Warcraft Elite Guides

Posts Tagged ‘Warcraft Economy’

The material master is provided free for registered users of this guide. It is the tool we used to track prices across servers.

Initially it had Visual Basic coded in to parse the “auction house” and “post box” data we retrieved from the game engine.

The template for this data is still included in a tab called “Historical data”. If you understood the section on price indexing then this sheet might be of use to you. If you do not then please leave the data in this tab alone.

The rest of the spreadsheet is in two tabs labeled  “Your Data” and “Profit Graphs” these should prove very valuable to you if you adopt the strategies in this guide.

These 8 columns are used to put your average price data in. Starting with the left most column.

 

First of all  filter your “items” list with your chosen portfolio by putting a “1” in the tagged items column next to the items name.

The next thing is to decide how often to take the average price from the auction house. We recommend using either 2 days or 3 days between readings.

A reading involves going to the auction house and noting the average price of sale for each item as described earlier in this guide. Repeating this for both Alliance and Horde auction houses, and noting the values in the appropriate column.

After 6 to 8 readings you will have enough data to make good judgments regarding price.

 

Put the item number from your portfolio in the top left box (number 1 is the topmost item in your list, number 2 the next etc) THIS IS THE ONLY THING YOU NEED TO INPUT ON THIS SCREEN. IF YOU PUT OTHER FIGURES IN YOU WILL FOUL THE SPREADSHEET.

 

The red and blue lines represent the Horde and Alliance average price from the auction house as recorded by yourself over a period of time as discussed on the previous page.

The gap between the lines is your potential profit for cross market trading.(That is buying from one faction – moving the stock through the Neutral auction house – then re-selling at the opposing auction house)

The variation on a single line is the profit potential within a single market (that is to say, buying low – waiting – then selling back through the same auction house)

 

This display gives you the information you need to make your tactical buying and selling decisions. It tells you whether an item is worth keeping in your portfolio or not.

What market strategies are recommended based on .

• Alliance Single Market – You can buy from Alliance Auction house in a market dip, hold stock, then resell, and you will meet your required profit potential
• Horde Single Market – As above but within the Horde Auction house only
• Cross Market Selling – Buying from the market shown in the “Source” box, moving through a neutral house, and reselling  at the opposite factions auction house.

NOTE. The extra cost for selling through the Neutral Auction house is already factored into this figure !

 

In the “Your Data” tab, in cell “AF1” there Is a cell where you put your desired minimum Profit percentage. It is set as standard at 25%

This is a decent lower level. All calculations take into account basic auction house selling tax.
Please see the appendix for more details on AH Taxes – and please factor in the deposit in case your items do not sell.

When you are experienced, then these individual prices will begin to mean more to you. Although the automatic calculations take the averages and standard deviations into account, you may want to see if any particularly high or low costs can be attributable to seasonal factors.

In general though, we have found following the advice given on this screen has given us huge profit without ever needing to grind at all.

 

 

The historical long term trends graph is filled in automatically for each item

This second graph is taken from the "Historical Data" tab. It is a VERY normalized set of data taken over 22 servers and 18 months of sales history.  There are 5 basic price models. This will give you an idea early on of what you might expect for each item over a period of time. Though please remember Blizzard alter the game all the time – we will keep these models up to date with each patch for Gold Consortium Members.

You might read this graph as an example of an item that has a gradual fluctuation in price.

This would make it a safe but not particularly exciting investment if you bought when the market was low. Again the proof will be when you populate the “Your Data” tables with actual prices from your server. This graph is a rough guide only.

It is worth noting that this is not the prices in gold pieces,. It is based on the price indexing techniques we have shown previously, with the highest price from the vending faction given a price index of 1.00 (one point zero zero) and all other prices expressed as a ratio of this.

 

Starting with a working capital of 100 gold, the red shaded area shows how it grows if you can make it grow by 20% a day.
The blue Manhattans show what happens if it grows by 80% every 4 days.
Those of you that know the maths will know that it is a compounding increase that makes the former a quicker growth prospect than the latter.
But your play  style should be a factor as well.

Put simply, if you are a weekend player, or someone who only wants to go to the auction house for some serious trading once or twice a week, then taking long term high profit items is going to be better for you.
If however you log on an play every day – and are quite happy to tinker in the markets every day, then short term lower profits will generally yield better results.

Of course the best of ALL worlds is short term high profit turnover. If you see items like that, and you understand them, then grab them no matter what your main strategy, but they do not come that often.

Once you are of a high enough level you should make this decision. Am I going to log on every day and play the market, or am I looking for a decent – but slightly more modest – long term reward.

Be warned, choosing the short term route, and then not following through on it will cost you a lot of profit potential. It would only take missing a couple of days on this chart for the short term market trader to fall behind the long term trader.

You will find it easier to trade as a long term trader with high end items and vice versa. But there are always those who look to sell tons of harvested loot on a Saturday tea time, but instance look in the early hours of Sunday morning, and sell it back on again to hungry week day players looking to just get out and play on Monday evening. It’s a matter of scale. Buying 250 stacks of Runecloth at 2g a stack and selling it the next day for 4g a stack to someone looking to grind rep is a tactic we have used over and over again.

This chart represents the “ideal” a softly undulating – easy to read sine wave. Price goes up, price comes down.  Read the market for a week or two. Then buy low and sell high.

It’s an ideal, but it’s not that common.

We’ll discuss this then move on to some of the many other types of market movements.

"Bread and Butter" – The graph will show a gradual undulation in price, probably no more than 15 to 20 % over and below the mean price. As long as you know where the mean price is, then this is a low risk item to buy and store to sell.

Check how long the cycle takes however. Many cycles are weekly, but some run over a much longer period (which is one of the reasons why we recommend 8 days between readings).

Early on you will want to work out which ones are more profitable. Your storage tied up with item that will make you 80% profit over a month ? Or items that will make you 18 % over 4 or 5 days.

You see the answer isn’t as simple as calculating the number of times your stock "could" turn over in a month.
Quite obviously, if compounded the 20% over 4 days will yield far higher profits over a month.
The graph on the next page shows how the compounded amount pulls away.

So little and often IS best, but not for everyone. Why ? Because it requires you to act every day.
If you do not log on everyday and take your profits, you will very soon fall behind.

Ok, so what items fall into these categories.

This is not a hard and fast rule, but Epic Weapons and armor fall into the slow category. Rare instance loot also falls into this category. During the summer recess high end loot was pretty common, especially at 2:00am on a Sunday morning when people put the BoE items they did not want on the AH after finishing the high level instance runs.

Likewise more people were farming for mats. Those mats were either competing in the market place as they were, or being crafted into epic items. During the vacation season this will increase. A similar thing might happen at weekends – but sometimes doesn’t. This is because people sometimes just want to have fun at weekends and meet up for instances. Take your readings from your own server to find out what the market does and when.

Earlier we discussed normalizing the prices of items across two markets. It is worth mentioning now that you can index or normalize the price in a single market place. There are many ways to do this, but for example  – take three  separate median asking price for an item over a period of say a week. You will then have three “median” prices. Average these to find a “mean mean” and give that figure the index of 1.0.

Every other price can then be rated as a ratio of this 1.0. Look back at the last chapter for more information on this.

Price indexing can, at first glance seem a waste of time. It comes into it’s own when you are comparing the profit profile of several different items. It allows you to graph item that are of a very different price on the same scale and just compare how profitable they are as a percentage.

Is Swifthistle more profitable as a percentage than a Titansteel Destroyer or would Netherweave be a better investment, Using indexing you can compare these side by side and get a true comparison

But something is missing. Profit is measured OVER TIME.
Swifthistle might sell for you at 30 stacks a day at the auction house, 2 gold a stack. 60 gold turnover. If you bought for 1 gold a stack. Discounting the Auction cut for now, you have made 100% profit PER DAY.

Now the Titansteel destroyer might be bought (or made) at a cost to you of 800 gold, you put it on the market at 1200 gold – but it takes 4 days to sell.
In this example  – again discounting the auction house cut you have made a 33% profit over 4 days – or an un-compounded 8.25% per day.
Now this is where you need to make a couple of decisions regarding your trading. Are you a busy day trader – or a long term magnate.

If you play regularly, and quite like to dabble in the market every time you play, there is often more profit in buying lots of lower value items – and selling them on quickly. If you log onto Warcraft only a couple of times a week “go long” with higher value items.
If you choose the quick route, but miss a few days every week, you will find that you are making less money than someone who only logs on now and then and trades slowly.

Why waste your time ? There is a subtle choice between turnover and profit – decide what kind of investor you are, and make sure your portfolio reflects that choice.

While we are on the subject, we have already looked at the issues of copllecting your sales data through an add-on like Auctioneer. The problem being.

Auctioneer does not collect sales data!

That’s a pretty big problem. It can keep a record of what your characters sold items for, but for the rest of the servers population (that being 99.997% of the data then) it only collects the ASKING price, and that can be nothing like the selling price. On some servers almost 50% of auctions don’t sell at all.

Secondly it does not take seasonality or trends into account (at least not very well)

And thirdly it is skewed by rogue prices.

As we mentioned before the practice of putting a low level item, like a piece of copper ore, on for say 1000 gold pieces happens. Annoyingly it happens quite a bit. This skews the averages a lot.

Which brings us nicely to how YOU get around these issues. Well you filter them out. We use what is known as a “pareto” or “80-20” rule. We take our averages from the middle 80% of all prices offered.

So if ten prices were showing for an item  say 1, 3, 5, 5, 7, 8, 8, 8, 8, and 4000 we would not put the “1” or the “4000” into the equation.  The 4000 is clearly a rogue price. The 1 probably isn’t , but not including it does not slant the average much.  The difference is one will give you an average price per item of 405.3 gold. The other 5.5 gold. One is hopelessly wrong the other nearly right.

Back to an old point, Indexing also lets you compare prices between factions and across servers – allows you to filter out rogue data, takes seasonality into account and ensures you yourself keep an eye on your portfolio. Auctioneer -  while a very useful tool, does not do this.