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Edwin Rothbard
Interstellar Arbitrage
15
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Posted - 2015.12.15 01:08:24 -
[1] - Quote
When did "I make my own PI" and "I manufacture my components" join "I mine the minerals so they are free" to become the prevailing economic wisdom in EVE?
Admittedly I've never been much of a manufacturer, but I recently stumbled on an item in jita that doesn't make any sense. Using perfect T1 and T2 prints the inputs total 360m in jita for production. This excludes build fees, system cost index fees, pos fuel, brokers fees, taxes, and time to build the items. Plus the upfront cost of the T1 and T2 bpos.
Producing from invented prints can add another 20m to the price tag + the cost of the bpc.
Yet when I look at the units for sale in the forge (nearly all in jita 4-4) virtually every single one of them is listed at a loss. There are multiple sell orders at 314m and the buy orders are at 300m even. How is this even possible?
If you have a pile of components sitting in your hangar that you can sell for 360m in jita they are worth 360m. It doesn't matter if you mined the trit, produced the PI, or built the components yourself. The mats are still worth 360m. Putting those mats in a cooker with a print to produce something that is selling for 314m in jita means you lose 46m+ per unit produced. This makes absolutely no sense.
Since they were selling these at a loss I decided to buy all of them that were below build cost. I bought everything <360m. I paid about 320m average price for the lot. I also placed buy orders at 300m since that was the highest buy order price. I then relisted all of the units at 360m so they would at least be selling at build cost instead of a loss.
I sold a number of them at 358m. Surprisingly people actually sold them to me at 300m buy order price during this same time. I noticed that at least 1 person who had an earlier sell order also later filled my buy order price which means he is likely a producer.
I thought about messaging him and suggesting he send me 60m isk once per day (about the production time) and not produce the items. this way he loses the same amount of money, but doesn't have to do all the clicking.
So now I'm 10b deep into this venture, and they keep selling them to me at 300m/unit.
On the sellers side after a couple days of having the only units for sale on the market more units showed up. they quickly 0.01 isked themselves almost back to where it was before. I considered lowering my prices, but if I do that then i'm doing the same thing of selling them under build cost. Thus I repriced all my units higher to about build cost +7% or 385m a unit. I suspect they won't sell fast with this strategy. :)
I feel like i'm catching falling daggers here. I'm not sure how many of things I really want to own. :) I would think even if they aren't smart enough to realize they are losing money that eventually they will feel it in their wallets and change their behaviour. Or am I too optimistic?
Rothbard's Casino | RothLoans
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Rhivre
TarNec
Invisible Exchequer
830
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Posted - 2015.12.15 01:26:44 -
[2] - Quote
It has always been a mystery, some items are consistently below build cost, right across all tiers of production.
On a much smaller scale, you can often pick up items at 20-30% below build cost from weekend builders, they log in on a Saturday, collect their industry deliveries, and dump them to buy orders for whatever price is there.
This is good for reselling, but can be very bad when you end up with piles and piles of ships (although, before the refine nerf it was very handy)
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Rykker Bow
The Scope
182
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Posted - 2015.12.15 01:28:44 -
[3] - Quote
Not to be a killjoy, but I think your too optimistic. I'm sure your numbers are correct and logic is sound although you may have missed a key variable of xxx^x number of illogical people in the game. The power of those people is enough to ruin any spread. The really bad part is even if you wait out that guy, another one will probably take his place.
/cynicism
The Mjolnir Bloc - Lowsec PvP for the sophisticated -
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Sheeth Athonille
Rabid Dogz Mining
The Bastion
61
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Posted - 2015.12.15 04:50:55 -
[4] - Quote
Could it also be leftover from terricide? Since the build costs of a lot of items have gone up recently, people who had stockpiles of them could still be selling for a profit even though it looks like a loss.
Not sure how much in the way of minerals the items you're dealing with need, so that might not be the reason.
And as others have said, never underestimate the stupidity of people  |
Elizabeth Norn
Nornir Research
773
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Posted - 2015.12.15 05:46:25 -
[5] - Quote
They seem to be doing pretty good at the moment.
WTS ME 10 TE 20 BPOs & BPO Packs
WTS Collectible Large Rigged Small/Medium Ships
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Gilbaron
Free-Space-Ranger
Northern Coalition.
1865
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Posted - 2015.12.15 05:49:53 -
[6] - Quote
T2 BPO |
Kitah Ferranti
Tulip Factory
3
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Posted - 2015.12.15 07:28:54 -
[7] - Quote
Edwin Rothbard wrote:So now I'm 10b deep into this venture, and they keep selling them to me at 300m/unit.
....
I feel like i'm catching falling daggers here. I'm not sure how many of things I really want to own. :)
This is hilarious.
What's the sales history on this item, for Forge and other regions? |
Capsups
Requiem Knowledge
Mortum Ravagers
48
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Posted - 2015.12.15 08:10:38 -
[8] - Quote
Note also that Norn isn't even using more than 1 per run here. Up the count to maybe like 10 per slot and you'll see an even further reduction in price. Building T3 subs for example, you're almost always in the red if you build 1 per slot. Up that count to 20 or 24, and you're suddenly very much in the black. |
TheSmokingHertog
TALIBAN EXPRESS
361
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Posted - 2015.12.15 12:48:38 -
[9] - Quote
Edwin Rothbard wrote:I thought about messaging him and suggesting he send me 60m isk once per day (about the production time) and not produce the items. this way he loses the same amount of money, but doesn't have to do all the clicking.
And the market then shrinks with 1 item per day. Don't forget to mix that in your sell strategy.
Edwin Rothbard wrote:Other stuff *snip*
This is completely true: "I make my own PI" and "I manufacture my components" join "I mine the minerals so they are free", have several corpies who do not understand this is not true.
Beside that, your isk wallet is bigger as most EVE players, don't turn that against them.
Think to consider when other people dump stuff under cost in jita;
- Corp ore buying programs are paying under price most of the time, producers then can produce under cost.
- People dumping out speculation stocks, if you made back your initial invest, you can sit on the rest of your stock for ages, without any direct isk losses. Indirect isk losses however could make you dump out on any price.
- Inter regional traders who are dumping from buy orders all over EVE to sell orders in jita, don't care about the profit, they care about turnover.
"Dogma is kind of like quantum physics, observing the dogma state will change it." ~ CCP Prism X
"Schrödinger's Missile. I dig it." ~ Makari Aeron
-= "Brain in a Box on Singularity" - April 2015 =-
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Captain Tardbar
Deep Core Mining Inc.
Caldari State
1129
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Posted - 2015.12.15 15:10:27 -
[10] - Quote
The economy is driven by stupidity.
"Entitlement" is a euphemism for "I hate the way you play and it makes me cry like a baby".
If you fantasize about being immoral it means you enjoy being immoral deep down.
Captain Tardbar: The official grumpy cat of General Discussion.
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Darkstar01
Republic University
Minmatar Republic
15
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Posted - 2015.12.15 23:52:37 -
[11] - Quote
It's possible the input materials (let's say minerals) used in production were purchased by speculators, and they are using manufacturing as as way to sell their stock. Manufacturing also compresses the minerals, and you have to take into account the shipping cost that you save.
If you have say 600 Billion worth of minerals spread out evenly across the mineral basket, it would be quicker to sell minerals as well as ships.
So it's possible that someone who is holding a lot of mineral stockpile choose to manufacture ships as a way to liquidate their holdings, as well as selling the minerals themselves.
Manufacturing also has the effect of compressing the minerals. Take the Megathron BPO for example. A Megathron requires about 120,000 M^3 of minerals. But the Repackaged ship is just 50,000 M^3.
So if you have a few hundred Billion worth of minerals located in some remote system (as many corps / alliances do), it would be easier to manufacture the ships, rather than selling the minerals because of the hassle of shipping. |
Freya Sunsoar
Caldari Provisions
Caldari State
0
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Posted - 2015.12.16 00:19:29 -
[12] - Quote
Mainly you could chock it up to a player-enforced price ceiling, the masses have gotten so used to paying/selling something at a set price so group mentality just forces it back down to a dump price.
To;dr people are stupid |
Rhivre
TarNec
Invisible Exchequer
831
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Posted - 2015.12.16 00:20:22 -
[13] - Quote
Darkstar01 wrote:It's possible the input materials (let's say minerals) used in production were purchased by speculators, and they are using manufacturing as as way to sell their stock. .
You have no idea how tempted I have been to do this with piles of mineral that I know were purchased in 2008. I have considered doing "Minerals I got in 2008 are free" several times.
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Darkstar01
Republic University
Minmatar Republic
16
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Posted - 2015.12.16 01:02:04 -
[14] - Quote
Rhivre wrote:Darkstar01 wrote:It's possible the input materials (let's say minerals) used in production were purchased by speculators, and they are using manufacturing as as way to sell their stock. . You have no idea how tempted I have been to do this with piles of mineral that I know were purchased in 2008. I have considered doing "Minerals I got in 2008 are free" several times.
Yep, so I think it's kind of the other way around. The Minerals listed at trade hubs are actually being sold at a "premium" rather than the ships being sold at a "discount".
Because minerals are a big hassle to move. And some industrial corps would probably choose to manufacture the ships (which compresses the minerals), rather than just moving and selling minerals themselves. And we also have people like Rhivre who are trying to liquidate their stockpile.
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Paul Pohl
blue media poetry
60
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Posted - 2015.12.16 02:25:27 -
[15] - Quote
I don't see what there is not to understand
Whoever is selling these things to you, either doesn't care about the money, just wants to build them, or is getting the materials at a far cheaper rate than your calculations and is therefore making a healthy profit |
Sabriz Adoudel
Black Hydra Consortium.
5602
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Posted - 2015.12.16 02:50:48 -
[16] - Quote
Darkstar01 wrote:It's possible the input materials (let's say minerals) used in production were purchased by speculators, and they are using manufacturing as as way to sell their stock. Manufacturing also compresses the minerals, and you have to take into account the shipping cost that you save (or the shipping cost that people incur by moving the minerals to Jita). Minerals are a hassle to move, and I'm sure you know that 99.99.....% of the minerals are not mined at trade hubs.
If you have say 600 Billion worth of minerals spread out evenly across the mineral basket, it would be quicker to sell minerals as well as ships.
So it's possible that someone holding a big mineral stockpile choose to manufacture ships as a way to liquidate their holdings, as well as selling the minerals themselves.
Manufacturing also has the effect of compressing the minerals. Take the Megathron BPO for example. A Megathron requires about 120,000 M^3 of minerals. But the Repackaged ship is just 50,000 M^3.
So if you have a few hundred Billion worth of minerals located in some remote system (as many corps / alliances do), it would be easier to manufacture the ships, rather than directly selling all of the minerals, because it would save a few shipping trips, and also the market cannot absorb all those minerals.
But when they are shipping, they also have to be careful about not turning themselves into a high-value target, because if their cargo is too valuable then they are subject to ganking. And Courier contracts would not work if the cargo value is too high, as not many couriers will have the ISK to put up for collateral, or willing to take the risk.
You can sell minerals at excellent prices without moving them. Your primary concern isn't paying someone to get them to the hub, it's paying someone to grind standings for you with the corp that owns the station they are located in so you can sell them there.
Especially if you have a mixed basket of minerals spread between multiple stations with no more than fifty billion ISK at any one station.
I support the New Order and CODE. alliance. www.minerbumping.com
Sabriz's Rule: "Any time someone argues for a game change claiming it is a quality of life change, the change is actually a game balance change".
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Do Little
Bluenose Trading
253
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Posted - 2015.12.16 09:31:03 -
[17] - Quote
I am a vertically integrated producer - not because it is the most efficient way to do business, but because I enjoy participating in every step of the value chain. We are, after all, playing a game - not running a business. None the less, my business is very profitable because I've learned - through trial and error - what works.
One point overlooked in this conversation is that a single character can mine, harvest PI, invent, manufacture and sell their finished goods simultaneously. With a few skills like scientific networking and supply chain management, you can run your business siting in an exhumer just as easily as sitting in a station and the minerals you harvest don't need to be purchased. You can debate the opportunity cost of selling the ore instead of incorporating the minerals into manufactured goods and selling them instead but - bottom line: if you are making isk and enjoying the process, you're doing it right! |
Teckos Pech
The Executives
Executive Outcomes
4082
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Posted - 2015.12.17 00:49:40 -
[18] - Quote
Rhivre wrote:It has always been a mystery, some items are consistently below build cost, right across all tiers of production.
On a much smaller scale, you can often pick up items at 20-30% below build cost from weekend builders, they log in on a Saturday, collect their industry deliveries, and dump them to buy orders for whatever price is there.
This is good for reselling, but can be very bad when you end up with piles and piles of ships (although, before the refine nerf it was very handy)
Oliver Williamson is not happy with you. 
Upgrading Local to Eliminate All AFK Influence
So Local Chat vanished, now what?
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Teckos Pech
The Executives
Executive Outcomes
4082
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Posted - 2015.12.17 01:29:08 -
[19] - Quote
Why do firms (corporations) exist? Why not have everything done in the market place? Or think about this,
Quote:His focus on the costs of transactions has led Williamson to distinguish between repeated case-by-case bargaining on the one hand and relationship-specific contracts on the other. For example, the repeated purchasing of coal from a spot market to meet the daily or weekly needs of an electric utility would represent case-by-case bargaining. But over time, the utility is likely to form ongoing relationships with a specific supplier, and the economics of the relationship-specific dealings will be importantly different, he has argued.
In other words, suppose you find a buyer and he'll buy your goods at regular intervals. Would you charge him a different price than you might charge if you tried to sell the goods on the market? Maybe give him a slightly better price than he could get off the sell orders on the market? After all, this could be a long term relationship (i.e. more than just a buyer-seller relationship). You benefit from selling all of your goods immediately vs. taking time to sell them to many customers. He benefits by getting a large quantity and possibly not having to travel around picking up smaller amounts in many systems.
In other words, markets are great, but they arenGÇÖt so awesome that corporations do not formGÇöi.e. there is still a benefit to integrating your process.
In EVE by building your own components you are not paying somebody elseGÇÖs mark up, taxes, fees, etc.
Using this website,
http://eve-industry.org/calc/
We see that building an obelisk costs 1.858 billion ISK, and you can sell the obelisk for 1.317 billion ISK. However, if you build your own components, e.g. Capital Propulsion Engine, it will cost 1.285 billion ISK and you make a 25 million profit. Part of the reason is the cost of the things like the Capital Cargo Bay cost you far less than buying them off the market. In other words, there is a considerable mark up on the Capital Cargo Bay.
In short, market transactions are not costless. Transaction costs are a thing.
Upgrading Local to Eliminate All AFK Influence
So Local Chat vanished, now what?
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Lucas Kell
Internet Terrorists
SpaceMonkey's Alliance
6970
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Posted - 2015.12.18 08:41:55 -
[20] - Quote
It may be that they got that stock for below the price you're now buying it for, prices have just shifted. Sometimes I'll dump stock at a price that looks favourable to the buyer but still nets me a fair profit because I know it will take a long time to squeeze out that extra profit and can better reinvest my funds. It could also be that someone built them when the prices were different and are just now getting rid of them. They may not have even built them and may have bought them and not even bothered looking up the manufacture costs because it's irrelevant when station trading them. The point is that there's reasons for doing a lot of things that to an outsider look crazy but work out for the individual.
The Indecisive Noob - EVE fan blog.
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Captain Tardbar
Deep Core Mining Inc.
Caldari State
1137
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Posted - 2015.12.18 18:42:16 -
[21] - Quote
Paul Pohl wrote:I don't see what there is not to understand
Whoever is selling these things to you, either doesn't care about the money, just wants to build them, or is getting the materials at a far cheaper rate than your calculations and is therefore making a healthy profit
Why not sell the minerals at higher prices?
"Entitlement" is a euphemism for "I hate the way you play and it makes me cry like a baby".
If you fantasize about being immoral it means you enjoy being immoral deep down.
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Rhivre
TarNec
Invisible Exchequer
833
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Posted - 2015.12.18 19:05:54 -
[22] - Quote
Captain Tardbar wrote:Paul Pohl wrote:I don't see what there is not to understand
Whoever is selling these things to you, either doesn't care about the money, just wants to build them, or is getting the materials at a far cheaper rate than your calculations and is therefore making a healthy profit Why not sell the minerals at higher prices?
The ship takes up less space than the materials
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Buzz Orti
State War Academy
Caldari State
68
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Posted - 2015.12.19 19:20:07 -
[23] - Quote
Edwin Rothbard wrote:When did "I make my own PI" and "I manufacture my components" join "I mine the minerals so they are free" to become the prevailing economic wisdom in EVE?
...
Also, mine minerals so that you don't have to buy them from someone else, thus, are no longer free for them (since they'd make a potential profit from you). |
Teckos Pech
The Executives
Executive Outcomes
4142
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Posted - 2015.12.20 04:22:32 -
[24] - Quote
Captain Tardbar wrote:Paul Pohl wrote:I don't see what there is not to understand
Whoever is selling these things to you, either doesn't care about the money, just wants to build them, or is getting the materials at a far cheaper rate than your calculations and is therefore making a healthy profit Why not sell the minerals at higher prices?
There is also a possible time value of money aspect as well.
Upgrading Local to Eliminate All AFK Influence
So Local Chat vanished, now what?
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Vaerah Vahrokha
Vahrokh Consulting
5674
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Posted - 2015.12.24 19:27:53 -
[25] - Quote
It's always a dangerous assumption to believe people are too dumb. Usually it's true, but in certain fields there might be somebody who is outplaying even the wise guy who checks materials price.
Now I don't really play so I did not check, but in the past I'd do:
1) Purchase and resale of stuff for well below production cost. Items DO come for close to free sometimes (pirate dumping loot).
To a station trader, it does not matter whether an item is largely below production cost, he cares to resell it for higher than he purchased it for, that's it. Somebody, along the buy/sell chain that led do said station trader stock, lost money... the station trader does not care, he buys at X and sells at X + Y, he's focused on Y.
2) Speaking of pirates, there's the simple fact that many professions create minerals as byproduct or can create so much ISK that those minerals (or modules then bought and melted and resold by reproccers) basically just pad up the real income.
A guy making say 80M per hour with PvE, is not exactly going to care if he's dumping excess loot at a mediocre price. He saves switching ship and wasting 15 minutes to fly to a better station by making 20M in those 15 minutes. Who cares if he's losing 2M because the station prices are not so good.
3) Another thing I have done on a massive scale, is to purchase hundreds of billions worth of stuff during the summer (prices used to tank wheh I did that) and then dump that stuff close to Christmas.
To somebody using a "materials calculator" app it'll sound like I am losing say 3% ("he's dumb!"), whereas I am gaining 30% with all of about 10 minutes of effort every 6 months. The materials calculator is not going to reveal this price history.
Auditing | Collateral holding and insurance | Consulting | PLEX for Good Charity
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Adunh Slavy
1625
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Posted - 2015.12.29 21:43:30 -
[26] - Quote
Edwin Rothbard wrote:
Admittedly I've never been much of a manufacturer, but I recently stumbled on an item in jita that doesn't make any sense. Using perfect T1 and T2 prints the inputs total 360m in jita for production. This excludes build fees, system cost index fees, pos fuel, brokers fees, taxes, and time to build the items. Plus the upfront cost of the T1 and T2 bpos.
Producing from invented prints can add another 20m to the price tag + the cost of the bpc.
Yet when I look at the units for sale in the forge (nearly all in jita 4-4) virtually every single one of them is listed at a loss. There are multiple sell orders at 314m and the buy orders are at 300m even. How is this even possible?
It makes perfect sense. What does not make sense is assuming that the cost to build something has anything to do with what someone else will pay for the finished product.
Necessity is the plea for every infringement of human freedom. It is the argument of tyrants; it is the creed of slaves.-á-á- William Pitt
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Buzz Orti
State War Academy
Caldari State
78
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Posted - 2016.01.01 01:30:53 -
[27] - Quote
say enemy A's philosophy is to sell products to invest in war efforts, mercs and what not.
by producing item 'B' with resouces 'C', A does not get the ISK from you he used to, which in turn he used to bash you over the head with, cybernetics boosters may vary.
So, do you lose 10,000% profit or make 20,000% by investing more wisely, and avoiding loss of spoils of war?
Edit:
This is not a good example because you can't buy resources 'C' if the seller or source of 'C' is allied with A. |
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