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Montine FleurdeLys
DEEP-13
12
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Posted - 2014.04.28 18:38:00 -
[1] - Quote
I'm wondering how you guys handle mineral cost in your profit calculations. Do you buy freighters full of it several regions away if it's a bit cheaper there?
Do you mine it yourself and add the market price to your markup? If so do you use the lowest sell order price or the highest buy order price?
I'm asking from the point of view of a lone "wanna be" industrialist with a one person corp. |
Shoogie
Serious Pixels
88
|
Posted - 2014.04.28 18:53:00 -
[2] - Quote
Price for raw materials is the lowest sell price in the same market hub I plan to sell my finished goods. Price I expect for finished goods is also the lowest sell price in the same place. You could use highest buy price for both of the above instead, but you need to compare the same number for each in order to see if you are making manufacturing profit.
Certainly, if you have the time you should take advantage of lower cost materials in a different region. But if you do, that is hauling profits, not manufacturing profits.
You could also mine some of the minerals too. But that is mining profits. You still need to calculate manufacturing profits based on the market price of the minerals. Then you can learn if your item is worth manufacturing, or if you would be better off selling the minerals. |
Gully Alex Foyle
Black Fox Marauders
Repeat 0ffenders
162
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Posted - 2014.04.28 18:56:00 -
[3] - Quote
I buy materials, using buy orders.
I buy them 'far away' only if the price difference is definitely worth the extra hassle - that's a personal assessment obviously.
If I mined them, I would probably value them at the highest buy order. That's because I would only mine if I found it enjoyable (which I don't  ), so it would be reasonable to consider the lost profit of not selling the materials.
Valuing them at lowest sell price would maybe be more reasonable if you were considering 'mine or buy' from a purely economic point of view. Or if for some reason you think it would be unlikely for you to source the materials with buy orders.
Also note that in major trade hubs, buy/sell of minerals is very close so it actually doesn't make much difference. 
TL;DR it's COMPLETELY up to your personal preference and point of view, as long as you don't think that minerals you mine are free! |
ST Mahan
State War Academy
Caldari State
4
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Posted - 2014.04.28 19:48:00 -
[4] - Quote
For minerals I just buy them. When looking at using buy orders or just buying from sell orders I look at the spread in the price difference. You have to factor in a personal preference for how long you want to wait to actually get the materials if you use buy orders. One thing to look at is how often you can turn your production slots (hopefully always full) and how much isk you want tied up in WIP or inventory. I found starting out that with little isk I wanted to turn my buy orders quickly and also to sell stuff quickly. The velocity of my production cycle made more of a difference than an extra 1-3% on some raw material prices.
The decision is going to depend upon how much time you want to spend with it (adjusting prices), how long you want to wait to buy/sell items (raw & finished) and how much travel time you want to spend.
Having said this, I'm a T2 heavy ship producer. So I do find that for moon goo the price difference between the buy and sell orders is often very significant; totally overshadowing the mineral buy/sell spread. Moon Goo for me is where I spend my time with buy sell decisions.
Starting out you need to factor in how long do you have to wait to fill your order and could waiting for that savings slow down your production turns. Ideally you should be focusing on items where you make isk no matter how you acquire your materials; the issue then becomes how much do you make and how long does it take.
I do occasionally mine but don't factor that into costing. I always make sure I'm good on margin with the market price for the minerals. |
Loraine Gess
Confedeferate Union of Tax Legalists
233
|
Posted - 2014.04.28 19:49:00 -
[5] - Quote
Jita sell price for everything. |
Tau Cabalander
Retirement Retreat
Working Stiffs
3527
|
Posted - 2014.04.29 00:41:00 -
[6] - Quote
I value anything in my possession at sell order prices.
I value other people's possessions at buy order prices.
A ship in your hangar is worth less to me than a ship in my hangar, so I will offer to buy your ship for less ISK than I'd sell the same ship for. |
SJ Astralana
Syncore
39
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Posted - 2014.04.29 02:32:00 -
[7] - Quote
I use actual costs, as nothing else makes sense to me. For instance, our good friend Trit. The average market history price sits much closer to the top buy price than the bottom sell price. This tells you that buy order volumes are much higher than sell order volumes, so it's not meaningful to say that I bought a billion units of trit and could have sold them at the sell order prices. If I tried to move that much trit, the sell order prices would collapse down to the buy order prices, and anything in production that doesn't scale is simply academic.
I do range ordering, as I save a few points off my costs, and spend a small fraction of a point to move it.
So in the end, a weighted rolling average of actual costs is the only value that makes sense in my production chain.
Hyperdrive your production business: Eve Production Manager |
Felicity Love
Whore and Peace
1713
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Posted - 2014.04.29 02:32:00 -
[8] - Quote
INB4 the "the minerals you mine yourself are free" nubbins...
I find that sourcing minerals, at a decent price, is only half the thinking.
Figure out where you are going to sell your "stuff", as better prices can often be found in secondary and/or remote hubs bordering Null, Low and Hi Sec islands.
... and I was just saying the other day, "Damn, I miss Soundwave"....
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Kun'ii Zenya
The Executives
Executive Outcomes
7
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Posted - 2014.04.29 14:26:00 -
[9] - Quote
Montine FleurdeLys wrote:I'm wondering how you guys handle mineral cost in your profit calculations. Do you buy freighters full of it several regions away if it's a bit cheaper there?
Do you mine it yourself and add the market price to your markup? If so do you use the lowest sell order price or the highest buy order price?
I'm asking from the point of view of a lone "wanna be" industrialist with a one person corp.
If you mine it yourself you always add the market cost to your calculations. The basic idea here is opportunity cost.
Since you are in a 1 man show, I'd advise buying it through buy orders not trying to mine it yourself...unless you have LOTS of free time, or can semi-AFK mine while doing other stuff. |
Volar Kang
Kang Industrial
152
|
Posted - 2014.04.29 17:36:00 -
[10] - Quote
I use different numbers for different items so I get a true cost and profit numbers. I mine my own minerals and PI items so I use the highest sell order because that is what I would have made if I sold them. For moon goo and the minerals I dont mine, I use the buy cost since that is what it cost me to buy them. I also keep these two line items (total buy cost and total sold cost) so I can see how much I am spending to make the profit and how much I could make if I did not make the item. This way I can see exactly how much profit I will make and can decide if its worth the effort or if I should just sell my materials
EDIT: By sell order, I mean the highest order I can sell at. This was written from my POV and not from the market categories. |
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