Market Discussions

And stupid math.

Because they could just resell the minerals at market prices.

MIMAF in another form.

Going back the past six months, my GP% for some selected ships are:

Most profitable, Apoc, 7.9%
Best GP, 2nd most profitable, Prophecy, 13.3%
Most factory efficient, Abaddon, 5.7%

Of course, maxed skills, advanced processes around supply chain management, very well capitalised. I do have rules in place to hold my ships back when margins or supply tighten, but given the Apoc is my #2 most profitable item overall I obviously don't hold back that much.

Since I didn't see it mentioned, in addition to production efficiency 5, you pretty much need a well researched blueprint to manufacture ships at a profit.

Also, for many manufacturers, they are sufficiently capitalized that the isk/hour/manufacturing slot metric matters more then the profit margin.

Not to mention the mineral market fluctuations not just between values of minerals but location as well. Just because a mineral costs a certain amount to buy in Jita does not mean that is what the ship builder paid for it. Many ship builders get their minerals through buy orders in remote systems with really good mineral supply, these orders can be well below jita prices. Combine that with the waste reduction of not only having production efficiency 5 but also a well researched BPO you can make at least10% profit just on the saved materials.

So if you buy the minerals 5% cheaper, have the skills and researched BPO's to reduce the building requirements by 10%, and sell the ship at a 20% markup it may look like you only have a 5% markup, when really you are making 20%. Many will argue that this 20% is not manufacturing profit, and not all of it is, but profit is profit. if you want to build ships, and you can find cheap minerals, and save costs by researching your BPO's, you are putting more profit in your pocket regardless of where it comes from.

You are assuming a frieghter and a pilot that can fly a freighter, that is not necsessarily automatic, that level of industry requires multiple billions in capital for the buy orders, the freighter, the unsold production inventory, etc. Some people just putter in industry, mine some minerals, refine modules, but a few cheap locally just becasue and a battleship you can already fly which can make the run to the hub for sale is faster for a once or twice a week is faster and less capital intesive than a huge production run and and less tedious than freighter operations. Obviosly this is only relevant in slow turn over markets where a few dozen "hobbyist" can materially impact the volume for sale.

To give the economics 101 answer:

Producers will enter the market as long as there is a profit to be made (mineral cost+opportunity cost>sell price). With more producers the market price will go down, until it is equal to the mineral cost+opportunity cost. This is called the equilibrium price. For manufacturing battleships this could be somewhere between 5-10% above mineral cost. At that time no more producers will enter or leave the market.

What do I mean by opportunity cost?
The producer has to spend time to buy minerals, move them to his factory, make a few hundred clicks, move the finished ships back to market and play the 0.01 ISK game to sell them. He could do something else with that time. He also needs to invest capital into the blueprint and the minerals.

to resell the minerals you just mined you need:
1. get ore into station
2. refine ore
3. haul minerals to trading hub
4a. organize sell orders and babysit it until it sold
4b. drop minerals into existing buy orders
4a and 4b paths have their own pros and cons.

All by all this is EFFORT and TIME. You just exchange this to some amount of ISK which would be taken by other players.

From corporation point it looks even more stupid:
even bought minerals from sell orders, used BPC from public contracts i build ship for few millions less than if i buy it from market buy orders. Reduce mineral prices by 10-15% and you have good profit for your corp.


or you just never mined and never managed it.

To extend that a little further, the Economics 101 answer also assumes knowledgeable and logical producers. People playing the game that love building ships may be neither. Those people may supplement their income through mission running, mining, exploration, scamming, etc. and not even know they are not making a profit or enough profit to justify producing.

This stopped being funny long ago.

so basically the smart thing to do would to be build/buy a metric **** ton of these lower cost battleships and relist/reprocess them for profits.

I used X amount to build it yesterday and i get Y amount today. Would this not create minerals out of thin air?