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Altalicious
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Posted - 2008.01.28 21:04:00 -
[31]
Originally by: Danari
Originally by: Altalicious The whole point of getting it was to bolster my T2 production position.
Would just like -- nay, enjoy immensely -- to point out that you just posted a 4-paragraph circular argument that reduces down to 'because'.
And that's the whole point of this game isn't it? Just because.

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Myrdyr
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Posted - 2008.01.28 21:07:00 -
[32]
You're behaving ignorantly when you simply use a single snapshot in time of Jita's lowest sell order to judge production costs. Or the highest buy order either, depending on when you take it and what it is exactly.
It's not isk until it's in your wallet, and there's pretty much always someone with a lot more money than you doing their best to make sure they make more than you off what you're trying to do.
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Shadarle
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Posted - 2008.01.28 21:16:00 -
[33]
Originally by: Altalicious
Originally by: Danari
Originally by: Altalicious The whole point of getting it was to bolster my T2 production position.
Would just like -- nay, enjoy immensely -- to point out that you just posted a 4-paragraph circular argument that reduces down to 'because'.
And that's the whole point of this game isn't it? Just because.

If you say so.
Personally I'd rather invest money into something that will yield 10-15% than a T2 BPO that will yield 3%.
And I personally just invested 25 billion isk I had sitting around and that should yield an average of 12% returns for me worst case, best case closer to 20%. Alternatively I could have purchased one of those T2 BPO's and made 3% but I could have increased my T2 production ability! Let me see, 12% or 3%.... doesn't take much thought to decide which one to go with.
Even a Mothership BPO making copies yields higher returns than the T2 BPO's on contracts and it requires a hell of a lot less work. Every 58 days you have to restart copying and then place the bpc on contracts. Compare that to all the work involved in T2 production and sales (and it is a lot more work than some realize, depending on what you produce).
Tanking Setups Compared
Stacking Penalty / Resists Explained |

Shadarle
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Posted - 2008.01.28 21:18:00 -
[34]
Originally by: cosmoray Oh really!!!!!
Using Jita pricing is probably the best way to determine cost and profit margin.
e.g. Option 1. If your components cost 50ISK, and your T2 items sells for 100ISK = 50ISK profit Option 2. If your components cost 50ISk but you can sell at Jita for 80 ISK = 30 ISk profit on components Therefore profit on T2 item is only 20ISk.
Always price items on current selling cost to get true profit.
This is exactly right. You have to understand the difference between making profit from hauling/trading and making profit from manufacturing. Anyone who doesn't understand this is losing out.
Tanking Setups Compared
Stacking Penalty / Resists Explained |

Myrdyr
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Posted - 2008.01.28 21:21:00 -
[35]
Originally by: Shadarle
Originally by: cosmoray Oh really!!!!!
Using Jita pricing is probably the best way to determine cost and profit margin.
e.g. Option 1. If your components cost 50ISK, and your T2 items sells for 100ISK = 50ISK profit Option 2. If your components cost 50ISk but you can sell at Jita for 80 ISK = 30 ISk profit on components Therefore profit on T2 item is only 20ISk.
Always price items on current selling cost to get true profit.
This is exactly right. You have to understand the difference between making profit from hauling/trading and making profit from manufacturing. Anyone who doesn't understand this is losing out.
No it isn't. You can wax poetic about your potential profits all day long but fact is if there's enough sell order volume that any reasonable amount of acquirable goods get sold without 0.01 isk wars getting involved, then the item is subject to getting bought out wholesale and relisted at a higher price point. If it isn't, then you certainly need to "understand the difference" between making profit while logged off (manufacturing job) versus having to update sell orders (0.01 isk grind soulkilling deathmachine)
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Leowen
Industrial Giants
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Posted - 2008.01.28 21:35:00 -
[36]
Originally by: Shadarle
Personally I'd rather invest money into something that will yield 10-15% than a T2 BPO that will yield 3%.
And I personally just invested 25 billion isk I had sitting around and that should yield an average of 12% returns for me worst case, best case closer to 20%. Alternatively I could have purchased one of those T2 BPO's and made 3% but I could have increased my T2 production ability! Let me see, 12% or 3%.... doesn't take much thought to decide which one to go with.
Shad I take your point, but the issue is there comes a point when you just have too much money to find a good home for. I have no idea of your net worth or your income but I'm guessing it's fairly high. I think in reality you do understand where I'm coming from.
I do have some high-return activity too. I have about 100b tied up in a large-scale production operation (not my T2, that's separate) that nets me somewhere around 15-20% return monthly. That's where most of my income comes from, my T2 prints (and I have about 20 high-quality prints) only bring in about 300-350m/day.
The issue is there are only so many opportunities out there that you can take advantage of that generate high returns. There is a ceiling to what you can do, and the main constraint that sets that ceiling is personal commitment to game-time. I play for about 2 hours most days, but sometimes work gets busy and I'm offline for 3-4 days. That limits me, so for example I couldn't run a project like Proton Power is running now. So if I have a choice of having 100b sat in my wallet, or have it earning 3% pretty safely (and I do still consider T2 BPO's to be fairly safe tbh), I'll take the 3% tyvm.
Of course a better solution would be for me to partner up with someone similar so I can be involved in some larger and more exciting projects, whilst also having someone on-hand to cover me when I'm offline for work. But I tried that as I think you'll recall... As things stand for me right now, running solo and with limited game-time, sometimes 3% is as good as I can get.
Leo
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Lucille Austero
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Posted - 2008.01.28 21:40:00 -
[37]
i use jita prices for a base idea. I don't purchase most of my materials in jita, and i usually don't sell in jita, unless it's a better price than the markets i operate out of.
suggesting that jita is the only market to price the profitablity of a bpo on is foolish. in fact jita is often the minimum you can earn on a bpo, and you can make much more if you're willing to seek out markets that will bear higher prices with lower competition.
and to the person who bought the 1mn bpo. good for you. if i had the money i would have went after that bpo as well. invention is a pita. |

Shadarle
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Posted - 2008.01.28 21:43:00 -
[38]
Originally by: Leowen Shad I take your point, but the issue is there comes a point when you just have too much money to find a good home for. I have no idea of your net worth or your income but I'm guessing it's fairly high. I think in reality you do understand where I'm coming from.
I do definitely understand where you are coming from. I had over 35 billion built up recently just sitting in my wallet because I wasn't sure what I wanted to do with it. I was hoping to find a decent T2 BPO for the same reasons you state. But at the rates being charged now I couldn't justify it. I looked around some more and found several other ways to invest it.
Basically I found ways to invest nearly limitless isk at 4-5%... but I wanted more than that. So I kept looking and I started finding a lot more ways to invest at 10%+.
The problem comes if you're trying to find a single item to invest 20+ billion in. Though I still think Mothership copying is better than most of these T2 BPO's being sold, at these prices. At 1 years cost the T2 BPO is prob a better bet.
Tanking Setups Compared
Stacking Penalty / Resists Explained |

Shadarle
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Posted - 2008.01.28 21:45:00 -
[39]
Originally by: Lucille Austero i use jita prices for a base idea. I don't purchase most of my materials in jita, and i usually don't sell in jita, unless it's a better price than the markets i operate out of.
suggesting that jita is the only market to price the profitablity of a bpo on is foolish. in fact jita is often the minimum you can earn on a bpo, and you can make much more if you're willing to seek out markets that will bear higher prices with lower competition.
and to the person who bought the 1mn bpo. good for you. if i had the money i would have went after that bpo as well. invention is a pita.
You miss the point. The profit in Jita is the actual profit the BPO is earning. If you can find other places to buy cheaper and other places to sell higher then that is fine, but it's a profit from hauling, not from production. You don't even have to own the BPO to get that profit, you can just buy the items in Jita and move them and get that profit. Or move components to Jita.
Tanking Setups Compared
Stacking Penalty / Resists Explained |

Lucille Austero
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Posted - 2008.01.28 21:58:00 -
[40]
Originally by: Shadarle You miss the point. The profit in Jita is the actual profit the BPO is earning. If you can find other places to buy cheaper and other places to sell higher then that is fine, but it's a profit from hauling, not from production. You don't even have to own the BPO to get that profit, you can just buy the items in Jita and move them and get that profit. Or move components to Jita.
How do you get this? If i don't operate in Jita, how is Jita determining my profit? Unless you're suggesting that my building a mod in one system and setting up sales in three different systems is somehow profit from hauling goods and not manufacturing. I don't get it. |

Myrdyr
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Posted - 2008.01.28 22:02:00 -
[41]
Right, because you can always find a free build slot in Jita 4-4 to put your T2 bpo to use in. 
Let me give you some food for thought; Is a 1MN Afterburner worth more as a T1 module, or as an ingredient for the production of the T2 module, or as minerals?
For manufacturing, the most important part is figuring out what the most efficient use of your build slots are. Why waste time with your T2 BPO if you can buy invention BPCs off market for a different module and make twice as much?
It's not a question of what the module's sell price is in jita, nor simply the sell price of the components in jita. I daresay you haven't figured out where most of the money is made in the T1->T2 process.
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cosmoray
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Posted - 2008.01.28 22:33:00 -
[42]
What we are talking about here is an accurate way to determine the return on a T2 BPO.
The maximum rate of return is if the T2 BPO is in constant production during a set period of time and every unit that is manufactured is sold. To come up with this number you have to accurately price the components to make the item. Jita market price is a good way of determining this cost and for what the item can sell for.
If you use one of the following cost scenario's: 1. Access to lower cost T2 components 2. Mining the minerals for free 3. Lower component cost
this does NOT lead to the return generated on the BPO. If you have 1 of the 3 scenario's (maybe others), you can just haul these items and re-sell for a profit.
To determine an ACCURATE rate of return(ROI, ROC) on an item you need to price components, materials and selling price at the average market price for each item. This is a true MANUFACTURING ROI of a BPO.
This is how a smart investor will determine his investment startegy to maximize his/her return.
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Benvie
Benvie Enterprises
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Posted - 2008.01.28 22:36:00 -
[43]
For a hilarious example of what is wrong with the T2 BPO market, check this thread. The profit on the item is basically non-existent, and sometimes you'd even be selling at a loss. Yet it only took 3 hours to get a 5b bid. Someone bid 7.5b in game, and later retracted the bid in the thread because they actually *gasp* checked the prices in empire only to realize the item offered zero profit.
There's this pervasive notion that T2 BPOs = ISK printers. It was true a year ago for some BPOs. IT ISN'T TRUE NOW. But there's way more stupid people than there are T2 BPOs, so this is what we get.
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Myrdyr
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Posted - 2008.01.28 22:45:00 -
[44]
Since Prowlers are obviously selling for 300k under build cost, why don't you guys go and buy the underpriced t2 ships and reprocess them and resell their components? Please post constructively. ~Saint |

Benvie
Benvie Enterprises
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Posted - 2008.01.28 22:47:00 -
[45]
I don't have a skilled refining character. ;)
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Myrdyr
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Posted - 2008.01.28 22:47:00 -
[46]
Makes you wish you dropped billions on a trade alt that didn't suck, eh? Please post constructively. ~Saint |

Leowen
Industrial Giants
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Posted - 2008.01.28 22:56:00 -
[47]
Originally by: Shadarle
Basically I found ways to invest nearly limitless isk at 4-5%... but I wanted more than that. So I kept looking and I started finding a lot more ways to invest at 10%+.
The problem comes if you're trying to find a single item to invest 20+ billion in.
Yes indeed, and my issue with hunting down other opportunities is that the more diverse my investments become, the more unmanageable it becomes within my limited EVE-time. For me it's a balance of profit versus time-commitment. Don't get me wrong even after my Sac print purchase I've still got close to 50b to hand if another good deal comes along, but having over 80b sat in your wallet is just plain silly.
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Lucille Austero
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Posted - 2008.01.28 23:03:00 -
[48]
Originally by: cosmoray What we are talking about here is an accurate way to determine the return on a T2 BPO.
The maximum rate of return is if the T2 BPO is in constant production during a set period of time and every unit that is manufactured is sold. To come up with this number you have to accurately price the components to make the item. Jita market price is a good way of determining this cost and for what the item can sell for.
If you use one of the following cost scenario's: 1. Access to lower cost T2 components 2. Mining the minerals for free 3. Lower component cost
this does NOT lead to the return generated on the BPO. If you have 1 of the 3 scenario's (maybe others), you can just haul these items and re-sell for a profit.
To determine an ACCURATE rate of return(ROI, ROC) on an item you need to price components, materials and selling price at the average market price for each item. This is a true MANUFACTURING ROI of a BPO.
This is how a smart investor will determine his investment startegy to maximize his/her return.
Now i understand what you were getting at, and perhaps there is a bit of truthiness to your idea, but economics doesn't work that way as far as i know. Simply because the volume of sales in Jita is greater doesn't mean it's the barometer for profit on a print. I know my markets, and I calculate my profit based on where I'm selling my goods. As I said, Jita can be a base number, but it's only actual, or "accurate" if you're buying and selling in Jita.
It's absurd to suggest that my profit is based on sales in a system I avoid like the plague. Perhaps you should personalize this and explain that it's the way you do it. Unless I'm oversimplifying profit is income-expense, regardless of where its done. And profit will differ for individuals, due to experience, or buisiness plan.
Furthermore, you're arguing that value is the same as price, they are not the same thing. |

Benvie
Benvie Enterprises
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Posted - 2008.01.28 23:03:00 -
[49]
Originally by: Myrdyr Makes you wish you dropped billions on a trade alt that didn't suck, eh?
Yeah I regret purchasing the account that has already paid for itself and then some, compared to a T2 BPO of the same price which would take 3 years to turn a profit.
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Myrdyr
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Posted - 2008.01.28 23:06:00 -
[50]
You completely discount resale value thus your valuation of T2 BPOs is worthless. Please post constructively. ~Saint |

Benvie
Benvie Enterprises
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Posted - 2008.01.28 23:11:00 -
[51]
You overestimate resale value, when the value of nearly every T2 BPO has been steadily dropping for a year. How can you count on resale value when that is a losing gamble rather than a solid investment? As I've said before, many T2 BPOs are actually depreciating in value faster than they're earning money from being produced off of. The very act of owning of the BPO is a money loser. While not true of all BPOs, it is true of plenty of them, and it's something that I doubt any of these buyers are even considering.
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Leowen
Industrial Giants
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Posted - 2008.01.29 00:16:00 -
[52]
Originally by: Benvie ...it's something that I doubt any of these buyers are even considering.
Understand your point, and you're doubtless correct in some ways, but possibly unfair to say none of the buyers are even considering it. Most T2 BPO buyers have made their billions somewhere on their own wit, so at least a few of them have the intelligence to consider all of the factors involved.
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Kylar Renpurs
Dusk Blade
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Posted - 2008.01.29 00:30:00 -
[53]
Edited by: Kylar Renpurs on 29/01/2008 00:32:37
Originally by: Myrdyr You completely discount resale value thus your valuation of T2 BPOs is worthless.
Resale value will, especially in todays environment, never be higher than what you bought it for, even if you research the bugger.
As I pointed out before, the T2 BPO example (1mn AB) has a profit turnover about the same as my average component lines. What use is the T2 BPO resale value?
Player A: Has 4 billion. Buys a T2 BPO for 4 billion,, earns two billion in a year,, final figures 6 billion (after resale of the BPO at value, pretty optimistic IMO). Player B: Has 4 billion. Buys a component BPO for 4.5 million, earns two billion in a year,, final figures 6 billion (without really having to bother with resale, you could keep the BPO and still have 5.995 billion)
(NB figures are made up, their relative sizes are whats important)
Whats the difference? Player B still has close to 4 billion in liquid assets available to do stuff with. Player A doesn't. However, player A (due to BPO ME and PE levels) can guarantee their profit margin in the long term. But I can guarantee that with any one of my lines anyway.
So,,, what does "resale value" have to do with anything again? As far as I'm concerned the only thing it does is tie up isk you could be using elsewhere, while giving you better-positioned access to a market. If you can't be that dynamic so much that you need to spend billions on a BPO to secure your position, you're really not a very good market player.
Back in the day, T2 BPO's were earning truckloads, given from the fact in the early days of invention, T2 Heavy Missile Launchers were earning me 6 mil profit per item (50k isk per minute, 10 times my usual returns today), and so arguably then the billions for said BPO is justified. This is no longer the case, but the prices of T2 BPOs hasn't changed.
Improve Market Competition! |

Shadarle
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Posted - 2008.01.29 01:31:00 -
[54]
No one is forgetting resale value anywhere. When someone says "it takes 3 years to make your money back" they mean that to double your money (thus make a 100% profit) you need to hold it for that long. Obviously you can resell the BPO at any point (though probably for less than you payed the way things are going, but lets assume it's 100%). Assuming this, you divide 100% by the number of months it takes to get to 100%. If it's 2.5 years that is 30. 100%/30 = 3.33% monthly. Pitiful.
Now, about using Jita prices. The reason we use Jita prices is not because we all trade in Jita. I never trade there. We use it because it generally has the highest priced minerals in the game. We always look for the best price we could get if we sold the individual components instead of manufacturing an item. Thus we know if it was profitable to build the item or not. Once we've determined if it was profitable we can determine how much money we've made on the purchasing of items under cost and how much we've made on the actual manufacturing.
If you mine all of your minerals for free does that mean the item cost you 0 to build? No. It cost you whatever you could have sold those minerals for. You made the profit on the mining, not manufacturing an item. It doesn't absolutely have to be Jita price mind you. It has to be the best you personally would get if you sold them. If you're a lazy SOB and would sell to a horrid buy order then use that price.
I used to manufacture stuff over a year ago. I've not manufactured a t1 item in over a year now though. I realized I could make more money reselling the minerals I had than I could building things... and it was a heck of a lot less work. Reselling minerals directly is far easier than selling manufactured items.
Tanking Setups Compared
Stacking Penalty / Resists Explained |

cosmoray
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Posted - 2008.01.29 02:05:00 -
[55]
Originally by: Lucille Austero
Originally by: cosmoray What we are talking about here is an accurate way to determine the return on a T2 BPO.
The maximum rate of return is if the T2 BPO is in constant production during a set period of time and every unit that is manufactured is sold. To come up with this number you have to accurately price the components to make the item. Jita market price is a good way of determining this cost and for what the item can sell for.
If you use one of the following cost scenario's: 1. Access to lower cost T2 components 2. Mining the minerals for free 3. Lower component cost
this does NOT lead to the return generated on the BPO. If you have 1 of the 3 scenario's (maybe others), you can just haul these items and re-sell for a profit.
To determine an ACCURATE rate of return(ROI, ROC) on an item you need to price components, materials and selling price at the average market price for each item. This is a true MANUFACTURING ROI of a BPO.
This is how a smart investor will determine his investment startegy to maximize his/her return.
Now i understand what you were getting at, and perhaps there is a bit of truthiness to your idea, but economics doesn't work that way as far as i know. Simply because the volume of sales in Jita is greater doesn't mean it's the barometer for profit on a print. I know my markets, and I calculate my profit based on where I'm selling my goods. As I said, Jita can be a base number, but it's only actual, or "accurate" if you're buying and selling in Jita.
It's absurd to suggest that my profit is based on sales in a system I avoid like the plague. Perhaps you should personalize this and explain that it's the way you do it. Unless I'm oversimplifying profit is income-expense, regardless of where its done. And profit will differ for individuals, due to experience, or buisiness plan.
Furthermore, you're arguing that value is the same as price, they are not the same thing.
OK swap out Jita for where you do all your trading (component and mineral sourcing and selling), and you will get a more accurate ROI (in a personal sense).
Another issue is if the value of the T2 BPO goes down (which is happening unfortuantely). It is imperative in this type of situation to get your money back as fast as possible. i.e. The time in which it takes to earn your purchase price in profits from the BPO.
I personally wouldn't invest in anything that gave a real return (if resale price stays the same) of around under 8%, which would allow me to get my money back in 1 year. If my shiney new BPO halved in value in a year my return on the original price would have to be 12.5% to see the same money.
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Lucille Austero
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Posted - 2008.01.29 02:42:00 -
[56]
Originally by: cosmoray Another issue is if the value of the T2 BPO goes down (which is happening unfortuantely).
Unfortunately you're still confusing value for price. And i disagree with your belief that prices are dropping. They seem to be going up. In the last two months, most ammo and mod bpos i've seen have gone for 1.5 to 2x of their yearly profit. This time last year it was standard for a t2 print to fetch only 1 year's profit.
Don't underestimate the value of owning a bpo so you can just pop off 100 units of something when your corp or alliance needs it.
Since i said that it also reminds me that 100 units from a bpo takes 1 slot. 100 units from invention takes 10 slots. Which is more cost effective?
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Shadarle
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Posted - 2008.01.29 02:55:00 -
[57]
Originally by: Lucille Austero Since i said that it also reminds me that 100 units from a bpo takes 1 slot. 100 units from invention takes 10 slots. Which is more cost effective?
I'm sure you know that invention slots are different than manufacturing slots.
In addition you can produce a massive amount more by inventing than you can by producing with a single BPO.
Invention and owning a BPO are not exclusive to each other. You can do both, either, or neither. But once you have the BPO you've sunk a lot of isk into it which can't be spent elsewhere, even if that module tanks in the future. If you invent you can just stop inventing if the module tanks and you havn't sunk really any money into it. And even if you own the BPO you can invent more if you need to.
Tanking Setups Compared
Stacking Penalty / Resists Explained |

Khatred
ReallyPissedOff Guinea Pigs
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Posted - 2008.01.29 03:53:00 -
[58]
All Tech 2 BPOs are isk printing machines. Ok, maybe the micro graviton smartbomb II was not but that was the exception!! However the real isk printing machine is the Caracal BPO. I've read somehwere that the profit margin on Caracals are extreeeeeme!!! and they sell like pancakes. Actualy buy several BPOs so you can keep up with the demand.
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Trustres
Exploration's Inc.
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Posted - 2008.01.29 09:25:00 -
[59]
Originally by: Shadarle
Originally by: Lucille Austero Since i said that it also reminds me that 100 units from a bpo takes 1 slot. 100 units from invention takes 10 slots. Which is more cost effective?
I'm sure you know that invention slots are different than manufacturing slots.
Im sure he ment that it takes 10x 10 run bpc to produce 100 items so 10 slots.
On the other hand you can have those 100 in 13h at npc stations not in 130h, so produce more, sell more and thus earm more even including invention costs.
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Lucille Austero
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Posted - 2008.01.29 14:34:00 -
[60]
Edited by: Lucille Austero on 29/01/2008 14:49:17
Originally by: Shadarle I'm sure you know that invention slots are different than manufacturing slots.
I'm sure you know that the most runs you can get from an invented bpc is 19, and that would involve using a decryptor that decreases your chance of success. I'm assuming that the average inventor will be getting prints with 10 or 11 runs. That being so, it would take 9 manufacturing slots to get 99 modules from invention vs one manufacturing slot to get 100 mods from a bpo. Additionally with the negative PE of invented BPCs the 99 runs would take significantly longer to produce than the 100 from the BPO. Time=Money.
I understand your argument that you can build more from invention than from a BPO, but that requires using your extra manufacturing slots, which could be used for something else, like manufacturing T2 components.
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