Playing the Market

business-school

Much like in real life, failing to diversify is something that we are taught not to do from a young age.  I can remember being told not to put all your eggs in one basket long before I understood its real meaning and value.  Having never been much of a crafting mogul, I decided that WotLK was my time to strike it rich in the sale of crafted leather goods.

 

Sales were strong initially and competitors were few and far between.  Now however markets are getting tighter and margins smaller as more players reach the level cap and more crafters enter the markets.  I started out with the shaman blue PVP pieces to get my enterprise rolling. 

 

My thought process was that everyone would need and want PVP gear, and that the pieces were useful to both elemental and restoration shamans.  Additionally, I knew from experience from leveling my shaman that these items were just as good as items that come from the various 5 man dungeons. Not to mention much better than any green quest reward items.

 

As the price for materials fell the margins got larger and larger for me.  I was spending 100 gold in material costs straight off of the auction house and selling the items for between 130 and 150g depending on how the market was doing.  This was a slow and steady inflow of money, and while I wish I had kept accurate numbers, I believe that I made around 1000g in profit from the sale of these items over the 2 weeks that I traded in them.

 

Certainly nothing to scoff at, but really I could have made a similar amount of gold had I just been farming during the time I spent browsing the auction house, creating items, transferring items to alternate characters for sale in the auction house, and maintaining my little conglomerate.  So I now had a bankroll of around 2000g and set my sights to even larger items.

 

Not content with a 30% return on an investment of 100g over a 2-day time frame I decided to get into the epic crafted market and trade for bigger amounts.  The item that I settled on was the Trollwoven Spaulders.  These shoulders are good for both rogues and feral druids and are the best pre-Naxx item available for these classes in PVE.  The cost of materials had fallen and I was able to invest 2000g into enough mats to make three of them.

 

At a selling price of 950g each I sold all three of them in two days.  This was a profit of around 250g per unit.  While it was still about the same margin as the blue PVP items the volume was much less and thus took less time to maintain.  Over the next few weeks I continued to sell one unit every 2-3 days at the same price while the cost of materials continued to slide downward.  Towards the end of my little run I was making them for around 500g and still selling them for 950g each.

 

However, the market was slowing down and I found myself being constantly undercut by, what I can only assume, some brain dead 11 year old with no business knowledge simply power leveling up his craft.  At least that is what I can only assume given that he started listing them for 700g well underneath my price of 950g.  I actually did buyout two of his for this price for later resale and this auction house adversary of mine soon stopped posting sales after a week or so which just further reinforces my conclusion that it was a power leveler and not someone concerned with maximizing profit.

 

Currently, I have 7 shoulder units to unload on the auction house before I am completely out of this market.  I seem to have outlasted my competition and am now back to being the sole supplier.  If I can get them all to move at the buyout price of 975g that I currently have them set for I should stand to make a pretty profit.  PVP gear was just released though so perhaps this market will be permanently depressed and I will be forced to cut prices even lower to clear out inventory.  I am in no hurry to sell these at the current time and am perfectly fine with slowly selling them for maximum profit over the next few weeks.

 

Unfortunately, PVE and now PVP at level 80 is a gear smorgasbord and with crafted epic sets to such a low item level comparatively, I don’t know if this market will ever truly recover.  However, with all the new gear entering the system there is another aspect of the leatherworking market that perhaps will yield some good return on both volume and margin.  Icescale Leg Armor and Frosthide Leg Armor.

 

It stands to reason that with all of the new gear coming from multiple progression paths that players will need leg armor enhancements.  Both are pretty much a must have for any physical DPS class and tanks.  Both use Arctic Fur in their construction, which is a rare drop from any mob in Northrend from skinning.  Both items require two of these items to make and thus securing a steady supply of below market cost arctic fur does seem advantageous.  But that is another project for another day…(mental note: track down skinner and get him to COD me arctic fur at below market cost).

 

Arctic Fur sells for somewhere between 40g and 75g depending on market activity.  Traditionally the prices spike around 6-9pm server and then slowly decline as the AH fills back up with goods.  Logging on every morning at 7:15 AM and then as soon as I get home around 5:00 PM, I have been buying any of them that are priced at 50g or below.  Hopefully this will drive up the cost of any competitors and force them to move on.

 

The leg armor patches sell for somewhere between 125g to 190g depending on how you hit the market.  I have been placing mine as far up in the price spectrum as possible and try to hit the AH at off peak times when supplies are low to grab a few high margin sales before the other dealers have a chance to logon when they get home from school.

 

In the past two days, I have sold six armor patches at a profit of around 60g per unit.  Perhaps the volume of this market will continue to drive sales.  Certainly there is no shortage of players looking for these items, but the current market may simply be driven by the release of the PVP gear than as a showing of what to expect in the future

 

My goal is to get a bankroll in the neighborhood of around 5000g and then invest in 2-3 of each of the epic crafted items.  I can then simply maintain a stock of these items on my auction house alt for continual sale and keep the auction house supplied.

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~ by Centuri on December 19, 2008.

 
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