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Tuesday, April 10, 2012

I'm In The Money And You Can Too!

A few weeks ago, I saw something precious on the AH that I had wanted for some time but had so far been too exorbitantly priced for my taste - in the 80k - 100k range, but I'm guessing someone had to make some quick cash and they posted it for 63k.

I did some quick math, realized that after the 5% auction house cut, a 63k sale was worth 59,850 gold to the seller; contacted them, and offered them 60k cash if they canceled their auction. I'd pay less, and they'd make 150 more gold. They agreed, I had my thing, and I was down to about 10k gold which left me feeling a bit nervous.

At that point, I immediately went on an AH binge and made about 45k over the next 48 hours, and re-posting what didn't sell, I made another 10k over the next 48 hour period putting me back up to 65k leaving me feeling rather comfortable again. In the weeks since, I've been bit by the AH bug and have double that amount, and my goal is to double it again before I head into Pandaria.

I did a sort of quiet celebration on Twitter and was asked by a couple of folks how I did this, and so I thought I'd go over how I make money.

And as I planned this, it got a bit detailed as well, but I'm going to try to keep it very high-level, accessible and easy and avoid any massive amount of data-mining, spread-sheet keeping, hedge-analysis, purchasing and re-posting massive stacks, or anything like that because that kind of detail turns me off on most of the gold-making sites and guides I've looked at.

Caveat time:
This is how I make gold on any given day when I need it. Please keep in mind that what works for me might not work for you, and while I'm no Goblin, I'm generally quite comfortable gold-wise and enjoy playing the economics game now and again.



CONTENTS:

- Assumptions
- Auctioneer
- What to sell
- Professions
- Shuffle
- Volatiles
- Premium Items
- Pricing
- Selling

ASSUMPTIONS:

1. Your server/faction has a decent population and a decent Auction House
This is a major factor and can be a non-starter for some people, as one of my two servers has a very lackluster auction house and I have a lot of trouble there when a very small number of sellers have completely  cornered and dominated the market, but my home-server of Moon Guard has a massive population and an even split across both factions, and quite a few AH Goblins (who can work to your benefit.)

Ideally, you want a lot of sellers and a lot of buyers - the more people involved the better things are for everyone.

2. You have access to some maxed out, lucrative professions - namely Enchanting, Jewelcrafting and Alchemy
If you have maxed out all three professions on any mixture of alts, you're going to have no problem making money. Blacksmithing and Inscription aren't bad, but (in my experience) have a much smaller footprint and you can easily get locked out of the market, as the turnover isn't great. Engineering isn't bad for the Chopper and pets, Tailoring is decent for the Threads and Bags, and Leathercrafting is just terrible outside of tank and DPS enchants, but none of them come close to the power and synergy of Enchanting, Jewelcrafting and Alchemy.

I'm going to avoid the gathering professions entirely as we're trying to make money quickly and not from farming for hours.

3. You have some starting collateral - it doesn't have to be significant, even having 3k or 4k gold to invest could be a good starting point depending on the AH and your goals
This is just to start out with, so that when you do need raw materials you can get access to them quickly and easily and then flip it for a quick profit - this is mostly for Ore and Volatiles, which will account for the bulk of your purchases.

4 You want enough money to be very comfortable and not think about gold but aren't necessarily interested in becoming an AH hero
This process is not designed to make you a millionaire or even someone who's raking in tens of thousands of gold every day - it generally works out to be slow at the start but in a few weeks you'll have a good amount of stock and you will have a modest but steady income if you're willing to spend about 10-minutes a day doing a bit of work. This also means that you're willing to settle for lower margins than your competitors and will often depend on these Goblins to buy you out wholesale netting you a quick and smaller profit than an extended, bigger profit.

5 You're willing to install one add-on to make some on-the-fly math easier (Auctioneer) and visit one web-site to get prices (The Undermine Journal)
That's really all you need - a lot of the gold guides overwhelm me with the number of add-ons I need to manage the production cycles of various flips and I'm just not interested in turning my game into something like that - I enjoy the economics and I enjoy playing the AH market now and again, and observing it through Auctioneer but other than that, I want to be in and out as quickly as possible.

AUCTIONEER:

The only thing I use Auctioneer for is to gauge the single-item price on stacked items. If the base UI had a way for me to do this, I wouldn't use Auctioneer at all. I mean, the undercut price from scans is nice... but it's not particularly useful as you're always setting price by hand anyway. There is a toggle check on the lower-left of the window.



I talk a lot below about "check the price" - assume that I'm always talking about unit prices, that's how you want to measure what you're posting for. Check the price of a single unit and price your sales based on where you set your unit price.



If you look at the above example, the two stacks of Shards at 20 and 17 gold are both listed for the same price (84.05/shard) but you can't really get that by looking at the summary values. So if I wanted to sell aggressively, I could reasonably set the price to 80 gold per and quickly move a ton of shards.

The above screen-shot, BTW, is from the web-version of the Auction House, which, honestly, is far, far better than the one implemented in game. Unfortunately, the game doesn't allow you to browse the AH while logged into game, or there would be no need for Auctioneer at all.

It really helps you cut through the mess of prices you see and is a far better way of setting prices than the averaging that Auctioneer's automatic pricing process.

WHAT TO SELL:

More than 95% of my income is from the following three stocks:

- Raw Gems
- Enchanting Mats
- Volatiles

Premium Items will be part of your income, but they're based too much on luck to be a reliable source.

PROFESSIONS:

Enchanting and Jewelcrafting can be very expensive to level-up but they are extremely lucrative, Alchemy is the only other thing that comes close to the money-making potential of these professions and it's a distant second.

The few thousand gold you'll spend leveling them up (if you don't have a tailor to help with enchanting or a miner to help with Jewelcrafting) can seem significant but they will pay you back big dividends. Alchemy is relatively easier and cheaper to level, especially if you have an Herbalist alt. I recently leveled these from zero to cap at the same time on a new character on a new server where I had no access to resources and it was a bit painful, so I empathize with anyone being daunted by these - but if you have farming alts, it gets much, much, much cheaper than buying all the raw mats from the Auction House.

Do your Jewelcrafting daily as often as possible and stockpile those tokens. Buy only the cuts you absolutely need and horde the tokens for when you need them.

For your Alchemy specialty you want to go with Transmutation. Elixirs are good at the start of the expansion when we were churning out flasks like crazy but thanks to Cauldrons I haven't bought a flask in ages. Right now, Transmutation is king.

SHUFFLE

At the core of how I make money is the good old-fashioned Ore Shuffle which has been documented in various places and is very popular. But it's also about how your posting strategy works and how often you post, and what you post.

For those who don't know, here is how the Shuffle basically works:

1. You buy cheap ore from the AH or hire someone to deliver ore to you regularly for a set price (say, someone will send you 5 stacks of Obsidium every day for 250 gold so they have a regular income every day regardless of how the ore prices fluctuate on the AH and you have a regular and reliable source).

2. You prospect all the ore with your Jewelcrafter

3. You take your Carnelians and send them to your alchemist and transmute them into Infernal Rubies with a similar number of Heartblossoms (a very cheap and abundant herb on the AH)

4. You craft green jewelry with the other green gems and then disenchant them for mats

5. You sell the enchanting mats, any blue-proc jewelry, and gems for more money collectively than what you paid for the ore

That's the basic shuffle, but serious investors are not going to invest 250 gold into it, they're going to invest thousands and thousands of gold into it for hundreds of stacks of ore and run the mill for hours through add-ons.

What I do different, is that by working on a very small volume, I'm building up a stock to sell when I need the cash and only investing a very small amount of money into the market in purchasing small amounts of cheap ore. It keeps my bank very, very well stocked and it costs me very little money. In the mean time I'm building a lot of asserts that I can liquidate at any given moment for a massive amount of money.

If you want to, you can also make high-demand, high-price enchants like Power Torrent or whatever, but I generally stick to the raw materials - much safer and faster turn around. Obviously, if you farm your own ore this is even more lucrative, but the objective here is to minimize the time spent making gold.

VOLATILES

While enchanting mats and gems are your stock assets, volatiles are your every-day money.

The basic transmute process goes like this:

Every day, look up the average individual price of Volatile Life and then the average individual price of all the other elementals. Typically Fire or Air will be the highest by far and Life will be the lowest. On the average, I buy Volatile Life for ~3 gold per and send it to my transmute-spec'd alchemist who travels to Uldum or Hyjall depending on what I want to sell and transmute them. If I buy a full stack, that's an investment of ~60 gold, and selling 3 stacks of 5 Volatile Air at an average price of ~20 gold per, I get back ~300 gold. Over a week, that's 2,100 gold from an investment of 420 gold.

Here's a visual example of how cheap the Life is and how well priced the Air is:


This is one of those things that farming might make even more lucrative as you can just sell the herbs you gather and transmute the Life for even more profit, and you can likely get enough Volatile Life for a week's worth of transmutes in an hour or two depending on how fast you pick flowers.

I'm aware that you can use your Transmute on MetaGems and TrueGold but on my server at least, those markets are pretty saturated and the margins are pretty low. This is one of those every-day things that takes about 5 minutes and over a period of time will build up a sizable amount of cash on hand.

PRICING

This is where I imagine a lot of people will have an issue with me.

Unlike the Volatiles where the margin is everything, in the case of gems and enchanting mats, I don't really care about how much of a margin I'm making. Generally speaking, I see these as assets to liquidate and anything I get is profit, and a significant one.

For example, during my selling binge, I hit a small patch of time where I was able to sell individual Maelstrom Crystals for 200 gold. I sold 100 crystal and made 20k gold. However, a lot of other people were selling in the 220 - 300 gold range. Yes, I absolutely underbid them, got very quick sales, and made a ton of money by sacrificing a higher margin by lowering my expectations and cashing out quickly. I gave up at least 2k gold in profits, in the interest of a faster turnaround.

That's the biggest thing about the way I look at this game - I'm not maximizing my profits here because I don't care about a long-term trend, market sustainability or price stability - I'm just in it for a quick cash-out and this kind of pricing is absolutely perfect for it. Many times, the people who buy your stock out will be the Goblins who're looking out for the market and trying to sustain high-prices for certain items that they have cornered. Nothing wrong with selling to these guys at all! In fact, I depend on them.

Same goes for gems - put them up at a reasonable, competitive and tempting price, undercut your competition and quickly cash out.

But.

You don't want to wind up selling too low - and how do you know? You might hit your AH during a bear moment and see prices that average out to be significantly lower than where they should be and you might only be a day or two from a correction. That's where The Undermine Journal comes in. And there is really only a couple of things you're looking at here - the average price of the item to see how far the current price is fluctuating and how many of the current items are on sale.

Say you have some Rubies to sell and they are on for 150 gold per and there are seven of them on the AH. Undermine says the trending average is closer to 200 gold. Well, post them for 199 over 48 hours and walk away. Chances are, the lower priced ones will sell and people will purchase your higher priced gems because they are the average and further posts will also elevate the market price and help with the adjustment.

Don't fret this too much - just take a look at the average price, if the undercut price is reasonably close, go for it. And set your own price, don't let Auctioneer do it for you.

PREMIUM ITEMS

If you're raiding, you'll gain access to some premium items that you can use to get a big boost of gold. For example, Epic Gems - when DS launched, I didn't use a single epic gem, and sold every one I got instead, as I knew I wouldn't be using them on my normal-mode gear anyway, and I wanted to make some money while the making was good.

Same goes for BoE's that you aren't going to use on your main that you might win in raids - selling those might take you a few days but you will be able to move it as long as you post consistently and keep it in the market.

Lastly, the Valor gear - it looks like this is going to go away in Pandas with the changes to Valor planned, but either way, what I do is advertise a direct price for the BoEs - say 3k for Boots and 2k for Belts - and you immediately become a lot more attractive than some guy who's just offering to sell BoEs and then the buyer has to negotiate a price. Offer a price right up front and you're far more likely to get sales (or at least I do). Often, I'll even negotiate subsequent sales, and try to keep a good relationship with these people by offering a free enchant or gem cut or whatever, so that the next time they want to buy something they'll use me instead of random dude in /trade.

This is a side-business, and something to do while standing around in Stormwind chatting in guild or whatever. It's a very nice income to be sure, but not something I depend on.

SELLING

How you stack stuff is incredibly important. I absolutely hate sales of massive stock listed one item at a time and there are pages and pages of these posts. I don't care if it's more profitable, I don't care if certain add-ons make it easier to deal with them - people who do this are incredibly inconsiderate to the purchasers and it really kills the pace of interaction.

However, it gives you an opportunity to take advantage - you should split up your sales as well, but stack your items in such a way that they're more attractive right off the bat compared to other, competitively priced items. If you see fifteen individual Shards for prices mixed anywhere from 97.87 to 105.35 and then you see 3 stacks of 5 for 499.99, what are you more likely to buy?

Lastly, retail pricing works. It works because we like round numbers, we like seeing a digit lower than the one we're willing to pay, and even if it means a slight loss of revenue, pricing and stacking things to make them seem more attractive will generate more sales.

For the record, I set stacks as follows:

Gems: 3
Volatiles: 5
Hypnotic Dust: 5
Heavenly Shards: 5
Maelstrom Crystals: 5
Greater Celestial Essence: 3

One final point of warning: you don't want to hold on to stuff for too long. Right now, I'm not stocking anything, pretty much everything I get, once I have it in enough volume to make a few stacks, I'll post and sell. You don't want to get caught with a bunch of devalued assets at the end of the expansion.



And that's about it. I know it doesn't seem very exciting and it doesn't seem very glamorous and it doesn't promise to make you a millionaire overnight but.... that's kind of how I stay very comfortable with my gold level pretty much all the time.

Good luck, let me know if you have any questions, I'll be happy to try and answer them.

1 comment:

  1. I'm not a big auction person myself, but for what I do I've found that AuctionLite (http://www.curse.com/addons/wow/auctionlite) is much better than Auctioneer. It doesn't seem to be as accurate about tracking price history and fluctuations, but if you're going by Undermine Journal and generally undercutting that's not really functionality you care a lot about.

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