Architect Archive

I don’t like the ideal of price fixing but two examples show that deregulation has not worked are the airline and energy industry. I don’t want a system implemented that causes price fixing or slows down the profession. I just want a system thats well thought out and fair. The system as it stands is not

Airline Industry
-Less competition
-Less personal service
-Lower wages and less qualified personnel
-More arrival/departure delays
-Packed like sardines into smaller planes

+Big Checks for top executives
+More of our tax dollars to bail them out troubles they create themselves

Bob,

Thanks for your intelligent post. I agree that ore concentration is rarely at 60%. But the steel required is usually around 80%-90%. We do use alot more ore than steel, but over time it averages around 60%. I agree that there are some additional overhead charges, but I wanted to keep it simple for the purpose of the post. IMO, I think our resources and time should be worth MUCH more, but I wanted to keep the values conservative to illustrate a point, and maybe make people think about what they're charging for their products. I also wanted to see if somebody had a more economical way of doing things, and how they were surviving on 2cr/unit items. Just my 2 credits.

Ecirb

Sorry j4d00, but what you posted isn't economics 101, it's old wives tales.

In business, this are the only3 factors to consider (general administrative cost doesn't figure cuz it doesn't figure in SWG): capitalization, cost of good, and sale velocity.

Capitalization is cost of building infrastructure (eg cost of building/buying harvestors, house, factories, etc).

Cost of good is the total cost of procuring your good.

Sale velocity is how fast you move the product.

"Time is money" have zero impact on a business--you put as much time as you need to keep the business going, it's not a consulting gig where you get paid per hour.

I'm not going to redo the math, but the cost of good--credit spent forkeep power generators & harvestors running--for a "newbie" (read wind & personal harvestor) is 0.46 cpu with cost of redeeding/travel etc being 0.01 cpu. For the veteran (read fusion & heavy) it's 0.37 + 0.01 for redeeding/travel etc.

The capitalization is neglible since none of the infrastructure need to be replaced (eg no decay). So the "cost" of capitalization is amortized over infinity, essentially zero.

Sale velocity is simply how good you are as moving the crap. Let's say you're decent and you're at capacity--eg you sell as fast as you mine.

Anewbie solo can net 47k/day whereas a veteran solo can net 107k/day at 3.0 cpu and 29k/65k per day at 2.0 cpu. I doubt very much that you need to spend 3 hours per day. More likely, it's 3 hours per week (resource shift is very predictable, if you know what you're doing, you shouldn't spend more than 3 hours per week). But let's say for the sake of argument it's 1 hours per day. At 2.0 cpu, you're still netting 29k/hr. Which is very good considering even master pistoleer/master creature handler solo will have a tough time pulling that much in destroy mission.

So what does this really mean? It mean we architect are paying way too much for the resources, even at 2.0 cpu. Don't blame the newbie architect for "undercutting" when they sell their houses at 2.5 cpu, but blame the master who paying 2.5 cpu for resources. The resource broker should be hawking their ware at 1.0 cpu, they would still be making 30k/hr at that price.

You don't believe me that the price of the resources will drop to 1.0 cpu? Just wait a month and you'll see it. By now, I would say 80% of the players got their hand on power generators/harvestors. That means there's a glutton of resources out there. Heck, even now, resources aren't selling unless it's less than 2.5 cpu.

It's really simple, are you basing your house prices based on "resource" expense or on your time? If you prefer not to dabble in mining, then drive down the price of the resources by refusing to pay more than 1.0 cpu.

Yeah, the miner will throw out all kind of non-sense "proof" and "math" to show how his "time is money" so you must pay him 2.5/3.0 cpu. Baahooeey. To pull up 40k in resources cost no more than 14k in credit. How efficient the miner is, that's his problem. He pull it up in .1 hour, he's making 400k per hour. He pull it up in 10 hours, he's making 4k per hour. That's his problem.

But please don't tell me that the architect should charge 3.0 cpu because that's resource economics 101 and that's how much it really cost to pull up resources.

The architect should be charging 3.0kcpu (you read it right,three thousands cpu)because the **edit** structure last FOREVER. Whoever is selling at 3.0 cpu is undercutting the true value of houses. Since houses/power generators/harvestors last FOREVER, the cost of bearing the house is amortize over infinity, so the true value need to take that into account, thus it must be 3k cpu. But those architect who sold at 3.0 destroyed the market for the rest of the architect. If buyer bark at paying 3k cpu, tell him the structure will last him for 100 months, so that's only 1 cr per day. It's a bargain.

Again we have someone that has lost sight of the point.

Prices are not set by some perceived value over amortization.

Prices are not set by cost of the raw materials alone ( although they do influence it )

Prices are set by supply vs demand.

If supply is greater than demand prices will fall sharply

If demand is greater than supply then prices will rise sharply.

You take any product on the market and increase demand for it while decreasing the supply for it and the price of it will raise, and very fast. You take any other product and reduce demand for it while flooding the market with the product and prices will fall through the floor.

You sell your houses for thousands per unit, you wont sell one, this is a buyers market. We don’t have control over the price because there are too many of us competing for a few customers. There will always be some shmuck ( like me ) that is willing to sell for less to gain market share ( I figure share as name recognition that people tell new players or older players for upgrades )in a declining market just ruining all your math and economic amortization schedules.

Good businesses just ruin things for bad businesses.

The only way for things to stabilize is to increase the demand for housing ( in SWG that is spelled "decay" ) or drastically reduce the number of architects that sell houses, which as it turns out will take care of itself on its own.

The 3cr per unit cost on a house is the first to feel it, next the miners will find that no one will buy for 3 cr. I believe the days of your 600%+ profit margins are over. You will blame under cutters who you will say don’t understand business ( while you are out of business and they are still in business ) You will blame Sony for not fixing prices at the high profit margins you insist on and stopping the player economy all together.

The truth is, that good business is what you make of it. I started this game expecting to have to compete with large PA's with low prices. What I found was a vast group of people including almost all PA's that believe in the tooth fairy of 3cr per unit. Because they once got those outrageous profits they think they still can while demand drops to a fraction of what it was and more and more architects compete for fewer customers.

I feel like a wolf in a chicken pen.

If I had unlimited lots I would own all housing busines in my Galaxy, or I would be in competition with others that understood what was going on. So far I have met3 of them in-game. I don't so I have to settle for enough to stay in business even thoughmany others are forced to quit. In a market like this one, the only people left in business will be those that know something about it.

sorry for a third post but I need to reply to Jasek too.
Jasek, I actually agree with 90% of what you said. But I see the market differently than you do.
I can never be the Wal mart of housing because I am limited by my harvesters on what I can sell. What I see is fewer and fewer customers all around. I hear Architects complain about it every day, while I actually have people flying in from other planets specifically to do business with me.
Could I gouge them for more? Sure... If I did so would I still have a glut of customers instead of a glut of inventory? No.
I am having fun trying to use real business axioms in this artificial environment. If I wanted a lot of money really fast I would just sell my resources. Heck .5 or less cr per unit ( +overhead ) selling for 3cr per unit? ( now, I don’t expect that price to hold ). I would make a lot more money then selling finished products.
But as reality finally sinks in, the price of resources will also drop.

”Sorry j4d00, but what you posted isn't economics 101, it's old wives tales.” --Phuobar

Thanks to sticking to relevant facts, and not personal remarks.

“In business, this are the only 3 factors to consider (general administrative cost doesn't figure cuz it doesn't figure in SWG): capitalization, cost of good, and sale velocity.” --Phuobar
I stated that this was an economic post, not a business post. They are 2 separate fields of academic study.

Economics is the science that deals with the production, allocation, and use of goods and services.

When doing an economical analysis you simplify in order to get the big picture. I never intended this post as a ‘How to make millions and millions of credits”, or I would have named it such.

“It's really simple, are you basing your house prices based on "resource" expense or on your time? If you prefer not to dabble in mining, then drive down the price of the resources by refusing to pay more than 1.0 cpu.” --Phuobar

This is a “post hoc ergo proctor hoc”. Just because you refuse to pay more than 1cpu, doesn’t mean the market price will go down.

“Yeah, the miner will throw out all kind of non-sense "proof" and "math" to show how his "time is money" so you must pay him 2.5/3.0 cpu. Baahooeey. To pull up 40k in resources cost no more than 14k in credit. How efficient the miner is, that's his problem. He pull it up in .1 hour, he's making 400k per hour. He pull it up in 10 hours, he's making 4k per hour. That's his problem.” --Phuobar
Time is a factor of economic profit. That’s why in first year economics you learn that an economic profit of 0 is still a good thing, because you’ve factored your time in as a resource. Why shouldn’t my time be worth money?

"Prices are set by supply vs demand.
If supply is greater than demand prices will fall sharply
If demand is greater than supply then prices will rise sharply."

Exactly! Thanks Dayln for understanding Economics.

Ecirb

"Prices are set by supply vs demand.
If supply is greater than demand prices will fall sharply
If demand is greater than supply then prices will rise sharply."

I agree that this is the business axiom.

This provides my concern as well, that the third line will not hold true. Prices won't rise sharply......if the low price sellers won't raise their prices.

If you're selling at lower costs, what will be your guage to identify that demand has increased? How will you recognize that demand has risen, when you're selling well and houses/structures are selling like hotcakes? Your opinion will guage it? In my opinion, the low cost sellers won't be able to tell the difference between good demand and bad. Yuppers. Not if they are currently obtaining customers, and selling them things.

An interesting thing about the demand, is I'm getting just as many new people applying to my PA as ever. New players, too. Granted, this won't change the sales of new PA Halls all that much, but it will seem to affect a demand stream.

How will you guage your demand? If you control prices, can you not affect demand?

I've raised my prices. Many others have as well. We are trying to create more demand. The lowballers won't change, therefore our attempts at creating demand will fail. I then resubmit that the lowballer will have trouble recognizing a trigger that demand has increased.

If you could convince everyone too do that, it would work.

Butitis an open economy, I dont beleive you will ever convince everyone to do that. I dont bleieve OPEC controling gas prices will ever fly in SWG.

As the market dwindles and too many archetects are going to besitting on inventory that they cant move and watching thier bank accoutns dwindle... they will lower prices. The flood gates will open, I am jsut trying to stay a bit ahead of it.

My prices arent as low as you might think. yes some things sell for less than 3cr per unit, but none of them are currently less than 2.5 per unit, most of them are very very closet to 3cr per unit or jsut over. Some things I sell for closer to 4cr per unit.

I defend people that sell for 2 cr per unit, because I dont buy the fantasy of resourses being worth 3cr per unit as a standard. That is just the current reality, that is going to change.

I forgot to answer your question..

I guage it by other archetects on my server and general demand for my finished product. When I have more orders than I can fill in a week I bump them a bit, when I have fewer orders I lower them a bit.

I also keep a close eye on what other archetects ( ones that actually sell stuff, not the really high priced ones, ones that are actually selling in the market )

Guaging it is easy, trying to sell at what you beleive the market will be next month is hard. Just trying to stay ahead of the game.

Just realized I didn't actually post anything on topic, which was what I originally meant to do, sorry.

I'm part of a conglomerate with an armorsmith, weaponsmith and droid engineer. Most of my non-ore stuff is leftovers from old harvests from them. Between the 3 of us (the armorsmith and weaponsmith are the same guy), we are planethopping CONSTANTLY finding resources, maintaining harvesters, checking what is rotating out, picking up materials if they are needed right away. Because of the unpredictability of shifts, and all the specialized material needed, we hit each world at least once a day. The costs are insane. But because of this, my ore harvesters are always on a 65+ spot.

And let me tell you, that armorsmith will not shut up, on a daily basis, about the RETARDED prices that I charge. Only 5cr/unit! He gets 300-350 on his armor. I somewhat agree with the premise that you should compare time we spend crafting to mission running, just to get a baseline. The resources aren't the only concern in your cost of goods sold (for most people), itstime as well. The info given here is definitely a good metric.