The Price of Production

In which the author builds something slightly smaller than a titan, but still puts numbers in bold text.

I have been interested in the idea of manufacturing items in EVE Online for a while now.  Mining lots of raw materials is just the “harvesting” part of any MMO trade skill.  To really become invested in trade skills you have to make things and maybe even try to sell them.

I am a trade skill sucker from way back.  To paraphrase an old joke,

Q: How do you make a small fortune in MMO trade skills?

A: Start with a large fortune.

That is classic me.  Find a way to make some cash, then find an in-game trade skill mechanism to piss it all away.

So I decided to play it a little more carefully this time around.  Mining has been paying the bills pretty well, but manufacturing is new territory.

One lesson I have learned from trade skills is that consumables are usually the better money makers.  Consumables in EVE mean ammunition.

Being in Caldari space, ammunition means feeding hybrid turrets and missile launchers.  I decided on missiles.  When it comes to small hybrid charges, there are eight choices.  They are:

Antimatter
Indium
Iron
Lead
Plutonium
Thorium
Tungsten
Uranium

For me that was too many choices.  It was too likely that I would choose the wrong one to make or, even if I chose the optimum charge to use against the local Guristas pirates, that the new players buying the charges would not know which was best and would buy based solely on price.

With standard light missiles, there are only four choices:

Bloodclaw
Flameburst
Piranha

Sabretooth

With only four choices, I felt more comfortable with missiles.  I chose to go with flameburst missiles for my first experiment in production.  The four choices only differ in the damage type they inflict, with flameburst, being true to the name, delivering thermal damage.  Thermal happens to be one of the weaknesses of the local Guristas pirates.

The blueprint original for flameburst missiles cost me 144,000 ISK.  Each run with the blueprint produces 100 missiles and requires only tritanium and pyerite, minerals I have in quantity, for materials.

flameburstbpo.png

I was a little bit confused at first.  The blueprint shows a “production limit” or 1500 runs.  At first I thought this was the total number of runs the blueprint would support.  But that is merely the number runs a blueprint can support per production session.  Basically it means that with this blueprint I can make, at most, 150,000 missiles per single production session.

Thanks to the tutorial missions, knew how to get a production run started, so I began manufacturing.

I did a couple of short production runs at first, starting with 500 missiles, just to see if they would sell at all.  They did, so I eventually cranked up production to 100,000 missiles a run.

100,000 missiles takes about three days of production to complete, so I did a couple of shorter runs first to keep sales up.  The bigger the production run, the less the run costs per missile, so it is better to keep production levels high if you can.

Now, after 12 days of making and selling flameburst missiles, I have some numbers to analyze.

Actual Missiles:

Total Produced to date: 373,000
Total Sold to date: 55,631

Looking at it from a cash outlay standpoint:

Manufacturing cost per missile produced: 0.23 ISK
Fees (tax, broker, blueprint) per missile sold: 0.36 ISK
Average price per missile sold: 8.05 ISK

With 7.47 ISK per sales coming back to me, that is a 93% profit margin. Not bad at all!

Too bad that isn’t the total cost.

At my skill level, each run of 100 missiles requires me to supply 68 tritanium and 78 pyerite.  While the raw materials do not cost me cash out of hand, there is opportunity cost involved.  I could quite reasonably turn around and sell tritanium for 3 ISK per unit and pyerite for 4.50 ISK per unit.

So I have to add two more line items to the cost:

tritanium cost per unit: 1.86 ISK
pyerite cost per unit: 3.51 ISK

Total cost per flameburst missile: 5.96 ISK

That is a net profit of 2.09 ISK per missile, which still is not bad.  A 25% markup works as long as you turn enough inventory.

Net profit from flameburst missile production and sales: 177,915.50 ISK.

Observations:

I love the market in EVE for giving me the information to make these calculations.  Yes, I could make similar calculations with EverQuest II, but with so many raw materials available at different levels, the prices tend to fluctuate wildly. 

The market is not price elastic when it comes to competing against other stations.  The cost is generally too low, so people will just buy missiles from the station where they are located.  The travel time is not worth the ISK savings.

Buyers will nearly always, if they are paying attention, choose the cheapest missiles in a given station.   I had somebody buy a lot of 200 missiles I had priced at 8.10 ISK each for 16.85 ISK each.  I am not sure how that worked out.  But sales dried up when another player dumped a big lot of missiles in the same station for 8.00 ISK each.

Putting missiles up for sales at multiple stations works well.  I said above that people won’t travel to buy a cheap missile, but it you have them for sale in their station, they will buy from you without thinking.

I am not going to get rich off of flameburst missiles.  Not in the short term, anyway.  This is a long term proposition.  The experiement is paying for itself however, and did so almost immediately.  That makes it unlike any trade skill in any MMO I have ever tried.  I have made money eventually on some of them, but I have never had a trade skill pay for itself so quickly.

Like my mining operation, I am going to keep manufacturing a self-funding prospect.  Now that I am bringing in cash I am starting to look for the next blueprint to purchase.

8 thoughts on “The Price of Production

  1. Mike De Groote

    try researching you newly aquired bpo,to reduce mineral cost’s :)
    It’s the other fun aspect of producing.. Btw i started like you now holding 465 bpo’s 1 year down the road. i make all the items i need. and thx to invention start making t2 items :)

    For your next bpo small suggestion as you tended to loose your caracal quite often the mods to fit it, heavy missle launcher bpo’s.Btw to increase your sales, try getting orders buy speaking to the people you meet to produce the stuff on demand.its fun you meet lot’s of new players and you make isks on the go :)

    btw the perfect “ME” for your flameburst missle is 13 so go get them tiger :)

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  2. syncaine

    Great post. I have a miner alt that currently is just training up his learning skills, but this makes me think maybe I should do a quick production run or two just to play around with it.

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  3. Debes

    Another thing to consider in caldari space is that many caldari ships get a kinetic missile damage bonus — and there are more ravens and drakes than you can shake a stick at. Kinetic heavies/cruises sell extremely quickly in mission-running stations with high quality 3s and 4s respectively.

    Also worth considering is that, in the end, *everything* in eve is a consumable, cause it all goes pop. There are few tech 1 mods that are popular, nearly everything people will snap up t2/named for. Power mods used to be fine choices t1, as named simply decreased minimal cpu usage, but this is no longer true. This leaves…ships.

    I don’t suggest investing your entire fortune in Moas, but Thoraxes? Hurricanes? Abaddons? Ravens and drakes are somewhat of a poor choice actually, because so many people mission run with them, yes…but in setups where it takes a serious error to lose one.

    Also, re: ammo. Hybrid/Proj ammo it’s pretty much antimatter/emp/fusion/phased plasma. You rarely see anything else bandied around. Some rail users use iridium I know, but by and large it’s antimatter or t2 for hybrids (esp. blasters) and am/iridium/t2 for rails. Projectiles use emp/fusion/pp for damage types. (everything, explosive, thermal/em, respectively).

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  4. Drew Shiel

    I’ve been engaging in trading while I watch the markets, looking to get a feeling for what production items will be worthwhile. This is somewhat stymied by the fact that the items that are most worth trading are the named items that can’t be manufactured.

    There are a few things you can do, obviously, to get the production costs down – mostly in the areas of skilling up on production skills. These won’t make a huge difference straight away, and I haven’t yet practiced what I’m preaching here, but even a 2% difference in costs turns into a fairly large difference in profit over a few months.

    I’m guessing the person who bought the missiles for 16.85 was probably punching in a much large buy order, and your missiles just got caught up in automated fulfillment.

    One thing I’m considering looking into is checking the price of some very low-use modules (Civilian Shield Booster, say) against the price of tritanium from reprocessing them, and seeing if there’s a possibility of using that as part of my supply chain.

    I really must get around to looking you up in-game. My main is Atrakus, in case you get there before me.

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  5. Van Hemlock

    Drones are worth a look for production – they’re a semi-consumable sort of thing. If you know how to use them right, they mostly always come back alive, but if things go wrong, they accidentally catch aggro, or you just have to plain bug out, they do pop quite quickly in missions, and need replacement. Higher unit prices, but somewhat slower turnover than proper ammo. I’d suggest a Hammerhead I BPo, but do a bit of market research near you beforehand, see how contested that particular product is.

    Definitely want to take the goods to the right station, yes – the various faction Navy stations, with high quality agents. Mission runners will usually pay quite a lot more than regional average for ammo, just so they can reloaded then and there, and get back out to the next mission. The difference is price is generally trivial to them compared to the mission payout and bounties.

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  6. Tony

    The more I read your EVE posts, the more of an itching I get to go back to the game. I dabbled in production for a bit, but I was having more fun playing the markets. Buying certain items to refine them to consumables and sell them. I played this way for a long time, hardly ever leaving a station and amassing a fortune.

    I need to get back, just to make sure I don’t lose it all!

    Thanks for the EVE posts. I need a way to live vicariously in that world.

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  7. Wilhelm2451 Post author

    Drones: Oddly enough Van Hemlock, I have followed your tips for drone usage and have yet to lose a single one.

    Relevant reading: Opportunity cost! That is what makes it difficult for me to run missions. I know my time can be spent much more profitably by mining, but I also know I need to increase my faction standing. I tend to compromise by running a mission or two between jet can pickups. But that is why I switched the refining operations to my main. My miner will never gain faction because he is so profitable just burning asteroids!

    The draw of EVE: It sure doesn’t hold you by the hand, but once you had a goal (or three) you can drive towards, it can be quite fulfilling, though it is not without its ups and downs. (No cruisers lost so far in October!)

    Spreadsheets: I haven’t dragged out Excel to analyze aspects of a game in ages. EVE is the kind of game that makes you want to do that. I got to update the numbers for this article moments before I posted it because it is all in my “Manufacturing” workbook.

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