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Selling what you craft: Secrets from the Hutts

STAR WARS: The Old Republic > English > Crew Skills
Selling what you craft: Secrets from the Hutts

Chalpy's Avatar


Chalpy
05.19.2012 , 11:17 AM | #1
Have you ever dreamed of having a rancor pit where you throw Hutts in for your own amusement? Do you want to chain Karagga to your podium? If so, this guide wonít make it happen but it may help you make credits and this guide is written with the idea that you want to make credits. First of all when making money there are a few things to consider which are broken down into the following sections. As a warning, math is required.
I. Finding a market
II. Pricing
-Sales do not necessarily equal profits
-basic cost
-opportunity cost
-pricing for critical successes
-how much should I mark up?
III. Finding other opportunities
-Arbitrage
-What if someone is underselling at below cost?


I. Finding a market

First, when finding a market you have to determine what sells and what doesnít. In a MMO, this is quite simple; where is the highest population and what do they need? In any level based MMO the economy is based around the end game and end game items. So, take a look at what people on your server need. This is easy enough by determine by asking around and checking on the trade network or you can go to a well-respected pvp or pve site and find out what they recommend for stat priorities. Anything that has those stats in the greatest abundance will be in demand for that class. You can also manufacture items as a test and see if they sell. The specifics of what is selling the most will depend on what your server wants and how many suppliers there are. Too many suppliers drive costs down; too few drive costs up. As well any materials such as Opila crystals, Electrum, etc that have limited missions for them and only a chance of getting them will have more demand for them due to scarcity than their counterparts such as Bondar crystals and Neutronium. Once you have an idea of what to sell you can figure out what to charge for your new items.

II. Pricing
Sales do not necessarily equal profits!

On an MMO if you undercut so much you sell at less than cost there will still be some people who think that they are making money just because they have sales. Sales only equal profits if the items is being sold at more than what it costs to make. If you sell 100 items but spent 1,000 credits more to make them than was charged to sell them then you have a loss of 100,000 credits; not a gain. Items have to be priced higher than costs to make credits. The question is now how to price but there are some concepts to keep in mind here:

First, in short!= Sales only equal profits if you sell for higher than costs!

(a) Basic cost. What I refer to as the basic cost is simply how much does it cost to make that item. A level six gathering mission will cost 1,485 credits and will return on the average 5 items. If you want to round up for simplicity you can assume 300 credits per item (or you can use 297 if you want to be really picky). If an item takes 10 of those to make then the cost is 3000. If you have to add in 10 materials such as thermoplast flux or cortosis substrates that cost 400 each assuming you donít gather them yourself then the cost goes up by 4000 so you now have a cost of 7000 to make. The trade network will have a 6% surcharge so times it by 1.06 to get the final result. In this hypothetical case, 7000*1.06 = 7420. If you sell the item for less than 7420 credits you are losing money each transaction and 7420 means you have no return. If you are interested in making money though there is, however, a better concept to use and that is opportunity cost.

Second point!= If you want to make credits, look at opportunity costs!

(b) Opportunity cost. The opportunity cost is a concept in business that states your cost is the cost of the activity you gave up instead. With SWTOR most cases of the opportunity cost will be found in one area; the Galactic Trade Network. How much do the materials sell for? If I take the item above and sell the crystals instead for 500 each then I should charge a minimum of ((10 crystals*500)+4,000 for the substrates) = 9,000 credits. If I charge less I would be better off selling the crystals on the trade network. How do you place the opportunity cost? Well, if youíre unsure put materials up for sale. The price at which you can be reasonably expected to get a sale will be your opportunity cost for that material. As an example, electrum on my server will currently sell for 1,500 per electrum and Upari crystals for 1,000. Cortosis substrates are 400 per for every server if you buy from the trade skill vendor and if youíre producing a lot of items you may not have the time to gather them yourself. Now letís look at
Fortified Electrum Headgear Basic Cost: Electrum(6) 1,500 + Upari Crystals (8) 2,400 + Cortosis Substrates (4) 1,600 + Trade Network Fees: 330 = 5,830 credits

Pricing at Opportunity Cost Electrum (6) 9,000 + Upari Crystals (8) 8,000 + Cortosis Substrates (4) 1,600 + Trade Network Fees: 1,116 = 19, 716

The price is a lot different. I could sell the headgear using the cost as 5,830 but if you want to make money you could sell the electrum and upari crystals instead for 17,000. On most servers the prices for electrum and upari will probably be closer to 500-600 credits per but if thatís the case by selling the 14 electrum and crystals involved at 600 credits each you can sell them for 8,400 credits which is still better than the basic cost and you donít have to spend your money on cortosis substrates either. Keep in mind your opportunity cost changes as the market changes. If the market for Upari crystals falls to 500 per then my opportunity cost goes down. If it goes up to 2.000 per my opportunity cost goes up.

Third point! = If you can sell the materials to make the item for more credits than you can sell the item for you get more credits by selling the materials!

(c) Pricing for critical successes. Pricing for critical successes is pretty easy if you remember these two numbers; 5 and 4. If your companions are at maximum affection then they get a +5% bonus to crit. The base chance for a crit for anything other than an orange mission is 15%. This means that over the long run one in five missions will get a crit. If your companion has a +5% bonus to that activity that companion, and only that companion, will crit one in four times. So when determining price you can multiply the amounts needed by five or by four if you only use one companion to do the crafting. As an example with the Fortified Electrum Headgear above to be reasonably expected a crit you would need 30 electrum, 40 Upari crystals and 20 Cortosis Substrates. For missions, such as grade six Advanced Neural Augmenters you get roughly three of them approximately every five missions with a companion with max affection. The missions cost 1,785 credits per mission. As such, your cost to gather them is 8,925 credits (5*1,785) divided by 3 which equals 2975 credits. There is still the 1.06 for the trade network cut which means 3,154 rounded is the break even point on your costs to gather them. If you sell them for less than this you are once again losing money every transaction.

Fourth point!= For crit missions times the costs by 5 (or 4) to get your costs for one critical success

(d) How much should I mark up?

This is more complicated and depends on a lot of factors. What mark up makes your entry and time reasonable enough for you to do this activity? Itís a video game; the goal is to have fun; not work. Personally for the time part if I cannot make more than double the returns I would have had for doing dailies or other activities for crafting I donít make the product. With Ilum I was getting 50,000 credits per half hour so if I cannot earn a minimum of 200,000 credits per hour crafting I donít do it. I donít get daily commendations, I donít get chances to get new equipment; Iím crafting. Sometimes I can craft while playing other activities, moreso for higher level items than lower level items where you're constantly resending out companions every couple of minutes. In that case I consider the time I spend crafting. Thatís the point where I have fun with it. For some people the point may be higher or it may be less; there is no right answer. The question is at what point and at what return are you having fun? Some people may want to see as many people walking around in their armor suits as possible and they will probably price lower to ensure as many people buy their products as possible. Some people may want to maximize their credits so they can see their credit total go up. They would try to price for maximum return (not necessarily the highest price; the point at which customers times profits equals maximum credits). Maybe you just want to clear out items in your cargo hold so youíre willing to accept a loss. There is no right answer; itís a video game so price at what you feel rewarded for your investment.

Fifth point!= Mark up to at least the point at which you feel rewarded for your effort and time investment!

IV. Finding other opportunities

Arbitrage


Arbitrage is a bit more complicated than this but in an MMO it could be defined as the buying of items at below market value and the reselling of them at market value. As another example, on my server Laminoid will sell for 1,000-1,500 credits per item at the date of this writing. If I see someone selling Laminoid at 168 credits per, which happens every few days, I buy it and resell it at 1,000 to 1,500 credits per piece if I donít use it myself. I have seen people who occasionally sell materials at less than the cost of gathering them; I buy them immediately to either use them or resell them at market value. Theyíre not making money so eventually theyíll stop doing it. It might take longer in an MMO as if people donít understand pricing they will sell for less but since theyíre getting credits from other activities they might think theyíre making money since theyíre credits are going up. Theyíre not going up from selling though; theyíre going down from selling and going up from doing missions, flashpoints, etc

Sixth point!= If someone is selling something at a price below market value or gathering costs you can make credits by buying it and reselling it at market value!

What if someone is underselling at below cost?

In this case, the answer is quite easy. Sell the materials yourself. Why take the time to produce it if you can get more credits by selling the materials instead. If the material market falls so that there isnít enough credits to be made there for what you want switch to another item and when the market comes back up reenter the market. There will be people who want to just sell items quickly in an MMO so theyíll quite often do it at a loss to minimal returns. Theyíll stop eventually and then when they do reenter the market.

Seventh point! = If someone is underselling at below cost or minimal returns see if you can make more credits selling the materials instead. If not, move into a different market until the original market returns to normal.

Try to anticipate demand

For this take a look at what the developers have planned. As an example, patch 1.2 brought in augmented armor pieces which had a very good return. The return in the first few days was insane. Patch 1.3 as currently planned is removing the ability of crit crafted armors to hold top end augments without an augmentation kit. In 1.3 crit crafted orange armors will be just as useful as non crit crafted armors as people will want the top end augments; not medium range augments. So the next big armor item will be augmentation kits. Instead of producing crit crafted armors start getting ready to produce augmentation kits. Of course this requires staying on top of in game developments but if you want to make a lot of credits reading over fansites every so often will help you to anticipate what people will want next.

Eighth point! = Try to figure out what people will want next and then plan to supply them.

Conclusion

If you want to make credits the eight points mentioned above should help you to figure out what to sell and how to price. Good luck with your credit making and letís get so many credits we enslave the Hutts. Also, if you liked this guide and think it would be helpful for people please uprate it and/or like it as I think it would be a good addition to the crew skills forum. Itís not about crafting per se but itís about selling which is a part of any crafting system.

pokota's Avatar


pokota
05.19.2012 , 03:09 PM | #2
Very nice. I want to send this out to the undercutters on my server who have ruined various markets by undercutting at 5-10k at a time, until the crafted product is selling at below the market value of the materials. A good read for those on SWTOR who need a little help earning credits.

Spectus's Avatar


Spectus
05.19.2012 , 10:21 PM | #3
Quote:
Personally for the time part if I cannot make more than double the returns I would have had for doing dailies or other activities for crafting I donít make the product.
THIS is probably the single most critical point in MMO crafting/pricing lore.

So many times, people would just foam at the mouth over how "expensive" high-end crafted gear was in various games, such as SWG and its composite armor. But to put that into perspective, people had to realize that the usual price (roughly 250 thousand credits for a full suit) was basically the equivalent of a couple hours grinding missions on Dathomir for 40 thousand credits per mission turn-in. People got the art of rancor-nest-busting missions down to a fine science back in the day. I could finish two missions that were near one another, ride back, turn them in, get a couple more and head out again in about 20 minutes. Of course, I wouldn't do that continuously, but it wasn't much of a problem to come up with a couple hundred grand in about 90 minutes.

The principle works similarly here in SWTOR. It takes TIME to go out and gather even basic mats. And unless you're gathering mats as an auxiliary activity to your usual everyday activities, that's time NOT doing dailies.

To put that into perspective, I just finished up all three sets of level-50 PvE dailies -- Corellia, Belsavis, and Ilum. And I wound up netting 300k credits, between mission payoffs, trash sales to vendors, and plundering random chests. It was a time-consuming endeavor, but how does the return on time spent gathering and crafting compare?

And then you have to factor in the time and costs for rare mission mats, such as Mandalorian Iron or Corusca Gems. These can be REALLY annoying to get. And every mission with a non-critical-success result is an increase in the cost of acquiring them.

The moral of the story: Support Your Local Crafters. They work hard for the money.
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CANCELLED
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Teykos's Avatar


Teykos
05.19.2012 , 10:50 PM | #4
Quote: Originally Posted by Spectus View Post
THIS is probably the single most critical point in MMO crafting/pricing lore.

So many times, people would just foam at the mouth over how "expensive" high-end crafted gear was in various games, such as SWG and its composite armor. But to put that into perspective, people had to realize that the usual price (roughly 250 thousand credits for a full suit) was basically the equivalent of a couple hours grinding missions on Dathomir for 40 thousand credits per mission turn-in. People got the art of rancor-nest-busting missions down to a fine science back in the day. I could finish two missions that were near one another, ride back, turn them in, get a couple more and head out again in about 20 minutes. Of course, I wouldn't do that continuously, but it wasn't much of a problem to come up with a couple hundred grand in about 90 minutes.

The principle works similarly here in SWTOR. It takes TIME to go out and gather even basic mats. And unless you're gathering mats as an auxiliary activity to your usual everyday activities, that's time NOT doing dailies.

To put that into perspective, I just finished up all three sets of level-50 PvE dailies -- Corellia, Belsavis, and Ilum. And I wound up netting 300k credits, between mission payoffs, trash sales to vendors, and plundering random chests. It was a time-consuming endeavor, but how does the return on time spent gathering and crafting compare?

And then you have to factor in the time and costs for rare mission mats, such as Mandalorian Iron or Corusca Gems. These can be REALLY annoying to get. And every mission with a non-critical-success result is an increase in the cost of acquiring them.

The moral of the story: Support Your Local Crafters. They work hard for the money.
Is there a reason why people ignore the fact that you have gathering nodes in the daily areas?

pokota's Avatar


pokota
05.19.2012 , 11:39 PM | #5
Quote: Originally Posted by Teykos View Post
Is there a reason why people ignore the fact that you have gathering nodes in the daily areas?
Materials are the main reason I still go to Belsavis. In all honesty, I don't need credits anymore, I have more than I will ever spend, but the place is an absolute treasure trove of high-end materials. Those are actually worth MORE than their market value, because you rarely see them listed on the GTN. I go all the way into the northiern dungeons, unlike most people who run in and run out. I'm usually in there long enough for most nodes to spawn a second time. As for the outside nodes, I usually pick those up four or five times.

However, I don't see how running daily quests and crafting/running missions contradict one another. If I'm logged in, then I have five companions doing SOMETHING, whether I'm on Belsavis or standing around on Fleet.

Resolute's Avatar


Resolute
05.20.2012 , 06:16 AM | #6
Good information and well written. The GTN on my server is disturbingly underused. I am contemplating effective ways to engage the larger guilds and empower them to breathe life into what looks to be a stagnant server market. I will recommend this as reading for them. Again, well done.

Sauska's Avatar


Sauska
05.20.2012 , 07:28 AM | #7
Nice guide

Now I just need a server with a decent population, as the economy on my server is all but dead...
The Borealis Legacy

StarDaimyo's Avatar


StarDaimyo
05.20.2012 , 11:20 AM | #8
Good post.

Now I just hope we will get more people playing on Rogue Moon so that our economy will get more fleshed out.

Some categories in the GTN I completely control due to lack of competition, and others are plain empty.

So come to Rogue Moon and get crafting and make bank, people
------------------------------
Best Regards
Daim
Jedi Shadow, The Red Eclipse

Chalpy's Avatar


Chalpy
05.20.2012 , 12:34 PM | #9
Thank you for the replies; in response to above I agree this guide would be very helpful to the undercutters that undercut so much they lose money as I don't think they realize they're losing money. In the real world if a business sells continually at a loss it goes out of business and the market returns to normal; in an MMO characters don't go out of business. They might get discouraged eventually as they won't make any credits but if they thought about how to price and priced accordingly they'd get more satisfaction and we'd get a healthier, livelier market.

Sibonk's Avatar


Sibonk
05.21.2012 , 07:26 AM | #10
Hello there!

Just dropping by to let you know we've added this to the Crew Skills Guide Directory. Thank you for contributing your guide to help other players!