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Joras Fett
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Posted - 2011.03.30 23:04:00 -
[1]
What are the 5 things you have to add into an item to determine its cost?
I know that 2 of them are broker fees and sales tax.
For instance if I have Item A, I'd add what to it to get what the market price should be.
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durikaka
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Posted - 2011.03.31 05:50:00 -
[2]
-Component Material cost
-Manufacture slot rental fee
-Brokers fee
-Sales taxes
-Location (people are willing to pay more for a product if they dont have to fly to a market hub to get it)
If you dont take the first two into account as well youll just end up selling your end product at a loss as you would have made more money just selling the mats. As for the last one its hard to put a value on but trial and error testing will teach you how much you can sell your product for.
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Maplestone
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Posted - 2011.03.31 06:21:00 -
[3]
Edited by: Maplestone on 31/03/2011 06:22:19
Once you get beyond the pure profit/loss, there's another level of accounting to consider:
character opportunity cost (unless you have infinite alts, the character's jobs/orders are finite - the time that those slots are used has a cost)
inventory cost (there are market fluctuations, you may have to carry inventory of inputs or products to smooth things out - that's a sum of ISK tied up not doing anything else)
insurance cost (risk of piracy/war causing losses)
player opportunity cost (everyone has a quota of time to play, whether you have an hour a week or 12 hours a day ... managing a supply chain, hauling, fighting 0.01 ISK wars and watching spreadsheets takes time)
(admittedly, aside from stating final profit estimate in profit/day to catch the opportunity cost, I just sort of wave my hands at the other items rather than actually try to put numbers to them)
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Kelestria
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Posted - 2011.03.31 19:21:00 -
[4]
If you're manufacturing you will also want to include a portion of the blueprint and research slot costs to determine the point where the profit you get from selling the item is truely profit and not recovery of the initial cost to purchase and research the blueprint |
Yarrow Naritus
Caldari
Divisione Ricerca e Sviluppo
OWN Alliance
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Posted - 2011.03.31 19:52:00 -
[5]
I also incorporated a profit per hour column on my manufacturing spreadsheet. I used % over cost at first, but then starting caring less about whether I made 20% or 50%, and more about if I make 50k isk/hour manufacturing hour vs. 500k isk/hour.
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Maplestone
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Posted - 2011.03.31 22:15:00 -
[6]
Oh - good point, I still sometimes look at % over cost when choosing to put a toe into a new or risky venture to maximize the wiggle room in case I make a mistake.
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Velicitia
Open Designs
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Posted - 2011.04.01 14:39:00 -
[7]
Edited by: Velicitia on 01/04/2011 14:40:46
 Originally by: Kelestria
If you're manufacturing you will also want to include a portion of the blueprint and research slot costs to determine the point where the profit you get from selling the item is truely profit and not recovery of the initial cost to purchase and research the blueprint
to a degree -- on the other hand though, a researched print will MINIMALLY sell at NPC buy order (unless you f**k it up and put up an auction starting at 1m -- then the buyer can get lucky and get it below NPC cost), so you don't need to count its price into your profit/loss -- it's a capital asset (or something along those lines).
EG:
BPO == 40m
Research == 5m
Researched BPO (on contract) == 45m
Material cost == 5 mil (per)
Sell Price == 6 mil (per)
you make say 10. At the end of the day:
Expenditures == 50m
Income == 60m
Profit == 10m
it "looks" like you need to sell 35 more to "break even", but you've still got the researched BPO on hand, as it's not consumed by the building process.
MFG Profit + Capital (the BPO) == 55m at the end of the day.
Edit -- OFC, if you're using BPC bought off contract, then the price per run is (Materials + (BPC Cost/BPC Runs))
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Toshiro GreyHawk
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Posted - 2011.04.01 16:13:00 -
[8]
Yes. The nice thing about researching your BPO's is that it's a one time event (assuming you do all the research you're going to do the first time you do it). Most have unlimited runs, so once you've bought it and researched it - you can make a million of the things and not incur that particular cost again.
Your biggest risk is losing them in transport to some pirate, so if you don't move the things or pay damn good attention to what you're doing if you do - once you've got one and finished it's research you're good to go forever.
So - you've got one time start up costs and then you've got on going production costs. You just want to have an idea of how long it's going to take you to recoup your initial investment when deciding what to make - which is actually a Trade consideration.
The most important thing to keep in mind as an industrialist - is that nothing you make is worth anything (unless you use it yourself) without Trading. All the skills and experience in the world can mean nothing if you blow the sale of your product - or produce a product you can't sell.
One of your biggest start up costs - is the TIME - it takes to do your market research on the viability of the thing you're going to make. Figure out what you can make - over time - with the thing you're doing market research on - and where you can sell it - BEFORE - you buy the blue print - not after ...
The biggest mistake a lot of wannabe industrialists make - is to decide they want to make something - make it - and then try to figure out how to sell it. No. That is NOT what you want to do.
You can create alts and train them in parallel but you yourself have to not only understand how to manufacture something - but how the market works as well. Mostly - it's better to learn how to use the market first - as you can just make money trading - and THEN decide to become an industrialist.
Of course - if you've got an experienced Trader in your corporation - that you trust - then you can let them do the trading but otherwise - you need to be able to do that yourself.
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Orbiting vs. Kiting
Faction Schools |
Kesshisan
Minmatar
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Posted - 2011.04.01 20:14:00 -
[9]
Originally by: durikaka
-Location (people are willing to pay more for a product if they dont have to fly to a market hub to get it)
I agree with durikaka, especially on this point.
Making a profit via manufacturing requires knowing how to make stuff (ingame skills,) and knowing how to sell stuff (ingame and out of game skills.)
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