Sunday, February 28, 2010

When supply runs out

I'm sure you've run into this situation at least once where you have a huge demand, but can't seem to hold onto a supply to match it. This has been happening off and on with my sever in several different markets from time to time. There will be a serious drought followed with a significant price spike, which will also have an effect on their primary and/or their secondary markets. This has been happening a lot lately with enchanting mats or all levels. Everything from greater cosmics, abyss crystals, brilliant shards, and even dream shards have been falling off the edge of the earth it seems. I mean, how can there NOT be a supply of dream shards? In addition to this, there have been rare and epic gems taking their turns of obscurity as well and especially borean leather.

So what is one to do when such a thing happens? You can only raise your thresholds so much before it's no longer worth it. You can go to trade chat sure, but that takes a good amount of time and annoyance with "lololol harry poter ands teh ANAL [item link]!" The option to leave that market is always there, but nobody ever wants to do that since lost time is lost money. Also on the note of raising yourthreshold, there can come a point where the crafted item is selling for a significant amount less than the materials cost at that time. If this happens don't raise it up but sell the raw materials if the pricing gap is big enough. Here's a recent example of mine.

The weapon enchant exceptional agility requires 4 eternal airs and 4 dream shards to craft. I pay 15g for the eternals and 5g for the shards plus the weapon vellum, so that means that each of these scrolls costs me 80g to make at these prices. So I won't be selling it for any less than at least 100g for it to be worth the effort and time. Now looking at the current AH prices shards are at 8g and the eternals are up to 30g making that old price not such a good deal for me. However there's still a bunch of the scrolls up for as low as 130g each. Well I need the shards still since I'm running out, and I'm also low on the eternals.

So what should I do? I should sell off the eternals at a hefty profit then buy out the cheap scrolls and flip them for a much better price. Because when it comes to eternals and very cheap shards, most people will only buy when they need more or only when they're extra cheap. For me, eternal airs at a decent price are hard to come by, so I'll buy a ton when the price is good and only resell when the price is insanely high. This means that if I'm out of materials, then so is the competition. And since we both have the same access to the same supply (minus farming, ugh) unless one of us gets lucky and finds a boat load for super cheap we're both sold out. Then it becomes a game of who has more of what left over before the drought and price spikes.

I've been doing the same thing with a few epic gems and scarlet rubys. The supply is running out and the cut gems are the same price still so I'll buy out a bunch and resell them for as much of a profit as I would have gotten at normal cut and sell prices.

You can also see this in a larger scale when the price of infinite dust goes up. Once it hits the 2g each mark, you'll see all the cheap common gems and eternal earths disappear to be replaced with the prices tripled. That's because peopel are making the JC rings to DE for 2-3 dust and some lesser cosmics. That's one thing though that you can always have a huge stock of. Right now eternal earths are at a ludicrous 20g price when 2 days ago they were 5g. I saw this coming and bought up every last one there was along with the common gems. Now everybody that wants dust has to pay through the nose for it while I still have them for a solid price. Sure I could sell the dust for a small profit, but using it for scrolls would be an even greater profit due to the price I got them all for.

That is not me suggesting you pay the high price regardless because you can still make a profit, but make a judgment call on if the price difference between the raw mats, what you have left, and the crafted product. If the profit margins are high enough for you then keep doing what you've been doing, otherwise you should consider flipping or just selling off the raw materials.

Thanks for stopping by!

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