Obviously im going to make sure that the ship im building is worth more then all the minerals I paid.... hahaha yes you see why we are like "OMFG NOOOOEZ!!" ?? you'd be stunned at how many ppl do just that jekyl eraser, let's say you can mine minerals and make 10m isk per hour, or you could just buy the minerals and spend your time building stuff instead, but by focusing on building stuff you make 20m isk per hour...that is why it's important to value your time, otherwise you will end up doing stuff that is less profitable. just remember that the goal at the end of the day is to make iskies(and have fun while doing it :)
uperkurk	Posted - 2009.10.24 17:16:00 - [42] OK after doing some research it turns out I could build the ship by mining the pyerite and trit and id make 29m 700k profit. But If I just bought all the minerals id make 100k profit less then if I just sold everything so thats too much effort for an extra 100k. So the best option here seems to be that I dont buy any minerals and just mine the trit and pyerite to sell it.
Don Pellegrino	Posted - 2009.10.24 17:26:00 - [43] Originally by: uperkurk OK after doing some research it turns out I could build the ship by mining the pyerite and trit and id make 29m 700k profit. But If I just bought all the minerals id make 100k profit less then if I just sold everything so thats too much effort for an extra 100k. So the best option here seems to be that I dont buy any minerals and just mine the trit and pyerite to sell it. Now you got it, young padawan. Manufacturing can be very profitable, you only need to find the right items.
uperkurk	Posted - 2009.10.24 17:47:00 - [44] hehe I actually got it from the start but people just assumed I was a numpty lolz
Aktof	Posted - 2009.10.24 22:56:00 - [45] Guys! Schrodingers acat is dead!
Chainsaw Plankton IDLE GUNS IDLE EMPIRE	Posted - 2009.10.24 23:09:00 - [46] Originally by: uperkurk whoa im just not understanding what you guys are saying. If I have all the minerals I need to build one ship lets say, but I need 5million units of trit. I could mine them 5m units and then build that ship. Or. Just buy the 5m units of trit for 15m isk. But then I have effectivly lost 15m isk cos ive just spent it on trit? Please someone explain how this is not being cost effective? at the end of the day it costs 0 isk for me to mine. But it takes time. And over time I could make more isk if I just bought the trit? Is that what you guys are saying? it costs me 15mil to buy 5mil trit, or I can make 15mil in about 20 mins and but 5mil trit. it would take me a good deal longer to mine 5mil trit. guess what I would do also reasoning just doesn't work on some people.
rubico1337 Caldari Mnemonic Enterprises	Posted - 2009.10.25 04:04:00 - [47] Originally by: Lui Kai Jesus Henrieta Christ. Last summer, I volunteered to help teach low-functioning autistic children sign language. They figured it out faster than you. Literally - you learn more slowly than toddlers who aren't allowed to use the toilet unsupervised.
Noskill McCheese Minmatar	Posted - 2009.10.25 10:07:00 - [48] Ah well since you're the 1 millionth person to ask this question, you win the secret answer. The trick is not to build ships but to build WAFFLES, TASTY WAFFLES, WITH LOTS OF SYRUP!
Makya Cha'Zima	Posted - 2009.10.25 17:53:00 - [49] You guys are making this way too complicated with math, fancy words and equations. Just keep it simple: If my 1000 trit makes me 20k with building a ship, but the trit itself I can sell for 30k, I don't build anything and just sell the trit. That is what trading is all about. You do what gets you the most money, regardless of what it is. You can build for a hobby, if that is what you want to do and it doesn't earn you more than just selling the minerals, but keep in mind, that you want those minerals to go there where you get the most isk out of it. That simple.
Achaen	Posted - 2009.10.29 10:03:00 - [50] Originally by: Julian Koll i'll quote myself from another thread Quote: T2 production is totally profitable as long as you follow those easy steps: 1: Get your own datacores. That lowers the invention costs by an increadible amount. 2: Mine your own minerals. Much lower build costs 3: Build your own components. Even lower build costs sure, there will be people throwing around fancy words like opportunity cost, but those guys are fools. what counts at the end of the day is the isk in your wallet, nothing else. You're on a good way here. Continue to follow it. Nevermind the "fancy words". The main theme of this thread is the idea that you could be using/selling your resources more intelligently to make more money. Take your datacores for example: I do the same thing, only I invent to produce t2 frig BPCs. I also do research with Lai Dai agents to get datacores. I could do Caldari Starship Engineering Research to get the Caldari Starship Engineering datacores I need to do the invention, but I don't. Instead I do Hydromagnetic Physics Research. Why? Because Caldari Starship Engineering datacores sell for 200k less than Hydromagetic Physics datacores. I sell off the hydromagnetic physics datacores and buy the Caldari Starship Engineering datacores I need to invent t2 frig BPCs. I end up making 200k more isk per datacore. To put it simply, you need to ask yourself, "now that I have these minerals/datacores/components (or time, skills, agents, etc...), what can I do with them to make the most money?". If you can make more money selling off your minerals/datacores/components than using them to build stuff, then why don't you just sell them and make more money? Keep in mind that the equation changes when you consider location and purpose. If you're in a 0.0 corp, moving around large ships can be an issue. In this case, you're right; you might want to obtain all the materials yourself in order to build locally. Also, if you simply want to build stuff becuse this is a videogame and you want to have a bit of fun doing something different regardless of the cost, then by all means do whatever you want regardless of the cost. But don't fool yourself into thinking that you're lowering building costs simply by mining/manufacturing the components yourself. Once you have that ore in your hand, it still has a value and you can still potentially get more money by selling it than by building with it. If you take these things into consideration, then you'll end up having more "isk in your wallet". - By the way, that's why the term 'opportunity cost' is important.
MightyRhinox Minmatar Red Federation	Posted - 2009.10.29 10:37:00 - [51] T1 Ships make a quite realistic profit of 7-12%p.u. This tends to put people off, however, as it's not the uber make loads of isk real fast profit margin people want. It also means you need a big investment to make big money, at t1 ship profit rates you need to spend a billion to make 100mil.
MightyRhinox Minmatar Red Federation	Posted - 2009.10.29 11:29:00 - [52] Now let's take player X. Player X wants to make stuff. Player X values different things differently. Let's look at Player X's values by assigning arbitrary numbers to the value considerations mentioned before: 1=little value 10=highly valued Isk value: Purchasing power=0 Production power=5 Material prestige (I can afford to fly a faction fitted faction BS)=3 Wealth prestige (I have 1 gazillion isk in my wallet)=2 Production value: Personal satisfaction=10 Ease of transport=3 Ease of sale=5 Continuous financial growth=1 Requires minimal focus allowing other tasks to be perform ingame or IRL=7 Mining Value: Easily carried out while performing other tasks IRL=8 0 Isk outlay for small scale production (excluding factory usage fees and taxes)=9 As we can see, player X likes to do things in game that don't take up too much of his attention, derives great pleasure from the simple act of making stuff and isn't too more worried about using less isk to make isk than having stacks of isk. Player X would most likely be classified as a "Mins are free player". His mins were free, it cost him nothing to get them. Their value for him, however, lies in what they can be turned into, not what they can be sold for.
Zatch Gallente Death of Virtue MeatSausage EXPRESS	Posted - 2009.10.29 15:56:00 - [53] Alright, you guys are making this way more complicated than it really is. If the minerals are worth more than the cost of production and transportation, sell the minerals. Again, if you make less money selling the product than selling the materials, sell the materials. Mining costs time. Time = money. Mining costs money. ----- Java Material Level Calculator - v100a7 Released Oct. 5, 2009
Kiyirari All Star Shipyards	Posted - 2009.10.29 17:25:00 - [54] Well making isk is different for many people some are totally stupid and fail the basic grasp off making profit e.g i mined this veld their for its free mentality or sell the desired ship at product cost (this varies depending on your skill and ME lvl of BPO/BPC etc) You will be lucky to make 5% PLUS profit on tier 1 ships, select models of T2 ships will varie from 10% to 20% average depending on poplurarity of said ship Profit also includes region/system market E.G the HUB system like Jita, Rens, Dodixie etc etc their are other smaller hubs and each one prices may varie in E.G your profit margin on any given product, its knowing what sells for what and where to ultimately make ya ISK like a propar phat cat Beware off active market *****s who will match your price or lower it by 0.1 isk maybe even play the field a little with you, ultimately dropping your given profit margin so low that he/she buys all your goods and then sells your items for a profit than you sold them Or you can send me 250 million isk and i'll you the top 10 BPO's to do invention from with a 25% profit margin plus on them Revenge is my god and my guns are her angels
Letrange Minmatar Chaosstorm Corporation Apoapsis Multiversal Consortium	Posted - 2009.10.29 19:05:00 - [55] @uperkurk It all depends on how patient you are and how astute you are in your marketing. An even better way is to do both. Look at it this way: Mining is active acquisition of materials that have value. Manufacturing is semi-passive transforming that material with one value into goods with another value. Buying materials off the market is semi-passive way of acquiring materials for isk. Selling goods or materials is a semi-passive way of tranforming your goods or materials into isk. You can also buy goods for isk and then transform them into materials (reprocessing and the scrap-metal skill. The reason I use "semi-passive" is that it takes (a bit) of time to setup the buy and sell orders and then it takes a while for them to work out. Also for manfuacturing - setting up the run and receiving the final product is active, but you can do other stuff while the manufacturing is running. For anything you manufacture - regardless of whether you use materials you acquired yourself or materials you bought off the market, you should run some cost estimates and check the average sales prices. If you aren't able to sell them for at least 10% above your manufacturing costs all factors considered you should be making something else. Note that sometimes these things go in cycles, so what may be profitable one month may not be the next. One of the reasons I like having a large collection of BPOs is that I'm able to always make SOMETHING that is profitable. And if something is not, I can switch manufacturing to something that is. In the end I usually used a mix of mined minerals and bought minerals. Basically what happened is that my manufacturing and selling skills were able to handle a higher volume of minerals than my mining skills alone could provide. I never manufactured anything I didn't sell at a profit (sometimes I may take months to sell, if someone moved in on a specific item, but then again my reserves were large enough that this did not affect operations - mainly because this had been planned for).
Ana Vyr	Posted - 2009.10.29 19:32:00 - [56] Time is money, friend. I like building stuff from scratch...but that's because I think that's fun to do it that way, not because of profit.
MightyRhinox Minmatar Red Federation	Posted - 2009.10.30 06:57:00 - [57] Originally by: Zatch Alright, you guys are making this way more complicated than it really is. If the minerals are worth more than the cost of production and transportation, sell the minerals. Again, if you make less money selling the product than selling the materials, sell the materials. Mining costs time. Time = money. Mining costs money. No, when you try to apply economic theory to ingame manufacturing decisions it is not that simple and far more complicated than I even posted above. For you, you value immediate isk more than the act of manufacturing, so you decide one course of action, another player has a different value system and does something else. The argument that "You're doing it wrong because economics says so" is complete ******s because economics does not* make value judgements, it's just a set of tools to use analyze options for resources. The course of action you take is based on that analysis is entirely your own decision. Using the "You're doing it wrong" logic we'd all be station traders. And at the end of the day, the free mins crowd wins out because they are able to continue making operating profits and economic profit while forcing other manufacturers dissatisfied with their profit margins out of production of items like t1 frigs and cruisers.
Skippermonkey	Posted - 2009.10.30 17:28:00 - [58] Edited by: Skippermonkey on 30/10/2009 17:30:25 Nothing is free, people just need to put a 'value' to their time. If you mined for an hour and got enough veld to sell on the market for 1M isk, your hour has a value of 1M isk. The question that remains is if you bought 1M isk's worth of veld instead of mining it 'for free', could you spend an hour you would have been mining and earn more than 1M isk in another way? If you can then buy the veld, if you cant mine it. ....something like taht
MightyRhinox Minmatar Red Federation	Posted - 2009.10.31 03:17:00 - [59] Originally by: Skippermonkey Edited by: Skippermonkey on 30/10/2009 17:30:25 Nothing is free, people just need to put a 'value' to their time. If you mined for an hour and got enough veld to sell on the market for 1M isk, your hour has a value of 1M isk. The question that remains is if you bought 1M isk's worth of veld instead of mining it 'for free', could you spend an hour you would have been mining and earn more than 1M isk in another way? If you can then buy the veld, if you cant mine it. ....something like taht Tell me, what's the value of mining? Because, remember, mining itself also has value. You could buy the 1mil isk of veld and go out and make 100mil in an hour pirating (you might get a nice fat ransom). But pirating requires a lot of skill and attention, it means you can't sit back and chat with buddies or watch videos on you tube while you make that 100mil. Is watching an hour of youtube videos and chatting for an hour worth 99million isk? Very much so for some people, not at all for others. Again what you forget is that value=/=isk. Isk is only one value attribute, decinding the value of a course of action, once again, is about finding the right balance of trade-offs for you. To give you a real life example; Why do people choose to become priests and nuns?
Cerfari Terra Incognita Ethereal Dawn	Posted - 2009.10.31 18:51:00 - [60] Time is money Buy low sell high it takes money to make money it takes a village to build a Capital Ship ~----\|+\|----~ Vanguard. KillBoard ~----\|+\|----~

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