Business And Economy Archive
Thread: Galaxy Wide Vendor Search on TC POLL
Ledao
Wed Mar 16, 2005 9:42 pm
#79
Drecki wrote:
Sorry, but this has nothing to do with economy. Of course, if you have raw material on stock, you paid for it. And if you're a businessman, you know, that if you use up this raw material, you will have to get new stuff. So the cost is there, using up your stock IS cost. You are just able to ignore it, because you have loads of it in your stock and you don't care whether you have 100m on your bank account or 500m, because you already have more than you will ever need in this game anyway.
The thing is, what I spent acquiring my resources has nothing to do with their value. Their value is purely extrinsic -- they are valuable only insofar as they can be used for something else. Using up my stock isn't "cost" because I don't have to replace it. I have enough resources to supply my entire server for years, as should have been apparent from my earlier posts. Further, in my position, the need to pay for things has been totally wiped away -- even if I start producing and selling at maximum capacity, I will absolutely be able to mine replacement resources myself before I run out. Avian meat? No worries -- I have 30+ resource kits. My resource stock exists as the potential for money, nothing more, nothing less.
The point YOU are ignoring or missing is,your profit/loss situation won't change in ANY way, whether your products are available on global search or not. Again, what is the difference between now, when you are taking "normal" prices, and in the future? What should make you cut down the prices down to where anybody else can't compete with, just because your products are now on global search? This would be interesting for 2 reasons:
My limiting factor now is not the number of items I can produce, or even the number of items I can stock. It is rather the number of items I can sell. Again, my resource have no value in themselves -- just because I paid 400 cpu for some avian meat before the resource kits came out doesn't mean it's worth more than 50 now...
- You want to spoil the game for others. As I said already, why don't you do it already?
- You want to get everybody else out of business and make more cash after every other crafter quit business. Again: You could achieve this already today. Maybe not as quickly, but as you said, you don't drop the prices in order not to kill business of others. Why would you do it tomorrow?
How about reason number 3: I choose to act as a self-interested rational agent, and maximize my in-game earnings. With the current situation, I most certainly could not achieve 100% market share, even with a vendor on every planet, simply because there is no really viable method for in-game advertising. With galaxy-wide search, don't you think some of the people who have been buying woundpacks from my competition for 3k will see mine for 2k? I imagine they will, and without any overt act on my part.
As Pavadin said above, my prices are *already* lower than everyone else's. They're not as low as they would be if my only concern were maximizing my profits, but I have to assume that not all crafters in my position will take this stance, that some of them will decide that it would be fun to farm credits, and so forth.
Anyway, your assumptions about business and about profit and loss would be valid if the economy were reasonably stable. But the fact is that it isn't. It has been thrown intoserious flux with the resource kits and the harvesting changes, and that has caused the complete disconnect between what I paid for something 2 months ago or 6 months ago and what I can sell it for now.
If the supply of resources didn't exceed the demand for crafted good by such a huge amount, things might be different. But as it stands, all a crafter of my size is concerned with is moving product.
Ojes
Wed Mar 16, 2005 9:49 pm
#80
Drecki wrote:
The point YOU are ignoring or missing is,your profit/loss situation won't change in ANY way, whether your products are available on global search or not. Again, what is the difference between now, when you are taking "normal" prices, and in the future? What should make you cut down the prices down to where anybody else can't compete with, just because your products are now on global search? This would be interesting for 2 reasons:
The simple fact is that in today's world, no one person can completely supply the market for a given product (like buffpacks in this example). Even if Ledao produced all 40k buffsets that his resource stock would allow, he has no method of making everyone on his server aware that he sells buffpacks. It is certainly possible to get the word out about your vendor(s) through a wide variety of methods, but it will never reach the kind of saturation that galaxy-wide search will provide with the flick of a switch.
On Flurry, there are a number of buffpack crafters who routinely make packs that are better than mine and they produce them in far greater quantity than I have ever done. Yet, I cannot tell you the number of times that people have told me my packs are the best when I know darn well my competitors have superior products. If I had to wait until I could produce packs of comparable quality before starting my business, I probably would never have gone any farther than crafting for myself.
Scudder
Wed Mar 16, 2005 10:15 pm
#81
I didn't say any of this to my knowledge.
Cafa wrote:
So, actually making friends with people in the game and enjoying them as friends outside this venue is wierd to you. huh?
I do have RL friends which I met in SWG.
This game is one of my hobbies. I also sail and do a few other things.
What I find amazing is that in a venue that wants to encourage interaction, you advocate completely against it, call yourself successful at it, and call others wierd for actually connecting to other people as human beings rather than some "whack a mole" you can screw with anonymously via a network connection. This game is not X-Box Live, CoH, or WoWand I don't want it to become that.
I do encourage interaction... I just don't demand it from other players. What business is it of mine how other people want to play. I'm all for you having a multi-planet conglomerate if you want to... I just don't know why something like this vendor search is gonna ruin that for you.
Also, this is the only game I play... period... I don't have an console system and I have two other PC games that were given to me over the past two years that I haven't even bothered to open. I like this game and it meets some of my entertainment needs. But I sure ain't gonna get worked up about it.
Bottomline, I am advocating the game being something that continues to promote and build communities that do not require the Master Looter choice when we go out together. If it changes into the selfishness of a me first atmosphere, it is no longer the game that attracted me and most that I respect within the game.
And you are certainly entitled to your opinions and freedom to express those opinions. In fact, I applaud you for doing so. If the game goes downhill I will certainly be the first to say "Fivo told me so."
But no one has convinced me that this game will suffer greatly because of this update. I've been around long enough and seen enough people come and go that I think it would take a lot more than this vendor search to bring this game down to where it would have to be closed. Lots of past mistakes were much worse in my humble opinion and the game has continued and has come a long way from what is was at launch.
Guess I'm just a Fan Boi
Fivo Asia
Message Edited by Cafa on 03-16-2005 03:34 PM
Message Edited by Cafa on 03-16-2005 03:35 PM
Message Edited by Scudder on 03-16-2005 11:17 PM
Scudder
Wed Mar 16, 2005 10:18 pm
#82
Poldano wrote:
Pawlin, I think Scudder might have meant the items crafted from the schematics are hard to find. In this particular case, the schematics are all over the place, but there are not that many finished technical consolepieces of furniturearound. I don't find this hard to understand at all, the market is probably becoming saturated and loot sellers want more for the schematics than the finished items will be likely to bring.
Saego, Wanderhome
You are correct... sorry I wasn't more clear on that point. Thanks!
GraySeven
Wed Mar 16, 2005 10:47 pm
#83
As a long time crafter (since launch) as well as one of the first Master Merchants (Mastered it before Artisan..go figure) I feel I can weigh in here.
I'm looking forward to this change. I have since I first heard about it, although I will reiterate that I believe the GWS should be a Tier 4 Merchant skill.
I was a decent Armorsmith, I made credits at it, finally getting resources good enough to make Stun layered 80/70 composite at the end when I gave it up. Had I been able to reach a broader market than I could from the top of the Narglatch Hill outside Moenia, I might still be an AS. It just wasn't worth the hassle for me to try to compete with the big names who were actually charging 100k more than me for the same stuff (well, the HAM was lower for them, but not by much with those extra 2 points). Had I had the option of a Galaxy wide vendor search, I could have gotten my name out there.
Would the big smiths have had to drop their prices? Probably. More than likely, I would have raised mine to the average, so as to maximize my profits. Resources, good ones,were just too hard to come by to price gouge, but my slightly lower prices weren't enough to keep me interested in the business. Some of the worst price gougers would have had to substantually drop their prices, but they were way above average any way.
This myth that people with access to larger amounts of resources will charge the lowest price confounds me. We all pay the same price to pull resources from the ground, or run factories, or have houses. Sure, some people have the ability to have more storage, thus are able to store more resources, and some run huge static farms but those have been shown over and over to rarely get good spawns of quality resources plus they pay much more in maintenance and power, so we are down to the same amount of mobile harvesters to harvest with. The differences in the cost to produce a given item are small, so small that anyone who price gouges is doing nothing more than hurting themselves.
No one wants to loose money just to gain market share, especially when item decay is such a lengthy process. People who bought from the price gouger will probably forget all about him come time to buy again, unless he continues to price gouge and then he's put himself out of business.
Being able to produce more does not equate to being able to produce cheaper. Sure, if someone wants to cut their profit margin to the bare minimum in the hopes that they make fast money through volumn they can, but they are just hurting themselves in the long run.
Competition is never a bad thing. I'm willing to bet we see a broader range of items, both in quality and price, especially considering the changes the CURB is going to bring. Merchants will stop their generalization, choosing instead to specialize thereby allowing them to bend their efforts to produce the best of a specific product, allowing them to harvest a small group of needed resources. This will have the added benefit of freeing up time, time to be used elsewhere.
Instead of going into a weapon shop and seeing OK rifles, Good melee weapons and Excellent heavies, maybe 5 of each, we will instead see just a shop carrying Heavy Weapons, while someone else concentrates on the Rifles, and another on the melee.
And as long as we have to go to the shop to pick up the items we browse and buy, there is still the chance for incidental purchases and impulse buys, and the hard work put into a shop that actually has stocks means that business will die for those who have 12 vendors each holding only a handful of near-useless items, if any at all, because consumers will remember the place they went to with the full vendors.
I may be overly optimistic about this change, but its better than the overly pessimistic comments I've seen from people who swear the world will end without even giving the change a chance, simply because they believe it will be bad.
Right now, my vendors are full. As things get sold, more get posted. If things don't sell, I get rid of them or keep lowering the price til they do. I won't change my business practices one bit with this change, except maybe to have to produce more to keep up with the increase in sales I'm sure to see as a result of the change. That is what I choose to believe. We will see who is right.
Ledao
Thu Mar 17, 2005 12:07 am
#84
GraySeven wrote:
This myth that people with access to larger amounts of resources will charge the lowest price confounds me. We all pay the same price to pull resources from the ground, or run factories, or have houses. Sure, some people have the ability to have more storage, thus are able to store more resources, and some run huge static farms but those have been shown over and over to rarely get good spawns of quality resources plus they pay much more in maintenance and power, so we are down to the same amount of mobile harvesters to harvest with. The differences in the cost to produce a given item are small, so small that anyone who price gouges is doing nothing more than hurting themselves.
No one wants to loose money just to gain market share, especially when item decay is such a lengthy process. People who bought from the price gouger will probably forget all about him come time to buy again, unless he continues to price gouge and then he's put himself out of business.
Being able to produce more does not equate to being able to produce cheaper. Sure, if someone wants to cut their profit margin to the bare minimum in the hopes that they make fast money through volumn they can, but they are just hurting themselves in the long run.
Excellent post GreySeven. I disagree, but I think you've helped me toward a better explanation of why:
I think that more or less everything you've said would be true if it were the case that the overall resource supply were roughly equivalent to the amount used by the playerbase.
However, I think that, to the contrary, there are vastly more resources coming into the system than there are going out (i.e., being crafted into items, sold, and used). I base this simply on my experience -- I've managed to have a consistently greater resource intake than output, even while operating at a net cash gain. And my resource intake isn't slightly greater than my output, it's many times greater.
Further, in the crafting professions where quality matters, prices are orders of magnitude higher than costs in most cases. If I'm selling fully advanced Stim Bs for 2k credits, I'm charging roughly 20 cpu. We've seen the math enough, I won't repeat it here -- there is a huge amount of room for prices to drop before a crafter with his costs under control (on my server, I can get as many hired harvesters as I want for 3 cpu.) even comes close to losing money.
Now, given the above -- that there are more resources coming in than there are going out -- it is probably safe to assume that resources on the whole are going to decline in value. That's what happens when the supply exceeds the demand (and what has happened...).
As we have seen from the Architects and Shipwrights, when the resources involved are readily available, price competition becomes intense -- there is no significant barrier to market entry, and so the market has to separate the strong from the weak itself.
So anyway, my point with all of this -- and with most of my ranting, in fact -- is that because of the ever-increasing resource surplus, I think thatit absolutely makes (economic) sense for those with access to the largest amounts of resources to try to achieve 100% market share at the expense of some profit margin. In my case, if I were (for instance) to cut my stimpack prices by 50% on the day of galaxy-wide search going live, I would still be turning a profit on those stims, I would still be pulling in more resources than I'm using, and I would most certainly sell twice as many as I otherwise would.
Yes, doom and gloom. You're right about that. It will be interesting to see what happens. I would love to share your optimism, but as I see it, all of the recent changes to the economic structure, while apparently intended to reduce barriers to market entry for new crafters, have merely made it easier for one large crafter or guild to totally wipe everyone else out. That doesn't mean it will happen, of course, but I hate to see the game heading in this direction.
Cafa
Thu Mar 17, 2005 1:09 am
#85
bluejanus wrote:
Well the problem is if things are as dire as some of us are saying, there will be a long term impact from the changes. It's not like they institute the changes, realize it was a mistake, roll them back and no harm done. Hologrinding has been gone a while, but it is still impacting the game. In a lot of negative ways.
Scudder wrote:
And IF that happens then more changes will be made... it's not the end of the world... give the DEVs a chance to see if this will work or not... people have been asking for this (or something like this) for as long as I can remember. I don't see the harm in giving it a try.
I'm sure some dev said the relative same thing Scudder is suggesting about Xmas Holo's. Gee, the game only lost 60% of it's subscriptions over that, let's really screw things up this time! Geez
Fivo Asia
WineGuyJr
Thu Mar 17, 2005 2:37 am
#86
I think what he's getting at is that at his current level of sales he can't get rid of resources as quickly as he aquires them. RIght now he's probably maximizing his profits since a drastic price cut wouldn't be offset by the increased business he would get under the current system. But with a Global Search function, a further price cut WOULD let him dominate the market and more than make up for the reduced margin. That would also provide a better balance between his incoming resources vs his resource usage.
At least, that's what I got out of it. Correct me if I'm wrong, Ledao.
Drecki
Thu Mar 17, 2005 3:11 am
#87
Of course, and I said that before too, it's easier to do price wars in the galaxy wide vendors search as it is now. But with some effort you can have that today too.
Place a droid at coronet starport, right next to the docs, and advertise you would sell buffpacks for 50% of the lowest price on the server. Spamming the auction channel and sending out mails to your customers, and I'd be surprised if you can't gain a significant market share,enough to get the majority of other players out of business.
The issue is not the galaxy wide vendor search, it's more that there are crafters on probably every server, who could give away products for free over months without getting broke.
Scudder
Thu Mar 17, 2005 6:07 am
#88
From the Stratics HoC Chat:
Brannoc: *[WH]-Banana-SillyWalker* What is the opinion of the Development Team on reducing the Demand for Jedi Power Crystals and Pearls, by making them easy to collect this will therefore make the markets elasticity to change and therefore bring down prices for low level Jedi ?
Lord_Pall: I love price elasticity.
Lord_Pall: Prices dropping are the bane of a lot of merchants, but for average players it's a great thing.
Lord_Pall: Having items be more affordable across the board is not a negative in my view
Lord_Pall: I love price elasticity.
Lord_Pall: Prices dropping are the bane of a lot of merchants, but for average players it's a great thing.
Lord_Pall: Having items be more affordable across the board is not a negative in my view
GraySeven
Thu Mar 17, 2005 9:12 am
#89
Thanks Ledao. Lets try this on...
I can see your point on resources, but it just isn't the large operations that have this problem. I, too, had that problem of more resources inbound than outbound. I have two accounts, and of the 20 lots available to me on Starsider 10 to 12 of them are ususally tied up in non-harvester structures.
The 8-10 harvesters I do run supply more than my needs, as far as QUALITY resources are concerned. "Quality" is the key point here. They also supply my power.
Because of my specialized needs (at the time as an AS/DE, now as a SW/DE), I used my lots to harvest the name and quality resources required by my professions and used resellers to supply my grind quality needs. Even by harvesting my own quality resources, I had a lot more coming in than going out, and what was coming in was very high quality and quantitiy (500k minimum).
While on the whole larger operations are going to be able to bring in more resources, everyone who mines themselves tends to bring in more than they use and so the ability to charge lower prices isn't limited to just those large operations. And this doesn't count the pure mining operations, who craft nothing but instead supply the player base with resources. If resource prices drop, other crafters will be able to keep up with your price cuts, for a while at least, by purchasing these lower price resources.
But my question is simple. Why would you lower your prices? To gain 100% market share, you say but all you are doing is hurting yourself. And other crafters. Say you do gain a big share of the market with your 50% off meds. What happens when you bring them back up to their "normal" price after you "corner the market"? Do you honestly believe that the cutthroat players of an MMPORG are going to say "well, he supplied me with cheap meds once, I'll keep buying from him"? Nope, they're gonna go and look for someone else. The problem with dropping your price to gain business is that your price will have to stay there to keep it, meaning you have devalued your product. You are making more work for yourself, for less money. Sure, you get all the business, but is the added work for less money worth it?
If I see someone undercutting, flooding the market with quality goods below average prices, or at prices lower than I feel they are worth, I'm going to simply stop making those goods. I'll wait, and eventually the price will come back up, because human nature will not allow us to take a loss for long, so I know that the undercutters prices will either come back up, or his good will disappear as he gets tired of crafting so much.
Happymob
Thu Mar 17, 2005 9:37 am
#90
GraySeven wrote:
No one wants to loose money just to gain market share, especially when item decay is such a lengthy process. People who bought from the price gouger will probably forget all about him come time to buy again, unless he continues to price gouge and then he's put himself out of business.
I hope you are right, but I'm not convinced you are. In the real world, basically every merchant is motivated by money, because money has real value. In SWG, merchants have different motivations. Many want to make credits. Many simply want to interact with clients. This type of person tends to run smaller, boutique shops, often at very little profit, but they are happy doing it because they get the customer interaction they desire.
But there's another type of SWG merchant, who is driven by ego more than profit. They literally want to control the entire market for a given product. It's hard under the current system for any single crafter to gain more than 40% or so of the galaxy market for an item. But if you give these merchants better ways to improve their visibility, I suspect some will use pricing as a mechanism to drive market share. And when the profit marginsare squeezedfor the smaller crafters, many crafters will simply give up crafting. I hope there aren't many ego-driven mega crafters on Scylla, but I could name 3 or 4 who I suspect will immediately drop prices once they are on the galactic bazaar.
The key to understanding the behavior of the mega crafter is to understand that the primary goal is often not about profits. And even if it were about profit at one point, they already have their billions in credits and billions more in stored resources. So what is the new challenge for them?
Cafa
Thu Mar 17, 2005 10:08 am
#91
GraySeven wrote:
[snip]
But my question is simple. Why would you lower your prices? To gain 100% market share, you say but all you are doing is hurting yourself. And other crafters. Say you do gain a big share of the market with your 50% off meds. What happens when you bring them back up to their "normal" price after you "corner the market"? Do you honestly believe that the cutthroat players of an MMPORG are going to say "well, he supplied me with cheap meds once, I'll keep buying from him"? Nope, they're gonna go and look for someone else. The problem with dropping your price to gain business is that your price will have to stay there to keep it, meaning you have devalued your product. You are making more work for yourself, for less money. Sure, you get all the business, but is the added work for less money worth it?
If I see someone undercutting, flooding the market with quality goods below average prices, or at prices lower than I feel they are worth, I'm going to simply stop making those goods. I'll wait, and eventually the price will come back up, because human nature will not allow us to take a loss for long, so I know that the undercutters prices will either come back up, or his good will disappear as he gets tired of crafting so much.
I completely agree with these two paragraphs, in concept. In practice, I've seen that undercutters either have some jihad to fulfill or want to drive competitors out of a market. The only thing preventing that is intelligent planning of others, of which I believe you've described above.
But, why give them the tools to do that? Ultimately, this change only gives a certain segment of the"vendor owner" communityany power. It irradicates the need to become a Merchant completely if it stays available within the Artisan trees. It certainly does not solve the problem they think it will because the database filters are remaining the same, have no localization, and will overwhelm the customer with useless data beyond anything they've ever imagined.
Also, I live and play on Dantooine. I'm already dealing with vendor lag, and can imagine how freaking terrible it's going to be with even a few hundred searches operating in tandem.
Fivo Asia