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Blue Dice
Gallente
Nano Tech Inc
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Posted - 2007.07.27 09:24:00 -
[1]
ItÆs not a whine against the 0.01 game, if you are strong enough you live with it and adapt to it, either you play it or you donÆt, itÆs up to everyone.
What I would like to discuss here is rather what itÆs influence on the market is.
The EvE-Market is generally based on supply and demand, the more people want something and the rarer the item the higher the price will be. And vice versa. But itÆs only a supply and demand regulation at the first sight, mainly due to the slow reactions of the market.
The EvE-Market is very slow to react to supply and demand (especially to oversupply) due to the fact that a lot of people are using the 0.01 undercut option.
For an item with a price around 100mil it would actually need 100mil undercuts to lower the price by just 1%, even if the supply is higher than the demand as long as no one undercuts by big amounts this item will almost eternally stay at the same price level provided that it has a constant demand too. (ItÆs theoretical as sooner or later someone will lower by more and thus will cut itÆs own profits)
This can very well be observed on several items that keep a certain price level even if mineral prices for itÆs production have dropped a lot.
So my question is if a % based minimal order modification would make the market react faster, would it result in prices actually reflecting a production price and the supply/demand ratio of an item?
IÆm not asking if it would be good in your opinion or ruin your business, I just would like to have some opinions about how the EvE market would change from people who know more about economy than I do.
Nano Tech Inc.
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Robacz
Essence Trade
Essence Enterprises
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Posted - 2007.07.27 10:02:00 -
[2]
0.01 price war is kind of price fixing pact. Producers are decided to keep some price and 0.01 undercutting is their tool to distribute sales between them. At this point, problem with market reacting slowly is not 0.01 itself, but limited competetion in the area, becouse no one is willing to break the price fix and start to compete.
I don't think that producers should be enforced to lower prices by some set amount (or percentage). If they wish to keep their prices at some level and are ok with 0.01 war, they should be allowed to. Price fixing pacts are legal in Eve, so there is no reason to change it.
If you don't want to play 0.01 game, you can always undercut by more until others give up, then price-fix is broken, competetion is re-established and market reacts in supply/demand accordingly.
_________
Always buying: pirate implants & high-end hardwirings
Tech2 distribution service: 8 regions covered |
Daeva Vios
Ardent Adversary
Anvil.
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Posted - 2007.07.27 11:32:00 -
[3]
Edited by: Daeva Vios on 27/07/2007 11:34:29
There are certain other factors that do enforce supply and demand. If you look at the price history of any given item, you'll find that prices are not nearly as static as they look initially.
0.01 pricing is what happens when demand and supply are both relatively stable or the profit margin is extremely low. Unless you're having some sort of fire sale, there's not much call to adjust prices drastically in either direction. The fact is, the market will merely return to its previous state once you're sold out.
About your suggestion, it fails to address one key point: Customers will pay only what they are willing to pay, no more, and suppliers will charge only what customers are willing to pay.
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Motivated Prophet
Zerodot Schools
Power Corrupts Industry's
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Posted - 2007.07.27 16:25:00 -
[4]
 Originally by: Blue Dice
For an item with a price around 100mil it would actually need 100mil undercuts to lower the price by just 1%
I don't understand this. Not trying to be an ******* if it's just a typo on your part, but if it's not, can you explain what you mean, please?
MP
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Proud steward of 47 billion isk in public money, and counting. Ask me about mineral compression! |
Fury Banker
Fury Bank
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Posted - 2007.07.27 16:36:00 -
[5]
Originally by: Motivated Prophet
Originally by: Blue Dice
For an item with a price around 100mil it would actually need 100mil undercuts to lower the price by just 1%
I don't understand this. Not trying to be an ******* if it's just a typo on your part, but if it's not, can you explain what you mean, please?
MP
If price of item is 100 million then a 1% lowering of price means a drop to 99 million.
That's a drop of 1 million ISK. Which, at 0.01 ISK per under-cut, is 100 million price drops.
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Pang Grohl
Gallente
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Posted - 2007.07.27 16:48:00 -
[6]
Originally by: Motivated Prophet
Originally by: Blue Dice
For an item with a price around 100mil it would actually need 100mil undercuts to lower the price by just 1%
I don't understand this. Not trying to be an ******* if it's just a typo on your part, but if it's not, can you explain what you mean, please?
MP
I think the OP means to say it will take 100 million .01 isk undercuts to move the price 1%.
The effect of forcing price adjustments to adhere to any minimum amount is that prices on finished products will be out of sync with changes in production cost by design rather than by human inadequacy.
The reason that .01 isk price adjustments make sense is that once you've procured an item, it's procurement cost is fixed in stone (unless you get some kind of adjustment from your source).
Si non adjuvas, noces
(If you're not helping, you're hurting) |
Shadarle
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Posted - 2007.07.27 16:48:00 -
[7]
Edited by: Shadarle on 27/07/2007 16:50:36
While I think the .01 isk undercutting is absolutely ******** and I don't take part in it myself, I think a percent based system would likely not work well.
If you make it percent based then you're going to run into problems. Either at the high end (if the percentage is too high) when someone has to raise their price by tens of millions or at the low end (if the percentage is too low) by still having .01 increases... or at best .1 or 1.0 increases. Neither of those are much better.
The problem is that each item has a very different market structure. You can't make a single rule for all of them and have it be perfect.
Look at how incredibly stupid auction contracts are for high-end goods. If the bid is 1 billion isk then each successive bid is going to be 100 million more. That doesn't make any logical sense. If an Item generally sells for 1-1.2 billion and you want it to get as many bids as possible then it would be better if the min bid was 5-10 mill, not 100 mill. But because it is percentage based currently it is a worthless auction to place. Contracts need user definable min increases to avoid the problems with a percentage based system.
The solution is instead to leave price changing as it is, but instead to re-charge some portion of the broker fee each time you change the order price. Say 10% of broker fees would be recharged. Maybe even 1%. This causes people to want to update their orders less often as they will be paying more money each time. Thus it gives them an incentive to raise the price to a level that they will not be outbid as often.
Tanking Setups Compared
Stacking Penalty / Resists Explained |
Ki'tal Ereza
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Posted - 2007.07.27 17:30:00 -
[8]
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SonOfAGhost
Minmatar Munitions and Tactical Assets Repository
Zzz
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Posted - 2007.07.27 20:08:00 -
[9]
For every PITA that undercuts by 0.01, there's a moron that undercuts the 1 unit 23 jumps away and deep into low sec by 20%.
Would minimal % change accelerate market adjustments? Yes. However, once close to equilibrium, it would also put a damper on competition.
Lag? GTFOOJ! |
CherylAnne
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Posted - 2007.08.01 16:56:00 -
[10]
Originally by: SonOfAGhost
For every PITA that undercuts by 0.01, there's a moron that undercuts the 1 unit 23 jumps away and deep into low sec by 20%.
QFT. I'll take the PITA over the moron any day.
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Shadarle
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Posted - 2007.08.01 17:11:00 -
[11]
I'd take the moron any day. Morons are the best source of money on the market.
Tanking Setups Compared
Stacking Penalty / Resists Explained |
Maalan
Caldari
Selinir Industries
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Posted - 2007.08.01 20:39:00 -
[12]
Originally by: Shadarle
I'd take the moron any day. Morons are the best source of money on the market.
Indeed, reselling can be quite profitable :)
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Hexxx
Minmatar
ironwood ink
The Sundering
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Posted - 2007.08.01 20:55:00 -
[13]
Reselling, even today with T1 stuff, is a great way to make an easy quick profit.
On a completely different topic, I'd like to thank all the lazy people out there who sold me their T1 stuff well below market value! 
Hexxx LLP - Business Consulting Services - IPO's, Business Plans, Share/Stock Pricing, and general Consulting.
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