Architect Archive

Thread: Small Houses at 20k! It can be done!

Sevardos
Tue Jul 13, 2004 10:38 am
#40




bluejanus wrote:

I'm not sure the idea that you can resell the grind resources instead of using them in walls and structures holds as true as it did a few months ago. Hologrinding is coming to an end and I think there's a glut in resources out there, especially grind resources. Saying thatusing "the 3 cpu pricing system for structures is bad because you can resell at 3 cpu" isn't as accurate as it used to be. Harvesting resources isn't any harder than it was before. Moving resources isharder though.






You're assuming the same number of people will be mass harvesting resources. They won't. In fact, I see the prices going up as the 'glut' you mentioned gets used up. If resource farms get forced to keep selling their resources and 1 to 1.5 cpu, eventually they'll just stop imo.





Sevardos
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636 -3836 Corellia (just outside Coronet) - Bria
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Pawlin
Tue Jul 13, 2004 10:55 am
#41




MozzerKing wrote:

...Your big ticket items don't decay so why on earth would someone sell a house for 5k? Why would you sell a heavy harvester that someone's going to use for months or years for 100k? I'm sure I'll get blasted for this thread but as a collective group, I think it's in your best interest to try and change the public perception of what a "normal" price is for Arch items. You're too cheap! Even at 5cpu, what about the factory time and your time as a player? Doesn't that count for something?

...



Well you asked...


There are various factors that go into the prices that architects charge.


One answer is supply and demand. Not enough demand and a lot of supply equals lower pricing. Towards the start of the game SOE publish stats for profession mastery and at one point architect was the 2nd most mastered profession behind Creature Handler. I'm sure thats not the case now, CH got nerfed and the architect market nerfed itself. But if every other person is a master architect then that leads to pricing competition. I remember at one point that I could barely run through Coronet without seeing 2 other Master Architects. The situation has changed now. There aren't many practicing architects. Supply was too high for demand so the market has corrected itself. But the damage was already done. THe over supply of architects drove down prices. SO now someone wants a medium house its "they cost like 50k right?" and then when I say I charge 70k normally but since they're a good repeat customer so I'll do 60k for them they say "well I guess I can handle that cause I need it". Expectations are set on the customer side that we have to struggle against. They don't know it takes 20k materials and an hour of factory time to make a medium house, they just know they have seen them for 50k.


Was it stupid for us to undercut each other? Sometimes yes but often times it wasn't stupid but simple competition. There are instances where some architect severely undercut the market below the cost of materialsand was inevitably unsuccessful in maintaining their business. That strategy is sometimes the "I'll charge what I think is a fair price" or sometimes the "I'll undercut everyone and steal all the business" strategy. Occasionally its the "our guild can outproduce anyone" strategy. But I think that most often it was simply due to all the architects competing for customers based on pricing. If the other guy is selling a house for 15k and you make the exact same house then selling for 14.5k is a natural way to compete. And now that someone is selling for 14.5k then its not long before another architect drops to 14k. Give it a couple weeks and we've cut the profit down to the bare minimum and we're charging 9-10k for small houses that take 3k materials to make. And then you get some folks that don't look at their opportunity cost and figure their costs based on what it takes to maintain their harvester and all the sudden people are selling houses for less than the market value of the materials used to make them.


There are also different factors affecting the pricing for items that novices or low level architects can make. They have different incentives than a master. Novices are worried about getting XP so they will often make a house and sell it for next to nothing because all they really care about is the XP and any profit is justa bonus. Low level architects can also make factories and medium houses so those items are often lower priced. Low level architects are also more likely to be struggling for cash so they have yet another incentive to dump products for lower prices.


Bear in mind that the quality of houses or factories does not vary at all from a novice to a master. So its not like comparing thesynthsteak of a novicechefto the synthsteak of a master chef. A small house is a small house period, they are all the same. And for the items that we make which do vary in quality it is relatively easy to get the absolute maximum stat. Our heavy harvesters max out at 13. There is no tweaking the materials to get an uber 13.5 or competing between a 13.1 and a 13.2. Its 13 for everyone and virtually any master with half a brain can make 13's if they get some decent steel. On my server at least a good steel pops every week or two. Our experimentation tapes only help with the hopper size and that isn't something customers seem to care much about. So a 12 point architect isn't really at any advantage over a 10 point architect minted 2 weeks ago as far as quality of product.


Now since we got the statues, the architect profession can legitimately be mastered in half an hour. Novice to master in 30 minutes. You might get a slightly sore wrist and it will take a big pile of ore and gems that go to waste but it can be done. Why does this matter? Well it means that its easy for us go get the fly by undercutters or holo-grinders that pause for a quick profit. Those folks aren't here to stay so they don't mind if they use a slash and burn undercutting pricing strategy. Or we have people who decide that our stuff is pretty expensive so they'll just grind out architect themself and make their own fleet of heavies. This probably isn't as big a factor but I'm sure we've all seen it happen.


You asked why would someone sell a heavy harvester for 100k.


A heavy harvester takes about 25k of materials (roughly) and most of that is grind quality. I figure my cost of materials for a heavy is 50-60k. So thats 40-50k profit if charging 100k. It takes about 90 minutes of factory time to put out a single heavy. There folks on my server selling for 85k.


Does this mean that we can't instead do even better in net profit if charging 140k or 180k? No, but it does show that at 100k someone can make a decent profit. Competition and the demand supply curve on each server will play a big factor in what prices will work best. And certainly there gets to be a point where the price is too low to justify the time and cost in making the product. If harvesters dropped down too far I'd stop making them.



Lets compare that to the 90k you chargefor a crate of brandy.


A crate of brandy takes 1k good flora, 5k grind stuff, and a crate of BSNs from a BE. The good flora is probably worth 3-5 cpu, the grind stuff 1-2 cpu and the BSN are 25-50k. So you're got costs of 33-65k for a crate of brandy. So at 90k you've got 25-57k profit. It takes about 2 hours to make a crate of brandy. I can't find brandy for less than 150k on my server.


Does decay matter in pricing? If there is 1 customer and 2 suppliers making the exact same product then how does decay matter? If the customer can buy the exact same thing from ABC corp at 100k or from XYZ inc for 120k then how does decay matter? In the very long term decay has an impact because the growth curve for the industry eventually drops off to a small amount of sustaiing business. We don't as individuals have enough information on the market as a whole or on the future in order to see if/when the bubble will burst on our business. Most of us also don't look at the long term for our industry but instead look at the sales receitps for the last week or two, our own bank account and what our competition is doing today.


I believe the architect industry bubble burst 2-3 months ago on my server but I really don't know for sure.


Of course this is all just my opinion. Sorry for the long rant.


Standard disclaimer: The economy varies a lot from server to server.




Pawlin Construction of Kettemoor.
Harvesters and Crafting stations - Triad Coronet Mall just outside Coronet (-177 -5490)
Architect, House, Furniture, Harvester FAQ
Oprolan the Wookiee of Sunrunner. Cheap resources W. Daeric Talus (-639 -3058)
"Worst FF ever *thumbsdown*" -- Pawlin fan club
"I am not going to win Miss Congeniality again this year in the Senate." -- John McCain

** Please refer to Elyssa's answer
MozzerKing
Thu Jul 15, 2004 5:50 am
#42
I like rants! And I appreciate the time you took to respond.


I agree with what you said about the bubble bursting etc. But don't you think that times have changed now that the holo craze is over and things have sort of returned to normal? The reason I say this is because a few weeks ago there was a post in the WH trade forum asking everyone what profession they thought was needed most. The overwhelming response from the community was Architect. It didn't suprise me because I've personally had a hell of a time finding a reliable Architect to buy from. This tells me that there's more demand out there than there is supply. It makes no sense for a profession to be so unprofitable that few people persist with it. If the demand is there and the supply is not, then prices have to go up regardless of what the public thinks is acceptable. The cost of buffs and slices have gone up drastically and people took it in stride. They had no choice because the Docs and Smugglers all started in on the new pricing scheme. The public accepted it. I think the same would be true of Architect items if only you'd give it a try.


Also, I pay about 15k for BSN's because I mostly "roll my own" so my profit margins are pretty nice.



Maya
Pawlin
Thu Jul 15, 2004 9:32 am
#43




MozzerKing wrote:

I like rants! And I appreciate the time you took to respond.


I agree with what you said about the bubble bursting etc. But don't you think that times have changed now that the holo craze is over and things have sort of returned to normal? The reason I say this is because a few weeks ago there was a post in the WH trade forum asking everyone what profession they thought was needed most. The overwhelming response from the community was Architect. It didn't suprise me because I've personally had a hell of a time finding a reliable Architect to buy from. This tells me that there's more demand out there than there is supply. It makes no sense for a profession to be so unprofitable that few people persist with it. If the demand is there and the supply is not, then prices have to go up regardless of what the public thinks is acceptable. ...


The supply and demand situtaiton will vary from server to server. I don't boubt what you say on your server. On my server I don't see a big demand or lack of supply. It seems to me that we're in balance. I could be wrong, I don't have much data. Thats part of the problem we have, we're all a little in the dark as far as the big picture of the market. However I don't see hardly any WTB posts in our trade forum and I do see architects advertising. Thats a crude measure that there is enough supply to meet demand for my server.


I also agree with you that if demand is high enough and supply is low enough then prices can / should / will go up. Thats the power of the free market at work.


Also, I pay about 15k for BSN's because I mostly "roll my own" so my profit margins are pretty nice.

How much could you sell the BSN's for on the open market? If you could sell the BSN's for 50k with a cost of 15k to make them then thats a potential profit of 35k. If on the ohter hand you took those BSN's and put them into a crate of brandy and sold that for a 35k profit then you'd be better off just selling the BSNs to other chefs in the respect that you'd be doing less work for the same profit. This is just an example to illustrate the point. Looking at what you could have done instead when making a business decision is called the "opportunity cost". IN this case selling BSN's is the opportunity cost of taking BSNs and making brandy instead. Many architects have based their cost for ore on the amount of money it costs them to mine the ore which is around 0.5 cpu. This leads some folks to think that selling finished architect deeds at 2 cpu is giving them a 1.5 cpu profit. That is true. However they are overlooking the 1.5-2.5 cpu profit they could make by just selling the raw ore, which is the opportunity cost in that situation.







Pawlin Construction of Kettemoor.
Harvesters and Crafting stations - Triad Coronet Mall just outside Coronet (-177 -5490)
Architect, House, Furniture, Harvester FAQ
Oprolan the Wookiee of Sunrunner. Cheap resources W. Daeric Talus (-639 -3058)
"Worst FF ever *thumbsdown*" -- Pawlin fan club
"I am not going to win Miss Congeniality again this year in the Senate." -- John McCain

** Please refer to Elyssa's answer
MozzerKing
Thu Jul 15, 2004 11:21 am
#44




Pawlin wrote:

How much could you sell the BSN's for on the open market? If you could sell the BSN's for 50k with a cost of 15k to make them then thats a potential profit of 35k. If on the ohter hand you took those BSN's and put them into a crate of brandy and sold that for a 35k profit then you'd be better off just selling the BSNs to other chefs in the respect that you'd be doing less work for the same profit. This is just an example to illustrate the point. Looking at what you could have done instead when making a business decision is called the "opportunity cost". IN this case selling BSN's is the opportunity cost of taking BSNs and making brandy instead. Many architects have based their cost for ore on the amount of money it costs them to mine the ore which is around 0.5 cpu. This leads some folks to think that selling finished architect deeds at 2 cpu is giving them a 1.5 cpu profit. That is true. However they are overlooking the 1.5-2.5 cpu profit they could make by just selling the raw ore, which is the opportunity cost in that situation.



The BSN market on Wanderhome is pretty flat right now. A crate of BSN's normally sells for around 30k so I'm definitely making more money selling the finished food than I would if I was selling BSN's to Chefs.


I think the "opportunity cost" you mentioned is the very reason why there are few Architects anymore on Wanderhome. Most established Architects can transition to Armorsmith with minimal delay. It's not a perfect transition but many of the resources that are high quality for Arch will also be very suitable for AS. The potential profits on armor are MUCH greater than that of architect. There's also the option of just selling the resources straight away like you mentioned. This route offers much less work for about the same amount of profit and in my galaxy, that's what many of the arch's have moved on to do....They make great miners!




Maya
Crimsonsplat
Fri Jul 16, 2004 12:31 am
#45




MozzerKing wrote:




The potential profits on armor are MUCH greater than that of architect. There's also the option of just selling the resources straight away like you mentioned. This route offers much less work for about the same amount of profit and in my galaxy, that's what many of the arch's have moved on to do....They make great miners!




Yeah, who says they took the mining profession out of the game? They just renamed it to "Architect!"

Or Artisan....

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