Wednesday, March 16, 2011

Durations, cuts, and deposits

Today's entry is about three simple factors on the AH that most tend to overlook or outright ignore: deposit, AH cut, and duration.

Every time you go to post an auction you lose a few gold for the deposit as we all know. The amount of the deposit is based on two things, the vendor price of the item and the duration of the auction. Shamelessly stealing from here's the math behind it on your faction owned AH. MSV is short for Merchant Sale Value.

Amount Received = Winning Bid - Cut + Deposit
(in Faction AH) = Winning Bid*(0.95) + Deposit

Deposit (12hr) = 15% of MSV
Deposit (24hr) = 30% of MSV
Deposit (48hr) = 60% of MSV

When you cancel an auction that has a bid in place, you will lose your deposit. You will also be charged a fee equal to the house cut of the current bid.

Cancellation Fee = Deposit + Cut

Ok lets get the obvious things out of the way first. The longer you post an auction for, the more it's going to cost as a deposit. When you sell an item your deposit is refunded, but if you cancel it or it expires that money is lost. For cheaper items like scrolls or glyphs you can safely ignore this as you can lose maybe a single gold coin by the end of the week at the worst.

The plus side to 48 hour auctions is fairly simple, you don't have to collect the mail or list more items nearly as often. And with the shorter durations you don't lose as much gold on unsold auctions but have to work the AH more often. Aside from those basic facts, there's a lot more to consider when deciding on a duration. Like I keep on rambling on about, you have to find your own balance.

But when you sell something like gems these deposits are a legitimate concern that you should pay attention to. It doesn't matter if they're raw or cut, common or rare or epic. On average you're looking at around 1g per gem so when you list 60 gems that's a noticeable amount that's thrown in the gutters. And if you do a cancel/post more than once in that day then that turns into 120g that you've lost. Granted that's if not one gem sells and you don't get the deposit back, but every item you list is a gamble. If it doesn't sell you lose money. Period.

If something has a high rate of sale like red intellect gems or nether bags, list several of them for 12-24 hour auctions. I always do at least 1 day auctions because I might not be around to relist when I get undercut or when they expire personally. For example, nether bags I list in sets of 8 and int gems (and a few others) I list 6 at once.

Most of my auctions I list in pairs for 24 hours since I do a cancel/post twice a day. For less common sales like assorted meta gems or leg armors, you don't want to list too many at once because that will siphon your profits pretty fast with lost deposits. There's countless items that you can sell on the AH and they all need their own special attention. However when there's a serious camper about I'll list for 48 hours to ensure that they can't make any more profit than what I set the price at unless I sell out of something.

With the deposit cost in mind I always add 15% to my threshold to ensure that I lose as little money as possible. I typically sell any given item after listing it three times so at worse I make my money back on the materials for whatever sells.

Because of all of this you need to find your personal balance. Think about what items tend to sell the fastest as in back to back sales. What items tend to sell out in a day? In a week? What only sells one or two per week? To find this balance you can closely relate it to your undercut values.

Thanks for stopping by!

1 comment:

  1. Great Post!!
    on my server i love to mess with the campers on the JC market undercut all their cuts with 1 gem and watch them cancel repost the walls of gems they have up.