Daily Archives: March 6, 2009

Light Missile Price Supports

There is a system near my base of operations with lots of stations in it and lots of agents of various levels residing therein.  I decided a few weeks back to corner the market in light missiles in that system.  An experiment in economic manipulation and artificial price supports.

Light missiles sell very well in the system, but I noticed that the price for light missiles was very low.  Lower than my cost to produce in many cases.  While my incremental cost to produce light missiles in quantity (materials + production fees) is around 5 ISK per missile depending on the flavor, if I include the need to pay off buying the the BPOs and doing material research on them, that number is really closer to 8 ISK.

From my point of view then, any light missile for sale under 8 ISK is an alternative to production.  So I bought up pretty much all of the light missiles in the system, since the price point seemed to be around 7.50 in most cases.

The joys of having a lot of ISK on hand.

I relisted them all at 15.00 ISK initially.  Missiles sold quite well when I was the only supplier.  I also put in a buy order much higher than the local buy orders to encourage people who just wanted to dump stuff after a mission to sell to me rather than listing the item for sale them self.  For two flavors of light missiles, the high buy order was 0.10 ISK, which is enough to encourage anybody to get into the resale business.  I wanted to discourage competitors, not fertilize the ground and cause them to grow.

Inevitably though, competitors showed up again, listing below my price and sales dried up.  Oddly enough though, in most cases, they listed their missiles back down at the old prices.

I rather suspect that they are operating under the illusion/delusion that for something as trivial in cost as a light missile you must consider the price of light missiles for sale in other systems.  I did not buy up missiles in surrounding systems, and there were low prices to be had one or two jumps away.

But almost nobody will even move to another station to save money on ammo, unless there is a huge price differential.  Light missiles in other systems are, for all practical purposes, in other markets.  My brisk sales well over the regional average bore this out.

So I bought up all my competitors again.  I have the trade skills to buy and list items up to 10 jumps away which allows me to do this all from the comfort of my home station.  Sales surged again even though, for one flavor of light missile, I had to raise the price to 18 ISK per because somebody actually listed close to my price.

Light missile sales in this system have turned into a reasonable money maker.  I lost control of one flavor of missile in the market because somebody came along and listed at my price.  I could have played the “undercut each other until the price gets low enough for me to just buy him out and relist high again” game, but I didn’t.  This operation has paid for itself over time, but it isn’t a huge addition to my bottom line.

Meanwhile another person shows up every couple of days and lists a pile of light missiles at 7.5 ISK each, which I promptly buy up.  They are like my contract supplier.  I hope they aren’t actually producing those missiles, because I would have to guess that they aren’t making much money at all.

And so my experiment churns along bringing a constant trickle of ISK.

Once in a while though, I get a big score, usually because somebody else is trying to scam people.

There seems to be a time-honored tradition in EVE of listing an item on the market for much more than its going rate in hopes that some careless person will buy it.  In line with this, somebody listed a single flameburst missile in my target system, in one of my stations, for 50,000 ISK.

Now there is a quirk with the market in EVE Online that I have noticed over time.  If several people are selling the same item at a station at different prices, if you buy from the highest priced vendor the market will often (but not always) sell you the item from the lowest price vendor, but pay them the higher price.

Remember this next time you think you’ll punish the guy who is undercutting the competition by 0.01 ISK.  If you buy from the higher priced guy, it will still likely be the undercutter who benefits.

When I buy up all my competitors in a system, I am always very careful to buy the lowest priced goods first.  Otherwise I find I end up wasting ISK by inflating my average price.

So somebody decided to buy that 50,000 ISK missile.  I don’t know if they were being a good Samaritan and trying to protect noobs by pulling it off the market or if they thought it possessed magical powers, but they tried to buy it.  Repeatedly.  They hit that button seven times before they gave up, which looked like this in my transaction log:

missileprices
That was enough to ensure the profitability of my missile operation for some time to come.  If we take 8 ISK as the base production cost for a flameburst missile, those seven buys generated the same profit as selling 35,000 missiles at 18 ISK per unit.

A tidy profit, but not as lucrative as selling 250 medium Antimatter charges for 9,999.00 ISK each, something that happened that day as well.  Again, the same market quirk paid off.

Some days it is good to be in business.