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Lose 15k Per Sale, Make it up with volume!


DarthBama

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I was crunching some numbers on the augment kits, and I just don't get the prices. It takes at a minimum 4 mats plus 2 of the $450 vendor crafting mats to get 1 mk-6 component. For a level 6 kit, that is about $4900 per augment component times 10, $49,000 (not including the mats for the construction of the kit itself). People on the Harbinger have oodles of them for sale at $36k. What in the heck are people thinking?
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You assume that people selling augment kits for that price are paying full market value for the base materials. In all likelihood, they are not.

 

When I craft augment kits, I use the mats that I gather from crew skill missions and occasional farming while doing dailies. Selling them for 36k or less on the GTN nets a very nice profit as they cost me next to nothing to gather. The only major cost to farming the mats yourself and REing to get the components is the time investment.

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You assume that people selling augment kits for that price are paying full market value for the base materials. In all likelihood, they are not.

 

When I craft augment kits, I use the mats that I gather from crew skill missions and occasional farming while doing dailies. Selling them for 36k or less on the GTN nets a very nice profit as they cost me next to nothing to gather. The only major cost to farming the mats yourself and REing to get the components is the time investment.

 

Wouldn't it be in your interests to sell the mats instead of make the kits? Would save a heck of a lot of time, and you would make more money.

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Wouldn't it be in your interests to sell the mats instead of make the kits? Would save a heck of a lot of time, and you would make more money.

Perhaps, but crafting a bunch of junk to RE and then grinding through all of it and crafting kits gives me something to do while I'm standing around on fleet with nothing else better to do with my time.

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Same with those exotech stims, I looked at the prices and got to the conclusion that it takes 16-20k to make one stim. And there are people who sell them for 13k. Heck, I saw someone selling them for 9k! The horror! Sure, those people don't buy the mats and gather them themselves - but that is still time invested and time is money; they could've used the time to gather them instead for running dailies or something. They probably didn't do the math or don't take into account that they are still "paying" with their time and just keep on undercutting. Bah, really makes no sense for me at all to sell them at the current market.
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Everyone doing these calculations needs to take a few things into account:

 

1.) As mentioned above, you don't want to use the full asking price for mats on the GTN. The value of something isn't determined by how much someone is trying to sell it for - it's determined by where the buyers and sellers are meeting. (this is also how you do away with the "just sell the mats" argument - people don't just sit there buying every mat on the GTN... a lot of those don't ever sell).

 

2.) You need to account for the mats you get back when REing something. If I make a belt and then RE it for the augmentation component, I not only get one component, I get 1-2 mats back. So, it actually takes 2-3 mats per component, not 4.

 

3.) You need to account for crits in crafting the kits themselves. So, per kit that comes out of this process, you used less than 10 components. If you have a 15% crit chance, then for every 100 components, you end up with 11.5 kits.

 

Adding #2 and #3 together, you end up with something like (conservatively assuming it's 3 mats per component) 3x100 mats yielding 11.5 kits (and of course, you also use the 400 credit buyable mats).

 

In terms of farming mats, that ends up being 26 mats per kit. Now, I won't try to put a hard value on the mats, but when you say it costs 26 mats + the piece you can get from the vendor (you need at most 11 of those, so 4400 credits), the price of 35k doesn't seem so low.

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i kept a spreadsheet for my synthweaver with a couple columns:

 

costs: included any archaeology/slicing missions i sent comps on for mats

sales: amount i made from selling augments

 

profit: sales minus costs

 

i did this because i too thought i wouldnt make that much, it turned out i was wrong, in a couple weeks of tracking i had made more than 5 million

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Kids just don't understand opportunity cost. They just see it as pure profit since they farmed the materials themselves. I can craft the kits but still end up just buying them off the gtn when I need them.

 

It would be interesting to see analysis determining how much 'profit' difference exists between selling the mats and selling the crafted the items, along with the true profit potential over a given time period (credits per hour) assuming a full crew of companions available.

 

Though for that analysis to be worthwhile it would need to factor in crits and the RE returned mats to come up with an accurate 'cost' for making an MK-6 along with accounting for the crew time required to craft the items (which could be used to run missions for more mats).

 

And the post right above me shows exactly what Frostbyt was saying with people believing the cost of mats are zero because they picked them up off the ground.

 

It doesn't matter if you gathered your mats or spent 1,000 credits running a mission to acquire them, if the mats sell for 2,000 credits and the item you craft sells for 1,500 credits, you will be forgoing 500 credits by crafting (and this is before factoring in the lost crew time spent crafting the item).

Edited by DawnAskham
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Everyone doing these calculations needs to take a few things into account:

 

1.) As mentioned above, you don't want to use the full asking price for mats on the GTN. The value of something isn't determined by how much someone is trying to sell it for - it's determined by where the buyers and sellers are meeting. (this is also how you do away with the "just sell the mats" argument - people don't just sit there buying every mat on the GTN... a lot of those don't ever sell).

 

2.) You need to account for the mats you get back when REing something. If I make a belt and then RE it for the augmentation component, I not only get one component, I get 1-2 mats back. So, it actually takes 2-3 mats per component, not 4.

 

3.) You need to account for crits in crafting the kits themselves. So, per kit that comes out of this process, you used less than 10 components. If you have a 15% crit chance, then for every 100 components, you end up with 11.5 kits.

 

Adding #2 and #3 together, you end up with something like (conservatively assuming it's 3 mats per component) 3x100 mats yielding 11.5 kits (and of course, you also use the 400 credit buyable mats).

 

In terms of farming mats, that ends up being 26 mats per kit. Now, I won't try to put a hard value on the mats, but when you say it costs 26 mats + the piece you can get from the vendor (you need at most 11 of those, so 4400 credits), the price of 35k doesn't seem so low.

 

Points 2 and 3 are kind of true and I am not quite sure of what is being said in 1.

 

Point 2 - I find that with the return of mats from REing each component costs between 5 and 6 mats, per component. That is true at least in some of the MK-6 kits that I craft. Also each 10 components require mats (none of which are returned) to craft the kit itself.

 

Point 3 - This is pretty much right on. After a lot of kit making, I find that I get a tad less than 6 kits for each 5 I run.

 

Point 1 - Not sure what you mean here. The cost of the kit to me is the acquistion cost of the mats and oppertunity time. That is true. On the other hand, I am a mat seller and I have to look at the value of the mats not at my cost but at what I can sell them for. If I can sell the mats for more than the kits, I consider the kits a loss even though on a pure cost basis I am making a profit. If I send out a companion to craft kits from components and/or send out a companion to craft the item I RE for a component and in the same time could have sent that companion on a mat gathering run which ended up in mat sales then I have to consider the lost profit (time) in such sales as part of my component cost. In other words if I can make x credits and hour selling mats and x-y credits an hour selling kits, sure I am making a profit on the kits but they do not make much sense.

 

LOL, I make good credits from kits so am not making up for losses with volume, but I find other ways of making credits more profitiable in some cases.

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Personally, I work forwards from 340 scavenging missions.

 

8 scavenging missions, send M1-4X out on them (takes a while, but he has the +5 crit), then make level 49 green belts, then RE them for the mats, then make the augment kits.

 

On a good day at the GTN I can get a 340 scavenging mission for ~20k. 8 of these will run my 160k. If I'm lazy and purchase Thermoplast Flux at the vendor its another 120k. Craft 140 belts, RE, craft 14 augment kits. If I were to sell these at 36k each, that would 504k, which is a 180% profit. If I get Flux from missions (instead of vendor) I can get over 200% profit.

 

It just takes a looooooong time, so I don't use it as a primary method of money making.

 

Edit: My armormech is my main, so whenever I'm doing raids I'll try to always have M1-4X out on a mission.

Edited by Khevar
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I am not quite sure of what is being said in 1.

What he means is that you can't determine the value of something by looking at how much people are asking for it on the GTN. Rather, the value is what other people are prepared to pay for it. Since there's no way to see past sales though, it's often impossible to find this out. With high-volume items such as materials or companion gifts this is less of a problem, since low-priced items are gobbled up pretty fast (the popular types anyway; I dare you to try selling luxury fabrics at a significant profit), leaving the market in somewhat of a stable state. But with rarer items like schematics you often have to make wild guesses at how much it might possibly be worth.

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You're assuming everyone buys their materials off the gtn. I gather 100% of my resources. I estimate that it costs me around 15k-20k to make a kit running missions. So, I sell for on average around 35k a kit on my server, that's a decent profit.

 

You also forgot about criticals. 100% profit on the extra kits, I get a lot of criticals.

 

Mk-6 kits are not my main source of income, I consider it extra money. I make around 300k-600k a day off the kits.

Edited by Alpine
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Same with those exotech stims, I looked at the prices and got to the conclusion that it takes 16-20k to make one stim. And there are people who sell them for 13k. Heck, I saw someone selling them for 9k! The horror! Sure, those people don't buy the mats and gather them themselves - but that is still time invested and time is money; they could've used the time to gather them instead for running dailies or something. They probably didn't do the math or don't take into account that they are still "paying" with their time and just keep on undercutting. Bah, really makes no sense for me at all to sell them at the current market.

 

Don't forget that when you make the Exotech Stims, you get a stack of 3. So even with crafting costs at the high end of 20k, that's a profit of almost 100% if sold at 13k each, and just over 33% if sold at 9k each.

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What he means is that you can't determine the value of something by looking at how much people are asking for it on the GTN. Rather, the value is what other people are prepared to pay for it.

 

100% agree. You see it all the time on the TV show Pawn Stars on the History Channel. Customer walks in demanding $X for item Y because he saw it online selling for $X. The first question out of the shop's staff is, "did you see someone actually pay that much?"

 

Since there's no way to see past sales though, it's often impossible to find this out. With high-volume items such as materials or companion gifts this is less of a problem, since low-priced items are gobbled up pretty fast (the popular types anyway; I dare you to try selling luxury fabrics at a significant profit), leaving the market in somewhat of a stable state.

 

what you can do though is if you are willing to spend the time, look at the range of pricing and make the assumption that the average of that pricing is the high end of what most players are willing to pay.

 

Or you can use your own set of values and assume most players are like you.

 

Either way, you adjust your assumptions as you get more data.

 

But with rarer items like schematics you often have to make wild guesses at how much it might possibly be worth.

 

One nice thing about the GTM is that while there is a deposit to post a sale, the GTM does not get a cut unless you actually sell the item. So if you have an item that is currently not available on the GTM, shoot for the moon post it at a very price, worst case is a day later you get it back unsold and you post it for 1000 (or whatever) credits less

until it sells. So long as you have patience, you can figure out what the real value of an item is.

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Don't forget that when you make the Exotech Stims, you get a stack of 3. So even with crafting costs at the high end of 20k, that's a profit of almost 100% if sold at 13k each, and just over 33% if sold at 9k each.

 

No, I've already considered this. They cost 48-60k to make. Of course nobody buys the radioactive pastes at 9k each (or nobody should because they sure wouldn't have any profit that way..), but you have to consider the prices for them at the market, why craft something if you could instead sell the mats for more?

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You're assuming everyone buys their materials off the gtn. I gather 100% of my resources. I estimate that it costs me around 15k-20k to make a kit running missions. So, I sell for on average around 35k a kit on my server, that's a decent profit.

 

You also forgot about criticals. 100% profit on the extra kits, I get a lot of criticals.

 

Mk-6 kits are not my main source of income, I consider it extra money. I make around 300k-600k a day off the kits.

 

But wouldn't you make more if you sold the mats instead of the kits?

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Everyone doing these calculations needs to take a few things into account:

 

1.) As mentioned above, you don't want to use the full asking price for mats on the GTN. The value of something isn't determined by how much someone is trying to sell it for - it's determined by where the buyers and sellers are meeting. (this is also how you do away with the "just sell the mats" argument - people don't just sit there buying every mat on the GTN... a lot of those don't ever sell).

 

2.) You need to account for the mats you get back when REing something. If I make a belt and then RE it for the augmentation component, I not only get one component, I get 1-2 mats back. So, it actually takes 2-3 mats per component, not 4.

 

3.) You need to account for crits in crafting the kits themselves. So, per kit that comes out of this process, you used less than 10 components. If you have a 15% crit chance, then for every 100 components, you end up with 11.5 kits.

 

Adding #2 and #3 together, you end up with something like (conservatively assuming it's 3 mats per component) 3x100 mats yielding 11.5 kits (and of course, you also use the 400 credit buyable mats).

 

In terms of farming mats, that ends up being 26 mats per kit. Now, I won't try to put a hard value on the mats, but when you say it costs 26 mats + the piece you can get from the vendor (you need at most 11 of those, so 4400 credits), the price of 35k doesn't seem so low.

 

4. The thermoplast flux is very easy to get from grade 5 scavenging missions. There's usually a bountiful or rich mission for them available, and sometimes also a moderate yield one. When I need some, I get them for ~50 each from those missions, and they don't sell for that much more on the GTN either.

Running missions for the other mats might give more profit though, tbh I never really considered it since I can't be bothered with selling them anyway (too much effort splitting stacks, tracking prices, keeping them updated etc).

 

With all those factors taken into account, my gut feeling tells me there should be a profit margin there compared to selling the mats, but...hard to run proper math on that.

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You're assuming everyone buys their materials off the gtn. I gather 100% of my resources. I estimate that it costs me around 15k-20k to make a kit running missions. So, I sell for on average around 35k a kit on my server, that's a decent profit.

 

You also forgot about criticals. 100% profit on the extra kits, I get a lot of criticals.

 

Mk-6 kits are not my main source of income, I consider it extra money. I make around 300k-600k a day off the kits.

 

Impressive. That seems to break down to (assuming gross not net) at least ten kits a day which is 100 components (not counting kit crits). 100 components = 500 or 600 pieces of mat (counting RE returns and not the mats from component to kit). 500 to 600 mats a day running level 5 or 6 missions is quite a bit and takes a long time (even on multiple alts) which does not count the RE time, the logging on and off to multiple alts, and the crafting time for the kits from ccomponents. Not bad for a not main source of income.

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MK6 kits are starting to get down to the 30k range on Shadowlands and Prophecy of the 5. At that price point it isn't worth it, for my playtime, to sell them.

 

I think that, just like armormech/sythweaving schematics from before the last server merge (when you could list and sell them for 50k or more - and that died right after the last server merge) the "golden age" of pricing mk6 kits has come and gone.

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