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Shadarle
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Posted - 2008.03.29 21:09:00 -
[1]
From what I've been seeing on the sell orders forum and on contracts, prices for T2 BPO's are going up and up as their yearly value goes down and down. Quite an interesting phenomenon.
6+ months ago 1 years profit was the common rate, everyone payed roughly this or less on crappy BPO's.
Now people are paying 2-5+ year profit for them, in some cases they are paying infinitely higher as the BPO's produce for a loss. I find it fascinating someone would pay 6B to get a BPO that will lose them money if they use it.
Just now a Nighthawk is going for 41+ Billion when it makes approx 20 billion per year. That is amazing that such a high valued BPO is selling for a year year profit, otherwise known as a 4% monthly ROI.
It seems to me any value people thought they lost on T2 BPO's is being more than made up for in the increased time periods used to value them.
So my question is, is 2 years value the new way to price a T2 BPO? Thus a 4% monthly ROI is considered fair, considering the risks associated with owning a T2 BPO (such as that the prices will continue to drop as they have for the last few months, making your investment closer to 2-3%)?
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LaVista Vista
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Posted - 2008.03.29 22:06:00 -
[2]
Well, i think at this point at this point in time, we are seeing people buy up BPO's for personal use, not strictly for selling to the market.
I know one of the guys who's bidding on the nighthawk BPO in question. And he is buying it to make for himself and then sell later for profit. I several times asked him why the hell he wanted a such overpriced BPO when he could spend those 40bill making MUCH more money. But his interest wasnt to make money but purely for the utility value, i.e you can make cheap ships for yourself.
.. which is a flawed logic anyways, because if you make more isk on those 40bill than you would save building for yourself, the difference in price is made up by the fact you made a ton of isk.
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Nyphur
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Posted - 2008.03.29 22:15:00 -
[3]
I think it's a case of the prices going up because the prices are going up. Moreover, because the price or value is percieved to increase over time, people consider the BPO to be an investment. Buy now, get some use out of it and sell it later for more than you paid. Not everyone can take their 40b and turn it into 60b within six months but the BPO could appreciate by that much in that time period.
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Proton Power
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Posted - 2008.03.29 22:16:00 -
[4]
NO clue tbh. Due to opening the IPO up I was going to look at investing 30bil or so into T2 BPO's just to earn some extra profit on the side for myself, but looking at BPO's its not worth it. Drone BPO's selling for 2 to 6bil isk that cost more to produce the drones than they are selling for, Ammo BPO's doing the same. I honestly no clue why people would pay that much for them other than because it says T2.
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Cogwheel
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Posted - 2008.03.29 22:17:00 -
[5]
Edited by: Cogwheel on 29/03/2008 22:17:17
 Originally by: LaVista Vista
Well, i think at this point at this point in time, we are seeing people buy up BPO's for personal use, not strictly for selling to the market.
That would be my guess too. Also, if mineral prices are heading up then there's more absolute profit to be had, even if margins tighten (think gas companies and the price of oil).
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Shadarle
LI0NS Industries
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Posted - 2008.03.29 22:29:00 -
[6]
Originally by: Cogwheel
Edited by: Cogwheel on 29/03/2008 22:17:17
Originally by: LaVista Vista
Well, i think at this point at this point in time, we are seeing people buy up BPO's for personal use, not strictly for selling to the market.
That would be my guess too. Also, if mineral prices are heading up then there's more absolute profit to be had, even if margins tighten (think gas companies and the price of oil).
This just does not make any rational sense. It completely ignores opportunity cost.
If you could make 65 bil doing one thing and you can make 60 bil doing another which would you do? Everyone would do the 65 bil thing assuming all else was equal.
Now, substitute a t2 bpo for the 60 bil figure and most people in EVE would do that instead. Why? Because they can build stuff cheaper! Free mineral theory strikes again. The better play is ALWAYS to go with the most profitable alternative for the time you're willing to invest... and then to buy the other items you want/need with the added profit.
Even if you used 100% of the production capacity of a nighthawk BPO it wouldn't be worth it to buy the BPO for that use, it would be better to invest your money in a better investment and then buy as many nighthawks as you need, you'll have the same number of nighthawks but you'll also have more isk in your wallet.
I am constantly amazed at how stupid people are about common decisions.
In WOW someone would go out and farm an item that rarely dropped and was worth 5g each. They'd get 2-3 per hour farming them. I would go out and farm another item worth 5g that dropped 5-6 per hour, sell half of them and buy an equal amount of the other item, then profit as much as I spent on the item. Thus the other guy was earning 10-15g per hour, I was earning 25-30g per hour. In the end he had 10 of this item we were farming, I had 10 of them as well, but I also had 50g more than when I started and he didn't. He was a guild mate, so I tried to explain to him opportunity cost and told him what I did... he told me he'd rather just farm his items as he didn't want to buy them from someone.  That same guy later asked me why that item cost 5g when it was rarer then the one i farmed... it's because everyone farmed it and no one farmed the item I farmed, thus the supply of my item was far far lower even though it dropped twice as much.
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abraheam
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Posted - 2008.03.29 22:38:00 -
[7]
Nostalgia.
With regards to my personal situation when I came into the game the T2 lottery was the sole reason I didnt pursue more lofty industrial endevors. Looking back that was a narrow minded apoproach, however I saw it as the pinnacle of industrial activites and the door was closed to all but the very lucky.
Now that I have been in the game a little while I can afford to purchase things of these nature.
I will agree that they dont make the head turning profits they used to, however it presents a sort of satisfaction knowing you can undercut any trader out there...to the point of screwing them over.
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Cergorach
The Helix Foundation
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Posted - 2008.03.29 22:52:00 -
[8]
While a certain T2 BPO may go for 41B+ isk and it only 'makes' 20B isk/year, your forgetting that the value of the T2 BPO isn't used up in that year. Thus even if the T2BPO didn't increase, after a year the investment of 41B isk, increased to 61B isk. If what you say is true and a year ago it was selling for 20B isk, the profit is especially huge (20B isk invested, value after a year 61B isk). Chances are that the value of T2 BPOs will only increase with time, they are essentially 'collectors items', the supply will only decrease (destruction due to ganking). If the Vexor Guardians are any idications, collectors items in Eve-Online keep increasing in value over the years, so T2 BPOs might be a very save investment. There are folk enough that have so much isk laying around that they can't really invest it properly without a lot of work or giving money to IPOs that might fold at any moment. You might even want to be completely passive and make only copies, might half your production, but then again, those BPCs might sell at a premium (easy transportation)...
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Cogwheel
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Posted - 2008.03.29 23:06:00 -
[9]
Edited by: Cogwheel on 29/03/2008 23:06:31
Originally by: Shadarle
Originally by: Cogwheel
That would be my guess too. Also, if mineral prices are heading up then there's more absolute profit to be had, even if margins tighten (think gas companies and the price of oil).
This just does not make any rational sense. It completely ignores opportunity cost.
Agreed. Humans aren't nearly as rational as they like to think they are...
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Khatred
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Posted - 2008.03.29 23:16:00 -
[10]
Shadarle, send me 50 bil isk and I will enlighten you.
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Sophie Daigneau
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Posted - 2008.03.29 23:21:00 -
[11]
You also have to compare the effort to return ratio among different investment opportunities. A T2 bpo can be set to 30 day production jobs for it and the components, so there's very little daily effort involved with it. There aren't really many other opportunities with that low effort that can be easily managed by a single person. Most other opportunities at the 40b+ isk level will require either a loss of control to others to help manage and/or a much greater amount of effort to run. When viewed in that perspective, a lower return compared to other opportunities is perfectly valid.
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Kylar Renpurs
Dusk Blade
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Posted - 2008.03.30 01:08:00 -
[12]
I suppose one thing is that Invention is *unsustainable* purely in 0.0. T2 BPO's have a use because supply purely in 0.0 will be limited unless the ferry of datacores to the area remains constant. Which, I honestly don't imagine it is.
Improve Market Competition! |
Mr Horizontal
KIA Corp
KIA Alliance
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Posted - 2008.03.30 01:12:00 -
[13]
The reason is simple. EVE is now overcrowded, and the high-end resources we have (moons, T2 BPOs) are in the exact same quantities as they were at pre-Revelations 1.0.
Thus both things are comparatively more and more valuable as they become more and more scarce amongst an expanding population.
Director | www.eve-bank.net |
Ramblin Man
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Posted - 2008.03.30 01:35:00 -
[14]
Tbh, it really is failure all around. There's no way to explain it, other than stupid people having too much money.
But that's what rich people do -- increase the market value of knock-off Grecian sculpture.
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Welcome to the dark side old friend. .Shar
Where we hate people through words. |
IonHammer
Black Avatar
Lost Sheep Domain
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Posted - 2008.03.30 01:58:00 -
[15]
I can only suggest that those with isk look at 3-8% per month in an ipo investments then compare them to t2 bpo buy and build model and consider the risk over a longer period to be more satisfactory and make a longer term commitment.
Ipo's have failed and investor loss is basically total, bpo's have been bought for billions then face near worthlessness due to game changes. Its all down to perception and personal risk profiles and of course opportunities available to make investments.
If good ipo's are drying up then perhaps the demand for bpo's is pushing prices up.
If thats your real life i'm very jealous - Petwraith |
abraheam
Deep Core Mining Inc.
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Posted - 2008.03.30 02:42:00 -
[16]
Originally by: IonHammer
I can only suggest that those with isk look at 3-8% per month in an ipo investments then compare them to t2 bpo buy and build model and consider the risk over a longer period to be more satisfactory and make a longer term commitment.
Ipo's have failed and investor loss is basically total, bpo's have been bought for billions then face near worthlessness due to game changes. Its all down to perception and personal risk profiles and of course opportunities available to make investments.
If good ipo's are drying up then perhaps the demand for bpo's is pushing prices up.
This pretty much. Everything involves risk in this game. For example mothership production is down the drain because of changing game mechanics...(The hictor, and the fact that a lot of people see a forth coming drone nerf)
I would rather have a couple unique BPOs, that have a minimal return for minimal effort then a Mothership BPO at this point. Of course hindisght is 20/20 and I have been more then happy with my decisions.
On the flip side I would also rather invest spare cash into something that is tangable, and not put myself into a position that forces me to rely on other people completely. I.E IPO, or bonds. Late returns, and chances of a scam/promoter burn out keep me away from most public investment oppurtunities.
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Lord Fitz
Antares Fleet Yards
SMASH Alliance
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Posted - 2008.03.30 04:36:00 -
[17]
The margins on things are dropping, there's a risk you buy a BPO for 41b this year, selling at the current rates would make 20b/year, but the prices drop and you only make 10b instead, and go to sell it to find it's only worth 20b, losing you 11b. Even a hulk BPO only makes about 12.5b/year now.
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YouGotRipped
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Posted - 2008.03.30 06:14:00 -
[18]
Edited by: YouGotRipped on 30/03/2008 06:15:44
It would seem some individuals have a huge amount of isk on their hands that can no longer be cycled in the amount of time they allocate to playing the game. Personal use / corporate use while also anticipating some price fluctuations in the future that would allow them to make awesome profits / resell is the most likely scenario. But the main reason would be that the guy always wanted to own the T2 BPO he's buying (and probably it's a quite a rare one). hahah
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Ramblin Man
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Posted - 2008.03.30 07:13:00 -
[19]
Well, at the very least it finally gives me something to do with my trash BPOs. Buying the odd 500M, 750M BPO here and there finally pays off.
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Welcome to the dark side old friend. .Shar
Where we hate people through words. |
Priest Amarr
Imperial Academy
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Posted - 2008.03.30 07:38:00 -
[20]
Because there is inflation in Eve. I do know it will be pointed that prices on many goods are going down therefore it can not be a real sign of inflation, but Eve and planet earth are not behaving same in this matter. In Eve the best way of seeing if there is an inflation is checking high end , rare items. Titans, rare moon minerals, high end BPOs and similar things. Let me explain why. In Eve universe as time passes everybody gains same abilities for doing same things. That means, given enough time, everybody in that 200.000 residents we have today will be able to build every product, will be able to fly every ship and they all will have enough money to afford it. Numbers of most items, including T2 ships will keep increasing and it will not be possible to measure isk inflation looking at their prices. We will be able to identify inflation looking at the prices of those items their quantity don't change. Some rare moon minerals, because no matter how much skill you gain and how rich you get their number stay same , people will bid more. High end BPOs , because there are more billionaires and same amount of BPOs.
At he end of the day, since people's ego and desires are more important than their actual needs in Eve , the logic will stop working. Some players will want to own a rare BPO because it was a symbol of power once and they will feel like they are competing with older players now. More isk they have , less logical they will act while buying things once, and still is a status symbol. As a conclusion direct affects of isk inflation will be easily identified monitoring prices of these items while it will not affect goods , their supply numbers can be adjusted and only seen as a common good.
At this point some people are not treating those BPOs as industrial goods anymore. They are bidding on it , just like some people bids on art in planet earth. They are paying it because they can pay it, they are paying it because they want to have it.
May Blessings Be With You
Priest Amarr
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Shadarle
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Posted - 2008.03.30 09:15:00 -
[21]
Originally by: Khatred
Shadarle, send me 50 bil isk and I will enlighten you.
Only 50b? I could send you a far larger sum than that. Unfortunately it would be for naught as you have no enlightenment to share. I do feel sorry for you though, you used to have BPO's that were worth so much... then a few patches come around and your 10-50+ bil BPO's start producing for a loss. Such a shame. Makes me glad I found more stable investments for my money.
Originally by: Cergorach
While a certain T2 BPO may go for 41B+ isk and it only 'makes' 20B isk/year, your forgetting that the value of the T2 BPO isn't used up in that year. Thus even if the T2BPO didn't increase, after a year the investment of 41B isk, increased to 61B isk. If what you say is true and a year ago it was selling for 20B isk, the profit is especially huge (20B isk invested, value after a year 61B isk). Chances are that the value of T2 BPOs will only increase with time, they are essentially 'collectors items', the supply will only decrease (destruction due to ganking).
Adding 20b to the 40b makes no sense at all, you realize that right? Your investment isn't worth 60b after a year because you made 20b selling ships from that BPO, your investment is still worth 40b (unless the BPO value changes). All you did was make 20b off your 40b investment, a 50% profit over 12 months, otherwise known as a 4.08% monthly ROI.
As to the part about the BPO being worth more now, it isn't. The yearly profit on a nighthawk BPO a year ago was FAR higher than it is now, in the 40-50bil range if I recall correctly. Selling for 275+ mil and being produced for 120-130 mil at the time I believe. 150 mil profit with about 1.08 ships made/day = 365 * 1.08 * 150 = 59 bil profit per year.
So the yearly profit has dropped by 66%, but the value of t2 bpo's has doubled, so you end up with a 33% loss in value over the last year.
Who knows what will happen in the next year. It seems equally likely they will drop or rise, so it is an extremely risky investment from that viewpoint. If I had to bet I'd bet on the year profit of T2 BPO's in general dropping another 10-20% over the next year, perhaps some bigger spikes in there but after a year it will have settled at about 10-20% less than it is now. Perhaps they will be selling at 2.5-3 years profit commonly though to make up for it.
Perhaps as one person said people are indeed buying them as passive income sources. The thing is there are soooooo many other passive income sources which are much more passive and create higher returns. They are also less risky, more stable, and in a better position to gain in value than lose it. Of course I won't list them off as I currently continue to pump 90% of my profits into these sources, the other 10% I use when I can snatch up a T2 BPO at 1 year value or see an IPO I like.
This thread is really less a complaint about people being stupid as it is a question to people what they think is a fair market value for T2 BPO's in general and also to wonder what cost T2 BPO's should have that either A) sell for a loss or B) are useless and you can't even sell the items in any decent quantity (less than 1 in 10 items produced would sell). What kinda prices should those BPO's have?
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ishkabibble
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Posted - 2008.03.30 09:27:00 -
[22]
Im no economist by any means, but this trend of T2 BPO's selling at 24 months profit is a side effect of the economy in EvE.
This is a marker on how much money their actually is out there, people have the isk and are willing to spend it. I dont think it has anything to do with the BPO itself.
1 year ago, t2 mods and ships were selling at 100-500% above what the selling price now. Shows you how much invention has factored into rare commodities such as these bpo's.
Too much isk ingame, nobody knows what to do with it. No sinks to remove the isk from the economy, it has to go somewhere so why not pick up a prized posession, a T2 Ship BPO.
Never argue with an Idiot. They'll bring you down to their level, and beat you with experience |
Alain DeMorgan
Imperium Technologies
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Posted - 2008.03.30 11:20:00 -
[23]
Perhaps part of the demand for the BPOs is not so much for profit, but as a hedge against market and game mechanics volatility.
i.e. if you have a Nighthawk BPO your build costs are largely immune to any price changes in invention inputs or changes in invention rates, so you have a somewhat more predictable maximum cost to replace them. Additionally you don't have to deal with market fluctuations on the final product.
(yes, I know there is an opportunity cost here, but that's how hedges work -- you're foregoing possible profit in exchange for predictability)
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Khatred
ReallyPissedOff
Guinea Pigs
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Posted - 2008.03.30 13:00:00 -
[24]
Originally by: Shadarle
Originally by: Khatred
Shadarle, send me 50 bil isk and I will enlighten you.
Only 50b? I could send you a far larger sum than that. Unfortunately it would be for naught as you have no enlightenment to share. I do feel sorry for you though, you used to have BPO's that were worth so much... then a few patches come around and your 10-50+ bil BPO's start producing for a loss. Such a shame. Makes me glad I found more stable investments for my money.
Sorry for asking 50 bil, obviously you'd be lucky to have 5 considering your "deep knowledge" of the T2 market. You should really stick with detecting IPO scams, that's pretty much you area of expertise.
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YouGotRipped
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Posted - 2008.03.30 13:18:00 -
[25]
Originally by: Khatred
Originally by: Shadarle
Originally by: Khatred
Shadarle, send me 50 bil isk and I will enlighten you.
Only 50b? I could send you a far larger sum than that. Unfortunately it would be for naught as you have no enlightenment to share. I do feel sorry for you though, you used to have BPO's that were worth so much... then a few patches come around and your 10-50+ bil BPO's start producing for a loss. Such a shame. Makes me glad I found more stable investments for my money.
Sorry for asking 50 bil, obviously you'd be lucky to have 5 considering your "deep knowledge" of the T2 market. You should really stick with detecting IPO scams, that's pretty much you area of expertise.
If you feel you have something to share with us do so in a constructive manner if not GTFO and take your rat with you.
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Khatred
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Posted - 2008.03.30 13:19:00 -
[26]
Originally by: YouGotRipped
If you feel you have something to share with us do so in a constructive manner if not GTFO and take your rat with you.
Or the bunny gets it?
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Treelox
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Posted - 2008.03.30 13:33:00 -
[27]
<---wuvs the bunny
--
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Lord Fitz
Antares Fleet Yards
SMASH Alliance
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Posted - 2008.03.30 13:45:00 -
[28]
Originally by: Alain DeMorgan
i.e. if you have a Nighthawk BPO your build costs are largely immune to any price changes in invention inputs or changes in invention rates, so you have a somewhat more predictable maximum cost to replace them. Additionally you don't have to deal with market fluctuations on the final product.
Your build cost is more stable, but your profit is falling, build cost has increased due to invention and demand on advanced materials at the same time due to the invention cost which is dropping over time the sale price of most things is decreasing. So invention is hitting BPO owners at both ends as designed. They don't need to remove the BPOs eventually they aren't going to be worth that much isk, only convenience for a very few people who don't really have a hope of using all they produce anyway. One effect that we have seen of the more recent changes is that some crappier ship BPOs are probably worth more as invention is balancing things out on invention+build cost, rather than before when it was a supply+demand=price formula, the supply now increases to meet demand.
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Phoenix Pryde
3-I Area 42
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Posted - 2008.03.30 14:07:00 -
[29]
Originally by: YouGotRipped
If you feel you have something to share with us do so in a constructive manner if not GTFO and take your rat with you.
Not everybody here is a selfdeclared fountain of knowlegde who pretend to be spoonfed with wisdom and contineously pull speculations or wannabe facts out of their collective asses.
Some ppl act based on their knowledge and abilities instead. But even these sometimes feel the urge to comment here. A comment doesnt have to be very informative though, does it ? :P
That said, i can think of several reasons for somebody to get more T2 BPOs. I am not surprised that ppl who dont do much more than posting here dont have the appropriate motivations or capabilities to see any such reason :P
TRUST sales management |
Leowen
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Posted - 2008.03.30 18:35:00 -
[30]
A couple of months ago I posted about there being too much isk in game and nothing to really do with it. I also predicted that over coming months we would see acceptable rates of investment return drop. This is coming to pass.
I have a good few ship BPO's, and I will continue to add to the number. T2 BPO's are pretty much the ultimate passive investment for those with too much isk to use. And there are more and more of those people around. Would I rather take a 3-4% monthly ROI on a BPO, or say invest my money in an EVE bank account or 'low risk' bond? I'll take the BPO any day thanks, because I don't have to trust anybody but myself.
Until CCP put in some more isk sinks or some VERY high-end industrial content, there will be more and more free isk sitting around. Expect acceptable ROI's to carry on dropping.
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