Basic marketing guide

[redcat]

!!ATTENTION: !! This thread contains a lof of common sense! But sometimes pointing out the obvious is necessary too!


This is a basic marketing guide projected at the WoW economics, this is no specific guide to earn 'a lot' of money (Yet it is very possible)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Chapter 1: Trend of prices (a.k.a. Up and Down and Up and Down)

We all know the price is determined by supply&demand, but what does that mean, and how does it work?

--------------------------------------------
terms:

supply: how much is available
demand: how much people want to buy
--------------------------------------------

The basic rules are

if there is a plenty of it and few people want to buy it, the price is low.
if it is hardly available and a lot of people want to buy it, the price is high.

if the supply and demand are about the same the price is determined by the rarity.
--------------------------------------------

Examples:

Increasing supply/Decreasing demand (The time to buy):

You want to sell item X at the peak times of the day (when most people are online and trading) you will find a lot of X in the auction house.

Since you know, that the item won't sell immediately if there are people out there that sell X at a cheaper price than you, you'll want to try to undercut the cheapest seller's price. (i.e. if the currently cheapest price is 10g, you might try to sell it for 9g 50s)

Example list:

X | bid: 8g | B/O: 11g 00s 00c
X | bid: 8g | B/O: 10g 55s 00c
X | bid: 8g | B/O: 10g 00s 00c <-- cheapest
X | bid: 8g | B/O: 09g 99s 99c <-- the offer you want to place

As a result of this, any new seller will try to undercut your price again, leading to an overall loss of the item's worth!

Try to avoid selling at this time, as it will decrease your profit considerably!
This is the time where you will want to buy cheap items to resell them later!

--------------------------------------------
TIP:
The most efficient way to undercut is to minimize the theoretical loss.
I.e. if the current price is at 10g you want to sell it at 9g 99s 99c.
Because of the way people tend to browse the prices and the psychological aspect this will make your offer more appealing than the one for 10g, even though the buyer just saves 1c!
Additionally, this decreases the rate at which the price gets lower!
--------------------------------------------

Decreasing supply/Increasing demand (The time to sell):

Basicly the same happens as above, just the other way around.
People will continue buy the cheapest offers first, but the sellers can't keep enough supply up to keep undercutting each other.

Example list:

X | bid: 8g | B/O: 11g 00s 00c
X | bid: 8g | B/O: 10g 55s 00c
X | bid: 8g | B/O: 10g 00s 00c
X | bid: 8g | B/O: 09g 50s 00c <-- cheapest

This results in an increase of items's price from {9g 50s} to {10g}

X | bid: 8g | B/O: 11g 00s 00c
X | bid: 8g | B/O: 10g 55s 00c
X | bid: 8g | B/O: 10g 54s 99c <-- your offer: most likely sold next, PROFIT
X | bid: 8g | B/O: 10g 00s 00c <-- cheapest SOLD
X | bid: 8g | B/O: 09g 50s 00c <-- cheapest SOLD

Try to avoid buying at this time, as it will cost a lot more!
This is the time where you will want to sell items at highly increased profit!

--------------------------------------------
TIP:
If you notice a decreasing supply don't try to undercut the cheapest offer!
Instead try to place a middle class priced offer, as it is likely that the ASP (Average selling price) will soon be at this point, thus yielding you a much higher profit!

TIP:
It might look appealing to list your items at the highest price, but it is very unlikely that the ASP will hit that mark, or that people will want the item THAT much that they pay such a high price
--------------------------------------------

Chapter 2: Predicting spikes (a.k.a. Oh no, 0% supply 100% demand!)

Sometimes things are worth more
--------------------------------------------

Every once in a while some special event occurs that makes prices "skyrocket" (a.k.a. raise the demand like an explosion and drop the supply to ~0).

For example this happened to nature resistance items at the launch of AQ, copper ore at the lauch of Jewelcrafting or to every new special drop from a new instance.

If you can predict these spikes you can incredibly rich with virtually no effort in almost no time, by simply stockpiling these items before the spike occurs.

I.e. copper ores were about 5g a stack before the launch of jewelcrafting, 2 days later they hit the 25g mark, thus yielding you a profit of 500%.

--------------------------------------------
TIP:
Predicting the item that is going to spike is hard, scanning newsgroups like mmo-cmp (the real name gets censored for some reason), mmowned or the wow homepage regularly is strongly advised.

TIP:
You won't be the only one that tries to make profit from an event, so start early, and if you know what's going to happen - don't tell anyone!

TIP:
Don't buy these item's at these times, prices will stay high what-so-ever, but get considerably lower over time.
--------------------------------------------

Chapter 3: What people need, and what people want (a.k.a. luxury is expensive)

--------------------------------------------

There are items out there, that people need, and that people just want to have.

For example, you surely NEED electricity and water, but WANT a fast car or a stronger PC.

The same thing applies to WoW. Everyone that raids usually NEEDS consumables, like buff food, potions and enchants, but usually WANT to have the top enchants out there, even though they are not that much of an upgrade to the cheaper medicore ones.

So - which of these is more profitable to sell/produce?
The luxury stuff, you might think?

Well, this isn't as easy as it sounds.
Think about your electricity company - they might earn about 500$ from a single household per year, while a company that sells de-luxe cars or PCs (hello alienware) does get several ten-thousands per customer, per year.

So, what is the difference?

A major company, that sells things that everyone needs, has several thousands to million customers, while a luxus company just has a few hundred customers that do posess a lot of money though.

It's the exactly same thing in WoW, if you manage to have a few rich customers that do want to have the newest and best luxury enchants on their new items, you might earn a lot of money with these (But the materials might also cost you 80% or more of the enchant's price)

If you sell rather cheap items with several hundred potential customers, you may earn several thousands of golds without actually having to look for a customer for hours, though you have to keep a huge supply up to make it pay off.

If you sell a luxus item (i.e. an epic craftable armor piece) it might cost you 60% of the selling price in materials aswell as probably several hours to find a customer that has the money to purchase such an item.

So - which one's the better choice?
This purely depends on your playstyle!

--------------------------------------------
TIP:
Sometimes there is even a huge demand for certain luxus items, thus it would be easy to sell those. Though the recipie might be EXTREMELY rare (i.e. SWP craftables at level 70)
~~~~~~~~~~~~~~~~~~~~~~~~~~~~

So, that's it for now, hope you liked my little (no, really, that's little for my standards) guide.
I didn't write this to get lots of rep, but to get out of leecher state (after over 4 years now o.0).
If you have any ideas how to improve this, feel free to leave a comment

[Henerz]

Very good and very explanatory, well done!

[Denbob]

You're right, there is common sense in there. But it's very well written and makes a lot of sense. +rep for effort if nothing else.

[BaboonX]

Well written. I didn't get to reading it all but I well tonight (Bookmarked).

[wac]

This seems pretty done by you! Good work. Though I already know all this . Put some colours and I'll +rep.

[Forbes]

A very well written information guide. Thanks!

[Redkoala]

If i go to buy somthing from the AH and i see someone has undercut someone by 1c i never buy it and buy the one for 1c more. I've been undercut when listing and its not nice.