Glyph Market Update

Well, it's been a couple of weeks since I started my grand glyph experiment. It took a while for me to settle in to a rhythm and to work out some of the kinks in my glyph processing routines. After spending over 25k on stuff for Djargenstad (bracers, mace, shadow-spec belt, epic flight), I've recovered back up to about 40k gold in the bank, and am making around 2k gold per week. Which means my profits are WAY down since I started this experiment. But they still exist, which is sufficient for now.

I've finally worked out an addon scheme that creates an appropriate amount of profitable glyphs and sells them at reasonable prices. Check back tomorrow for a technology update.

The only problem I have is the pricegap issue. If I have a glyph in stock, and the current market has two listings at 50s and five at 5g, QA3 will consider the value of the glyph to be 50s (and not post it). I've tried fiddling with the settings in QA3 to no avail, but what I'd really like is for in certain circumstances (less than N glyphs posted below threshold, basically) to post either at the fallback price or the highest price that's above threshold and below all other above-threshold prices. So in the prior example, I'd post at 4g90s. I can do this manually (and have been doing it manually for about ten or so glyphs that I know are good sellers but I've been temporarily undercut by someone), but I'd rather include that in my automation. Any advice on that front is welcome.

After some initial rumblings and hatemail, the glyph market has stabilized. Egnormous (my other major competitor in the rare-glyph market) seems to have set a price ceiling at 4g on all his (her?) posts. The trainer glyphs, especially the low-skill trainer glyphs, are as hectic as usual. There will be a market void for a day, I'll make 5 copies of the glyph and sell 2, and then all of a sudden there's 10 other postings, all at 50s or so. Frustrating but expected, since most people view any sales at all of trainer-taught stuff as bonus gold, since they're only making the glyphs to get skill points.

As I mentioned in my prior posts, I've been getting some really cheap herbs lately on the AH. This has led me to branch out a bit into new markets. I've started selling some Rituals of the New Moon, which actually come in four flavors (Red, White, Black, Grey). They don't sell often, but when they do, it's like 100g profit. I've tried my hand at vellums as well, but there's some pretty stiff competition in the vellum market (as well as the runescroll one).

I also took the change in the gem market that came from 3.3.3 in stride and changed my alchemy spec from transmutation to elixirs. Now that you can get an epic gem from about one battleground's worth of honor (if you do the daily), the epic gem market has tanked a fair bit. Prices on raw gems are down about 25%. Flasks still sell well, and I've got a ton of cheap herbs, so I have done some experimental forays into that market.

Unlike glyphs, where there is a huge number of individual items, there are really only four flasks worth speaking of: Endless Rage, Frost Wyrm, Mojo, and Stoneblood. Of those, Mojo and Stoneblood are kind of secondary- they're not in nearly as high demand, since tanks tend toward endless rage and most healers toward frost wyrm, except in certain rare circumstances. Each flask costs more-or-less the same amount to make: 10 herbs, one bottle and one lotus makes 2.4 flasks (base of 2, and you get about 20% more flasks made from elixir spec procs).

The main market problem I'm facing right now is that in there's two other serious players in the flask market, both of whom tend to have about 100 flasks at a time on the AH. Neither particularly "camps" the auction house, but flask sales aren't as consistent as glyph sales either- more guilds have in-house alchemists, and most of the sales are on tuesday for the upcoming raid week. So it's important to position your stuff well, and I doubt that I'll be able to shove these other two competitors out of the market any time soon, given that they've got so much capital tied up in their flask stocks. We'll see. Even still, I've made some sales already, and the flask prices are good enough that I'm happy to just post 40 at a time.

Silence Lil'XT

It really annoys me that blizzard is selling the worlds most annoying sound files for $10. That is to say, Lil'XT, the new pet that you can buy, makes the same stupid sound emotes that XT-002 Deconstructor makes. As if that weren't the most annoying thing in the world. Now, I typically run the game with my sound off when I raid, but I don't want to have my sound off all the time. So instead, I downloaded this addon. All you need to do is override XT's sound files by placing some empty WAV files in the {Warcraft}/Data/Sound folder. That addon includes the proper files.

For bonus hilarity, you can put in whatever wav files you want, if you really want to. But for now, silence is golden.

Should I feel guilty?

As part of the general Inscription job, you have to keep an eye on herb prices. Now that I have enough gold in the bank to buy herbs in bulk when they're cheap, that's what I do. Whenever I'm in the auction house, I scan the herb prices.

On my server, the good herbs (Lichbloom, Icethorn, Adder's Tongue - all of which mill for 6 inks per stack) go for about 1g per, give or take. On a busy day, they can drop down to 75s, or spike up to 1g50s per, depending on supply and demand, but you can usually expect to spend about 1g per herb, which works out to be about 20g per 6 inks of the sea, or 3.3g per ink. So at 1g per, that sets the profit ceiling at about 4g per glyph, including the auction house cut and 50s for a parchment. If you can get your herbs at 75s per, that reduces your ink cost to 2.5g / ink and means you can make more money selling glyphs at the same price. I, of course, subsidize my glyph making by selling snowfall ink-related objects, such as the ink itself, runescrolls of fortitude, and the occasional darkmoon card. That means even if I sell my glyphs for 2g per, I make an overall profit over the cost of the inks.

But what happens when something changes that cost calculation significantly? Say, you log in one day to find an absolute ton of icethorn on the market for 10g per stack. That's 50s per herb, or 1.6g per ink. That's a HUGE price reduction, and can lead to tremendous profits. I also got a ton of frost lotuses for pretty much half-off, to feed into my burgeoning flask industry (harder to get a handle on, since there are so few actual flasks to sell, but with all my excess herbs it is pretty much a needed thing).

Given the volume of the herbs being sold (over 1000 herbs- 50 stacks), it seems clear that the seller is either (a) a botter or (b) someone cleaning out somebody else's guild bank. There's a slim chance that the seller could be really interested in quick cash and had a backstock of herbs, but my experience in dealing with human herbalists (as opposed to botters) is that they tend to sell about 10 stacks at a time, give or take, which represents an hour or two of farming, rather than letting their bank fill up with herbs.

So, it's likely that I just bought stuff from a gold-seller. Should I feel guilty? If I didn't buy them, someone else would have. But I still feel vaguely bad about it.

Gear? What gear? We don't need no stinkin' gear.

Take a good look at that ElitistGroup report: the low-level blue gear, the ungemmed, unenchanted shoulders. Imagine for a moment that you saw that gear on a Blood DK, and you were in Heroic Pit of Saron.

Would you drop the group pre-emptively?

I almost did. I came this close to just saying, "heck with it" and waiting 15 minutes for a better group. I did whisper him with some snide comment to start, "You'd better be excellent, because your gear isn't all that hot". I apologized to him, after we had pretty much pwned the hill pulls right after Ick.

But I'm glad I didn't. Mister Blood Death Knight (Deathtalks-Mok'Nathal) did just fine tanking. He used his cooldowns properly, used both strangulate and brain freeze to position casters, and didn't have a stupid "Get over here!" macro'd to his death grip. We finished PoS just fine, with no wipes (although there were a few close calls, and I got killed by Ick when I tried to run away from him and walked myself into a corner).

So. A lesson to learn, that lots of other people have learned already. Gear doesn't make the tank. Sometimes you've got ungemmed gear because you're going to replace it in a day anyway, why bother spending 100g on gems and enchants for temporary stuff if it can (clearly) do the job just fine.

Now that doesn't mean I won't have the same worries the next time I walk into an instance with that sort of tank. The vast majority of the undergeared DK tanks I've healed were DPSers dressed up like tanks. But there are regular, hardworking DK tanks who know what they're up to, and you can tank PoS in that set of ... PoS gear. Which I'm sure he'll be upgrading pretty quickly over the next couple of weeks.

Speed up your inbox!

If you've been an auctioneer in a high-volume field like glyphs, you've probably hit the frustrating "only 50 mails per minute" roadblock that WoW imposes at the mailbox. There are some easy ways to automate the checking of mail (notably using QA3 or Postal), but you're still throttled to 50 mail per minute... or are you?

Instead of waiting the full time, you can do a /console reloadui (or just /rl) when your mailbox empties out. After reloading the UI, your mailbox will be refreshed with 50 more mails. Sure, you have to sit through the loading screen, but if you're in a hurry, this can cut 25% or more off your mail-check routine. For me, it takes about 30 seconds to grab all 50 mails in my inbox, and 10 seconds to do a /rl. So I save 20 seconds per cycle, more or less.

Not bad, although I only do it when I really need the speed, as QA3 will automatically refresh the mailbox at 60 seconds, so I could just hit "get all" and afk for a half hour or whatever.

Your time is not free: Opportunity Costs

"I can charge less for glyphs because I farm my own herbs, so they're free".

That sentence is the bane of many rational marketeers' existences. Your time is not free. No matter how you actually acquired the herbs, the simple fact is, you could have just sold them on the AH instead of milling them. At the very least, consider how many dailies you could have done in the time it took you to farm those herbs. Multiply that number by 13g or so, and call that your baseline minimum wage, since as Fizzle pointed out, you could have been doing easy dailies instead.

That's opportunity cost in a nutshell. How much could you have made selling those materials instead of turning them into a crafted good? This applies to farming as well as other modes of acquiring materials (I do a combination of paying farmers to herb and buying cheap herbs in bulk when they show up in the AH).

If you bought herbs at 50s per because you have a good supplier, and they currently sell for 1g50s per on the open market, consider selling the raw herbs instead of the glyphs. Take a good hard look at the expected profit per glyph you can get. It might be that you'll get more profit for those herbs by making flasks. It might be that you'll get more profit selling the herbs back on the AH. It might be that inks are selling well right now.

Personally, I like to spread risk around (diversify!), so if I get a crapton of cheap herbs, I'll make some flasks, make some glyphs, and if the market condition is right, I'll sell the herbs back on the AH.

Warcraft is not the World: Economic Implications

Economics is a funny thing. Warcraft economics is even funnier. Fair warning: I don't have a Ph.D in Economics, so some of what I say could pretty easily be wrong. Then again, it could be right too.

I've got a couple of things to say about Warcraft economics, going to spread this out over the week or so. I'm sure, if you read gevlon, a lot of this sounds familiar (heck, I might even have subconsciously cribbed it from him). Anyway, today we're going to talk about prices.

"No price is crazy if people pay for it."

I just saw that quote on the Professions forum, in a thread about jewelcrafting. There are other, similar sentiments around- "what the market will bear", and so on. Generally speaking, these phrases are bandied about when discussing whether or not a particular price for an item is appropriate. Should glyphs default to 40g or 4g? Should epic gems cost 250g or 100g apiece?

What's the proper price for an item that you have?

Warcraft is a funny thing, because there is a quantifiable price floor for any sellable good: vendor price. A glyph, for example, sells to the vendor for 1s. That's the only real line you can draw about what counts as a sane price: if you sell glyphs at the auction house for less than 1.1s per item, after losing the AH cut in sales you would have made more money just vendoring the item. Any difference between vendor price and actual sale price is profit.

In a perfect World of Warcraft, vendor prices would make sense, and all auction prices would eventually trend down to the vendor prices as competition goes up.

Glyphs in particular are a really annoying commodity that represent how broken the actual World of Warcraft is. A typical glyph requires some kind of parchment, the good ones take Resilient Parchment. Resilient parchment costs 50s from the vendor, and vendors for 12s50c. There is no other way to get resilient parchment. Ink of the Sea is created by milling herbs, but has a 5s vendor price itself. That means, the first thing a glypher does is spend 55s to create an item that has only 1s "real" value. At the very least, in a more-perfect WoW, glyphs should vendor for 55s. It would definitely be nice if every crafted item had a vendor price that was the sum of the vendor prices of the item's ingredients.

I'll relent on that for the time being, to get back to my main point: When you ask yourself, "what is this thing worth?" the only hard-and-fast answer is the vendor price, period. The second answer to that question is: how much did the item cost you to make?

While the vendor price of an item is an external reality and unlikely to vary from player to player (save faction discounts), the actual material cost for an item varies quite a bit. The herb market drives glyph prices- if I can get a stack of good herbs for 15g, I can charge less per glyph and still make a profit than the guy who is paying 30g per stack.

Don't get confused at this point and say, "well, I farm my herbs, so I pay 0g per stack". That's a fallacy: don't ignore opportunity costs. If you farm your herbs, figure out how much you COULD have sold them for if you put them up on the AH. That's how much your herbs cost, because if your glyph rates fall below that level, you'd be better off selling the herbs straight, rather than the glyphs. More on opportunity costs in a later post.

So, when somebody tells me that I'm pricing my glyphs too low, I know that they're coming at the problem from the wrong angle. All my glyphs are priced such that (a) they represent a real profit over vendor price (as well as the vendor price of the constituent parts, which if they didn't, I'd just vendor the materials), and (b) they represent a profit over what I actually paid for the materials. This brings us right back to the "what the market will bear" fallacy, which is flawed in two directions: elasticity and competition.

Elasticity refers to the change in demand as price varies. If you charge 10000g per glyph, a lot of people will say, "you know what? I think I'll just run un-glyphed and accept the fact that I'll have 3% less DPS." If you charge 1s per glyph, nobody will say that. In between is in between. Consider the price for Battered Hilts. If you're leveling an alt (or just getting toward ICC for the first time on your main), there's probably a lot of utility to be had in getting a Battered Hilt. Everybody wants one. But only some people think it's actually worth buying. If you could sell battered hilts at 2,500g per instead of the 15,000g that they go for on my server, you'd make a bundle- lots and lots of people would be buying them. So, 'what the market will bear', or 'no price is silly if people will pay it', is an overly-simple line of reasoning. Yeah, the market bears 20,000g for a Battered Hilt, but there's only one sale a week, if that. You have to account for demand elasticity.

Competition doesn't need as much explanation, hopefully. The important thing about it is that your competitors may have a different target price point than you, because they have a different idea about where in the price elasticity of demand curve they're aiming. Consider the difference between the prices of a corner bookstore and Borders. Borders has cheaper books, pretty much across the spectrum, of the new releases at least. They sell new hardcovers at 20-40% off cover price. The corner bookstore might say, "hey, you're undercutting the price that's written on the book, you poopypants!" Borders would respond, "well, yeah, we're making less profit per sale, but we're making so many more sales that it all works out in the end". Think WalMart here.

The WalMart model only works a little bit here- they keep their prices artificially low because they don't pay nearly as much in raw materials prices as other retailers. But the trade-off between per-unit profit and volume sales is a clear one that should make sense.

When a new competitor comes into the market with a different idea of what an item should cost, they're not being dumb. The only price written on any item is the vendor price, and any sale price other than that is negotiable and not likely to last.

At the end of the day, that's what economics is all about: trying to understand how people make up numbers to associate real value to imaginary benefits. More to come.

Crashing the Glyph Market

According to common wisdom, the way pricing on the Auction House should proceed is as follows.

1. Every item has a "natural ceiling" price, which is more-or-less the most any reasonable player would pay for the item. This ceiling is a fungible value, depending on volume. If you had to sell a LOT of battered hilts, the price ceiling wouldn't be 20,000 gold. The glyph price ceiling seems to be 50g.
2. Any extra players in the market will undercut the original poster by some amount. 10s, 10% of buyout, and 5g are all very common undercut amounts.
   
3. Some AHers (campers) will continually (or at least frequently) scan all their auctions, cancel the ones in which they're being undercut, and repost at lower values. This behavior is rewarded in markets where the deposit cost is significantly less than the buyout price (typically: glyphs, enchantment scrolls, enchant materials, and certain very expensive epics)
4. Prices will naturally trend downward to the price floor (the minimum beyond which competition will not proceed, usually the cost to create the object in question, but not always).
5. If a competitor drops out of the market for any reason (their item sold or expired and they did not repost), the prices can reset to stage 1 again- you go to relist your item and find no competition, so you set the price to the ceiling.

The funny thing about this model is that it requires cooperation between all competitors in the market. It only works if everybody involved agrees on a ceiling price and follows that rough plan of "undercut by a reasonable amount". Cooperation is a pretty interesting phenomenon in markets, and emerges all over the place when people act rationally in their own best interests. Take a moment (if you haven't thought about this stuff before) and check out the wikipedia article I linked, especially the part about the Prisoner's Dilemma.

Consider the moment of sale. That is the moment when someone walks into the Auction House in order to buy a glyph. Let's assume for a moment that the market is indeed shaped by unspoken cooperation between rivals. The tension is: we all want to make the sale (and therefore have the lowest price at the time when a customer enters the AH), but we also want to maximize profit (and therefore have the highest possible price at that moment of sale).

You can see how that tension leads to two things: a desire to undercut by some minimal amount of gold (10s being the common amount), and a desire to have the largest window of exposure to the market. It is important that your glyphs be at the lowest-price position for a long time, especially during high-activity hours. Clearly, when cooperating with other glyphers, the cancel-repost strategy makes a lot of sense, as does staying logged in for extended periods of time (even alt-tabbed) waiting to hear that "beep" that your /friended competition has logged in and out. Once they've logged out, you can log over to your glypher character (because they don't know your spy character they didn't know you were watching them repost) and cancel whatever was undercut.

The natural question in this situation is: how can we "betray" the cooperative market? The obvious choice is what I alluded to earlier: lower the agreed-upon price ceiling significantly. If I ignore the 50g price on that glyph of mortal strike, and post my undercut at 5g instead of 49g90s, I'm definitely breaking the unspoken rules of play. There are some other ways of betraying the market which I will blog about down the road a bit, but for now let's consider the situation that arises while lowering the price ceiling.

I make a profit selling glyphs for 5g. I will not post a glyph that I lose gold on. I'm clearly not making as much gold as I could have by selling at high prices, but I'm still making money. On the other hand, by lowering the price ceiling so much, I've changed the buyout-deposit-time relationship enough that it's no longer reasonable for me to use the camp-cancel-repost strategy. If a cancel-repost takes an hour to complete (most of that time is spent at the mailbox chokepoint), and costs a little bit of gold, I'm simply not going to waste my time chasing after tiny profits with that strategy. Instead, I can just post all my glyphs for 48 hours and let them sit on the AH until they expire. If I get undercut, so be it.

That one feature (eliminating the thrice-daily need to scan-cancel-repost) is very intriguing to me. Under this new model of play, I hypothesize that my glyph competition will also drop away from the camp-cancel-repost model of glyph pricing and instead take up the long-post model that dominates most of the rest of the auction house. If my competition continues with cancel-repost, my sales will be so low that I'll just sit at nearly no profits for ages. If the competition is fierce (or has better herb sources than I), they can drive glyph prices below my profit line and push me out of the market.

The most interesting side-effect of this market manipulation is that as long as I stay in the market, even if I'm being undercut, I keep the profits low for everybody. That's the scope of the betrayal of cooperation here. It's a fascinating position to be in- I've got enough cash that I don't care about getting 10,000g in the next week or whatever. Provided I'm not losing money, I can afford to keep prices really low for a long time.

Addon Update: Fixing LSW and UCQ

I'm a big fan of LilSparkysWorkshop. As it's own tool, it's somewhat interesting. It really shines in conjunction with UCQ, the Ultimate Craft Queue. You can use UCQ to effectively issue a one-button command that says, "please queue whatever glyphs are needed to craft (in skillet) so that I have 4 of every glyph I can make that sells for 3g or more". That's a really handy button to be able to press. Read up on UCQ for details on how to work it, but I've noticed a few quirks in things.

First: LSW doesn't play nice with AuctionLite. I use AuctionLite for its mass-buyout capabilities; you can shift-click a LOT of auctions and buy them with one button-press. Saves a lot of time. Unfortunately, if LSW detects AuctionLite, it tries to pull pricing data from AL instead of Auctioneer, which doesn't work if you're not also scanning the AH with AuctionLite (which I don't, as it's an extra button press that serves me no purpose). Took me a while to figure this out, but if you go into the LSW addon folder and delete pricingSupport/auctionLite_support.lua, it starts working again. As an aside, kudos to lilsparky for making a pretty clever modularized auction compatibility system. Using callbacks on function objects is pretty neat. Anyway.

Second: UCQ doesn't seem to work right the first time. I don't know why, but the first time I hit the "create queue" button, it decides there's no Auctioneer data present. Instead of erroring out, it will ignore the threshold request and craft EVERY glyph you can make. That's kind of a bummer if you don't notice (which happened to me once). Check on the log tab, scroll to the top and see if you have a red line saying "Auctioneer not found". What works for me in this case is clearing my queue from skillet and just pressing the "create queue" button a second time. Always works a second time.

Those two little fixes have made my life a lot easier. Together, they mean I can:

• Buy out arbitrarily large numbers of herbs with one button press (AuctionLite)
• Open all my mail with one button press (QuickAuctions3)
• Automatically queue any profitable glyphs for crafting (UCQ/LSW)
• Buy the appropriate parchment and ink from the traders in Dalaran (Skillet)
• Post all my glyphs at auction with the appropriate pricing scheme (QuickAuctions3)

If one of these addons would just do all my milling for me, my life would be complete. I'm happy that they reduced the mill-time from 2 sec to 1 sec, but you still have to press that "mill" button a couple hundred times, which gets tedious.