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Dracnys
21
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Posted - 2013.05.17 16:17:00 -
[31] - Quote
To give the economics 101 answer:
Producers will enter the market as long as there is a profit to be made (mineral cost+opportunity cost>sell price). With more producers the market price will go down, until it is equal to the mineral cost+opportunity cost. This is called the equilibrium price. For manufacturing battleships this could be somewhere between 5-10% above mineral cost. At that time no more producers will enter or leave the market.
What do I mean by opportunity cost? The producer has to spend time to buy minerals, move them to his factory, make a few hundred clicks, move the finished ships back to market and play the 0.01 ISK game to sell them. He could do something else with that time. He also needs to invest capital into the blueprint and the minerals. |
Hune Orphious
Deep Core Mining Inc. Caldari State
0
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Posted - 2013.05.17 16:34:00 -
[32] - Quote
Harry Forever wrote:normally a manufactured ship should be at least 20-50% more expensive, it seems like the manufacturers do not want to have a margin on what they do, for me it does not make sense to manufacture if selling the raw material gives the same profit
You are simplifying the entire equation into some economic law you saw once. There is no reason that the ships should command a 20-50% valuation upon cost. There is neither a scarcity of producers nor a high barrier to entry. Many are produced so cheaply because many people decided they wanted to build ships and are willing to do so for very small margins. Yet more produce ships at a LOSS because they do not run the figures and fail to realize that the ships they produce with their mined/bought materials are not free, and they would make more money just selling the resources. |
March rabbit
epTa Team Inc.
681
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Posted - 2013.05.17 17:26:00 -
[33] - Quote
Steve Ronuken wrote:Because they could just resell the minerals at market prices. to resell the minerals you just mined you need: 1. get ore into station 2. refine ore 3. haul minerals to trading hub 4a. organize sell orders and babysit it until it sold 4b. drop minerals into existing buy orders 4a and 4b paths have their own pros and cons.
All by all this is EFFORT and TIME. You just exchange this to some amount of ISK which would be taken by other players.
From corporation point it looks even more stupid: even bought minerals from sell orders, used BPC from public contracts i build ship for few millions less than if i buy it from market buy orders. Reduce mineral prices by 10-15% and you have good profit for your corp.
Steve Ronuken wrote:MIMAF in another form. or you just never mined and never managed it. |
Steve Ronuken
Fuzzwork Enterprises
1412
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Posted - 2013.05.17 18:55:00 -
[34] - Quote
I've mined.
I've managed people mining.
You don't see where you're throwing isk away, when you build a ship, and sell it below the value of the minerals on the open market?
That's hardly a 'good profit'.
That's a 'marginal profit, because you're sponging off your miners'
And just to rebut a little:
you still have to: 1. get ore into station 2. refine ore 3. Ship the finished goods to a station. Sure, the volume will often be lower. But then again, you're then burning your own time to do it. if you're using someone like Red Frog, you still cap out at 1 billion. That's full freighter of trit to move. 4a: Sell the goods. Of course, as you're throwing away your isk, not so much baby sitting is needed. 4b: sell to a buy order. This is generally less of an option, unless you're in jita.
There are people like me out there who check for minerals in their vicinity, not just jita. And will pay Jita sell order prices, as long as you're trying to sell millions of units at a time. Steve Ronuken for CSM 9!-á I'm starting early :) Handy tools and an SDE conversion Twitter: @fuzzysteve on Twitter |
Daimar Lavode
12
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Posted - 2013.05.17 22:13:00 -
[35] - Quote
Dracnys wrote:To give the economics 101 answer:
Producers will enter the market as long as there is a profit to be made (mineral cost+opportunity cost>sell price). With more producers the market price will go down, until it is equal to the mineral cost+opportunity cost. This is called the equilibrium price. For manufacturing battleships this could be somewhere between 5-10% above mineral cost. At that time no more producers will enter or leave the market.
What do I mean by opportunity cost? The producer has to spend time to buy minerals, move them to his factory, make a few hundred clicks, move the finished ships back to market and play the 0.01 ISK game to sell them. He could do something else with that time. He also needs to invest capital into the blueprint and the minerals.
To extend that a little further, the Economics 101 answer also assumes knowledgeable and logical producers. People playing the game that love building ships may be neither. Those people may supplement their income through mission running, mining, exploration, scamming, etc. and not even know they are not making a profit or enough profit to justify producing. |
Milegherete
Avarice Unlimited
2
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Posted - 2013.05.18 02:50:00 -
[36] - Quote
What i mine is free right? So i get 100% markup all times yo... |
Mu-Shi Ai
Ai Capital
202
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Posted - 2013.05.18 03:32:00 -
[37] - Quote
Milegherete wrote:What i mine is free right? So i get 100% markup all times yo...
This stopped being funny long ago. |
Danari
Viziam Amarr Empire
9
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Posted - 2013.05.18 16:45:00 -
[38] - Quote
Secret Squirrell wrote:Since I didn't see it mentioned, in addition to production efficiency 5, you pretty much need a well researched blueprint to manufacture ships at a profit.
Also, for many manufacturers, they are sufficiently capitalized that the isk/hour/manufacturing slot metric matters more then the profit margin.
Factory isk/hour matters less than you think. When I added Apoc and Abaddon to my portfolio, the mineral requirements to keep them fed skyrocketed. I'm one of the biggest if not the biggest T1 producer in Amarr (Red Frog tells me I'm their second largest customer in the game so I'm not a small producer by any measure) and it took well over a year to properly capitalise just these two blueprints. Just because a blueprint pays 500-1000k/hr in factory time doesn't mean you can keep it flowing indefinitely.
It's a delicate game on the supply side, and I'm continually having to hold back on the sales side in order to keep higher margin items (rigs) flowing without disruption. These higher margin items nominally are less efficient through the factory, but that's academic if you can't keep up on the supply side.
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xPredat0rz
Grey Templars Fidelas Constans
39
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Posted - 2013.05.19 04:06:00 -
[39] - Quote
so basically the smart thing to do would to be build/buy a metric **** ton of these lower cost battleships and relist/reprocess them for profits.
I used X amount to build it yesterday and i get Y amount today. Would this not create minerals out of thin air? |
Steve Ronuken
Fuzzwork Enterprises
1416
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Posted - 2013.05.19 04:14:00 -
[40] - Quote
xPredat0rz wrote:so basically the smart thing to do would to be build/buy a metric **** ton of these lower cost battleships and relist/reprocess them for profits.
I used X amount to build it yesterday and i get Y amount today. Would this not create minerals out of thin air?
The changes to ship build materials were done using 'extra' materials. These are not returned when you recycle the ship.
(specifically so people couldn't go and create trillions worth of minerals with the release) Steve Ronuken for CSM 9!-á I'm starting early :) Handy tools and an SDE conversion Twitter: @fuzzysteve on Twitter |
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Dyphorus
Volition Cult The Volition Cult
20
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Posted - 2013.05.19 05:44:00 -
[41] - Quote
Economics. If you really don't understand it, you're probably not going to pick it up on these forums.
Better answer. You aren't living alone in a vacuum in EVE. There are thousands of other pilots comping with you. The number of variable contributing to the market value of ships, ore, etc.... is huge. On lower end stuff, as I assume you're looking at, it's even worse because just about anyone can jump into the market with very little SP. |
Merdaneth
Angel Wing.
224
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Posted - 2013.05.19 09:20:00 -
[42] - Quote
Dracnys wrote:What do I mean by opportunity cost? The producer has to spend time to buy minerals, move them to his factory, make a few hundred clicks, move the finished ships back to market and play the 0.01 ISK game to sell them. He could do something else with that time. He also needs to invest capital into the blueprint and the minerals.
But, in EVE, opportunity cost of manufacturing can be negative, as people like to manufacture and sell stuff for fun.
Same thing with piracy in EVE. Pirates usually operate at a loss, but since piracy is a leisure activity people are willing to pay to pirate.
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Dyphorus
Volition Cult The Volition Cult
20
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Posted - 2013.05.19 13:35:00 -
[43] - Quote
Merdaneth wrote:Dracnys wrote:What do I mean by opportunity cost? The producer has to spend time to buy minerals, move them to his factory, make a few hundred clicks, move the finished ships back to market and play the 0.01 ISK game to sell them. He could do something else with that time. He also needs to invest capital into the blueprint and the minerals. But, in EVE, opportunity cost of manufacturing can be negative, as people like to manufacture and sell stuff for fun. Same thing with piracy in EVE. Pirates usually operate at a loss, but since piracy is a leisure activity people are willing to pay to pirate.
It doesn't matter if you enjoy it, opportunity cost still applies. By choosing to do one thing, you are choosing not to do any one of the infinite other things you could have done with that given amount of time/resources. And if all you're worried about is fun, rather than profit, wtf did you start this thread for? A whine about the game not giving you piles of isk for doing what ever you feel like doing at any given time?
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Adunh Slavy
807
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Posted - 2013.05.19 15:52:00 -
[44] - Quote
Do not forget the other opportunity costs involved here. They paid $15 for their month of game time to do whatever they want. They could have spent the $15 on going to a movie and making zero space bucks in Eve. They could choose to not play Eve; work an extra hour at their RL job and then buy a PLEX and make 500 million ISK. or spend that hour mining, shipping and building for 5 million ISK.
To ignore all the aspects of opportunity cost involved, in the activity of making ships on Eve, is to miss the point entirely. The MIMAF crowd may be annoying, but if they have fun, then that is what matters to them. |
Loki Feiht
Feiht Family Clan
76
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Posted - 2013.05.20 09:22:00 -
[45] - Quote
Mostly I would assume its becuase of miners tendencies of 'if I mine it its free' More NPC thread https://forums.eveonline.com/default.aspx?g=posts&t=220858 |
Vincent Athena
V.I.C.E.
1869
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Posted - 2013.05.20 17:55:00 -
[46] - Quote
Skydell wrote:............Nobody manufactures from Jita.............. Is that why all the manufacturing slots in Jita are booked up for weeks? http://vincentoneve.wordpress.com/ |
Kara Books
Deal with IT.
619
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Posted - 2013.05.20 23:17:00 -
[47] - Quote
Because right now Lowsec industrialists have complete and utter price advantage, mineral availability advantage over highsec industrialists.
the prices will continue to push south |
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