Wednesday, January 19, 2011

Auction House Nirvana: Part 2


NOTE: A new version of the patch notes is up on wowhead. A notable change for the AH players is that xmute pyrium bar will only need 1 volt earth and 1 elementium bar. So depending on your server's prices this might become profitable to do.


Part 2: The explanation
It will be different for every server and every market and it will change constantly. It is another fine example of the butterfly effect where a small shift in one market may completely rearrange the middle ground of another one. Experience is absolutely paramount here. You may think of this as a cop out, but when you have been playing the AH for a while you can just "feel" when these shifts will happen and you can notice where the middle ground is on instinct.

If you're thinking to yourself that I haven't really told you what the middle ground is yet you're right I haven't.

What the so called middle ground is, is a point where your maximum sale price is high enough to milk every last copper from the buyer, but still low enough to be ignored by most sellers. In short, it's a method of pricing. Yes I've said before that you'll never be without competition and there's no such thing as a monopoly. But what I'm talking about now is somebody that wants a share of the market, not somebody that crafts a random widget and lists a few.

Remember what I said at the beginning about you have to get to the cross roads before you can find the middle ground? That's what I'm talking about here. You don't find this spot until you've already managed to scare off most of the competition. It's not until a market is floating on it's own that you can find the right price range to sell at.

The secret is that you can draw out your dominance of that market for as long as possible. Simply put as don't get greedy. Be smart about what you sell things for and don't just throw a large number at the AH.

When looking for this middle ground you also have to forget how much gold you have piled up and ask yourself "how much would I be willing to pay for this? Is it truly worth X gold? Do a lot of people have that much to spend on it?" When crafting high end NR scrolls I think of what their high price was in WotLK and reduced it by about 100. That's because cata is still new and people are used to those scrolls being expensive even if that prices of the materials are in the gutter. They don't know because they didn't look. If they did check the material price they wouldn't be buying 4 a day every day.

However, if I was listing the scrolls at say 700g each people would start to wonder about the material price. They'd think holy crap that's a lot for an old widget, I wonder what the materials are so I can buy/farm them instead. Then they find out that I stand to make over 600g profit. But with your price being at the middle ground they think "well sure it's expensive, but it's not as bad as this other one. Plus it is a high end enchant after all so sure it's a little pricey." Then they buy it without thinking to see how much it really costs to make.

Right now you're basically playing on the customer's expectations. People expect an engagement ring to cost like 10 grand or something crazy expensive. But if you wanted to sell them one for $50 they'd think you're scamming them. But since 10k is out of their price range and they see one for say $5,000 it's a lot more reasonable. But what they don't know is that the difference in quality is actually so minute that you won't notice unless it is directly pointed out to you.

It's a common sales tactic of exploiting that fact. These days people almost always mentally translate "expensive" into "top quality." Rarely the case. Hell you can spend $15,000 on a car wash if you like, it's still not going to be that much better than the one I got last week for 20.


Continuing with this tomorrow.

4 comments:

  1. I tried finding a place to email you, could you send me an email so I could ask you a question? I'm sorry for leaving this in a comment. Great article btw!

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  2. @ Markco
    That would be theahpile@gmail.com. I'd have it listed here but I don't check it unless I'm expecting mail.

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  3. I sent you an email as well.

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  4. Great article, and I greatly enjoyed part I as well. This should be required reading for any aspiring AH baron.

    Looking forward to part III.

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