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Stuff and Things: how can this possibly work?

First post
Author
Thorus Gallen
Science and Trade Institute
Caldari State
#1 - 2014-04-05 21:24:27 UTC
I ran the numbers on resources to build a frigate and discovered I could make more selling the resources. I then discovered IPH and confirmed it there. I also checked some basic components and some higher end ships and got the same result.

This leads to two head-scratching questions:

1. Why are minerals and ores more expensive alone than in a final product? This is not as stupid a question as it sounds. Resources by themselves are worthless. They are only worth something because of their utility in making something else.

2. Why are manufactured goods selling at prices below their resources? This is actually a different question. How can something be cheaper than the resources required to make it when you have to buy those resources? The only way this can happen is if many people are willing to sell at a loss, which means everybody runs out of money eventually.

So, what's the story here? Why is the economy so "backwards"?

And, yeah, I'm off to mine stuff that people are buying to make other stuff at a loss. Whatever.

The difference between being a carebear and a highsec industrialist is wearing cool eyewear and looking pissed off.

Tippia
Sunshine and Lollipops
#2 - 2014-04-05 21:29:13 UTC
Assuming you're not calculating off of the base numbers of the BPOs (since that most likely increases the material reqs by 10% over what people are building with), there's the “minerals I mine is free” crowd, who think that since they didn't spend any ISK acquiring their materials, it's all profit no matter what the price they sell at.

They will gladly pour 1M ISK worth of minerals into a ship that sells for 800k, and think that they made an 800k profit rather than a 200k loss.
Thorus Gallen
Science and Trade Institute
Caldari State
#3 - 2014-04-05 21:35:37 UTC
Tippia wrote:
Assuming you're not calculating off of the base numbers of the BPOs (since that most likely increases the material reqs by 10% over what people are building with), there's the “minerals I mine is free” crowd, who think that since they didn't spend any ISK acquiring their materials, it's all profit no matter what the price they sell at.

They will gladly pour 1M ISK worth of minerals into a ship that sells for 800k, and think that they made an 800k profit rather than a 200k loss.


a. I'm seeing a good 30% in difference in profit. I'm running of a non-upgrade BPO but played those numbers a bit too and whittled a 289K loss down to $6900. Still a no-go technically and if I do all that research, I sure as hell expect profit over cost!

b. They are wrong. Before I found IPH, I set up a battery run. I now know that it is costing me 600K in lost profit. It's not about the resources being "free", it's about getting the most money out of them. Everything else is ascii.

The difference between being a carebear and a highsec industrialist is wearing cool eyewear and looking pissed off.

Jessica Duranin
Doomheim
#4 - 2014-04-05 21:53:51 UTC
Don't build ships.
Everyone thinks it's cool doing that. Especially the 'minerals I mine are free' people.
Jayem See
Perkone
Caldari State
#5 - 2014-04-05 21:59:15 UTC
I know that this might seem a slightly stupid question - but what would happen if the "MIMAF" crowd started selling the mins.

Would it have a major impact?

I am not good on indy and just wondered. Would the market just reach a different equilibrium?

I do understand the free miners - there is a certain amount of enjoyment just from creating something. Just curious.

Aaaaaaand relax.

Thorus Gallen
Science and Trade Institute
Caldari State
#6 - 2014-04-05 22:05:30 UTC
Jayem See wrote:
I know that this might seem a slightly stupid question - but what would happen if the "MIMAF" crowd started selling the mins.

Would it have a major impact?

I am not good on indy and just wondered. Would the market just reach a different equilibrium?

I do understand the free miners - there is a certain amount of enjoyment just from creating something. Just curious.


Ah, I think maybe that's the key right there.

If MIMAF dump resources into ships and sell them at an inefficient price, one effect is taking resources off the market, but they're paying a premium for them in the profit differential. Resources become more scarce thus the price goes up. Which means there must be more people using resources at a profit than not. SO the MIMAF are actually helping prospectors by inflating the price of resources.

Off to mine!

The difference between being a carebear and a highsec industrialist is wearing cool eyewear and looking pissed off.

Tippia
Sunshine and Lollipops
#7 - 2014-04-05 22:11:36 UTC  |  Edited by: Tippia
Jayem See wrote:
I know that this might seem a slightly stupid question - but what would happen if the "MIMAF" crowd started selling the mins.

Would it have a major impact?

I am not good on indy and just wondered. Would the market just reach a different equilibrium?
It really shouldn't make much of a difference, at least not until the summer patch. MIMAF-made ships are already being melted down for their mineral content and the minerals resold at their current prices, so what they mine ends up on the market at regular prices regardless — all that has happened is that someone has made a bit of profit on their willingness to throw away value.

With the summer patch and the refining revamp, that particular adjustment method will be gone so at best people will just relist the ships and modules at their proper prices. The end result might be the same, but with specific goods rather than base minerals.
Thorus Gallen
Science and Trade Institute
Caldari State
#8 - 2014-04-05 22:12:04 UTC
Jessica Duranin wrote:
Don't build ships.
Everyone thinks it's cool doing that. Especially the 'minerals I mine are free' people.


OK, so what should I be looking at for manufacturing? I've noticed some modules have the same problem. Any suggestions?

The difference between being a carebear and a highsec industrialist is wearing cool eyewear and looking pissed off.

Jayem See
Perkone
Caldari State
#9 - 2014-04-05 22:22:02 UTC  |  Edited by: Jayem See
Thorus Gallen wrote:
Jessica Duranin wrote:
Don't build ships.
Everyone thinks it's cool doing that. Especially the 'minerals I mine are free' people.


OK, so what should I be looking at for manufacturing? I've noticed some modules have the same problem. Any suggestions?


Million dollar question. You have to do the research (time/effort/maths) and work that out - nobody is going to tell you for obvious reasons.

Edit to be more useful.

Think about where you want to operate, if you want to make stuff for mission runners then look what they need. If you want to supply people who PvP then look at the mods they need. There are a lot of options. You don't have to be amazing to start out, just sensible. I started out with a goal that everything I sold would have a 10% mark up.

It wasn't great but I did ok. Look for your target markets, use tools out of game and enjoy it - don't expect billions instantly. It's a game first and everything else is a bonus.

Aaaaaaand relax.

Gilbaron
The Scope
Gallente Federation
#10 - 2014-04-05 22:57:52 UTC
Thorus Gallen wrote:
Jessica Duranin wrote:
Don't build ships.
Everyone thinks it's cool doing that. Especially the 'minerals I mine are free' people.


OK, so what should I be looking at for manufacturing? I've noticed some modules have the same problem. Any suggestions?



Make ammo, but try to sell it somewhere that is not jita. Incursion systems, popular carebear systems...

T2 modules are click intensive but profitable. Fuel blocks are always in high demand.
Thorus Gallen
Science and Trade Institute
Caldari State
#11 - 2014-04-05 23:03:11 UTC
Jayem See wrote:
Thorus Gallen wrote:
Jessica Duranin wrote:
Don't build ships.
Everyone thinks it's cool doing that. Especially the 'minerals I mine are free' people.


OK, so what should I be looking at for manufacturing? I've noticed some modules have the same problem. Any suggestions?


Million dollar question. You have to do the research (time/effort/maths) and work that out - nobody is going to tell you for obvious reasons.

Edit to be more useful.

Think about where you want to operate, if you want to make stuff for mission runners then look what they need. If you want to supply people who PvP then look at the mods they need. There are a lot of options. You don't have to be amazing to start out, just sensible. I started out with a goal that everything I sold would have a 10% mark up.

It wasn't great but I did ok. Look for your target markets, use tools out of game and enjoy it - don't expect billions instantly. It's a game first and everything else is a bonus.


That is actually very useful. "Purpose oriented" manufacturing. I never thought of it that way.

The difference between being a carebear and a highsec industrialist is wearing cool eyewear and looking pissed off.

Chopper Rollins
hahahlolspycorp
#12 - 2014-04-05 23:47:12 UTC
I sell frigates and cruisers at a loss at hisec stations near FW lowsec so people buy the mods n ammo i make.
Sure the BPOs are researched and all that but you don't make ONE thing and make a profit. Pilots want damage mods, speed mods, ewar as well as rigs for that and tank.
This thread has it all wrong, blaming others for stupidity when it's your approach that is too simple.
Diversify, maaa-aa-aaan.





Goggles. Making me look good. Making you look good.

Gully Alex Foyle
The Scope
Gallente Federation
#13 - 2014-04-06 00:12:34 UTC  |  Edited by: Gully Alex Foyle
There are 3 ways to make a profit:

1. Sourcing the materials at a low cost (including transport and taxes)

2. Producing efficiently (zero or minimal waste)

3. Selling the products at a high price (after transport costs and taxes)


To be succesful at these you have to:

1. Be a good buyer and a good hauler (or know who can haul cheaply for you)

2. Train Material Efficiency and research BPOs, or again be a good trader so you know how/where to buy a good BPC

3. Be a good seller (and possibly a good hauler)


TL;DR to make money in manufacturing you actually need to be good at trading (and logistics)!


So my suggestion is: try intra-region trading for a month or two, then you'll know what makes sense to produce, where to buy the materials, where to sell your stuff and how to move stuff around.

Make space glamorous! Is EVE dying or not? Ask the EVE-O Death-o-meter!

Antisocial Malkavian
Antisocial Malkavians
#14 - 2014-04-06 00:18:44 UTC
Tippia wrote:
Jayem See wrote:
I know that this might seem a slightly stupid question - but what would happen if the "MIMAF" crowd started selling the mins.

Would it have a major impact?

I am not good on indy and just wondered. Would the market just reach a different equilibrium?
It really shouldn't make much of a difference, at least not until the summer patch. MIMAF-made ships are already being melted down for their mineral content and the minerals resold at their current prices, so what they mine ends up on the market at regular prices regardless — all that has happened is that someone has made a bit of profit on their willingness to throw away value.

With the summer patch and the refining revamp, that particular adjustment method will be gone so at best people will just relist the ships and modules at their proper prices. The end result might be the same, but with specific goods rather than base minerals.


The refining revamp will remove refining modules? So, um sell the modules lol

And, isn't sanity really just a one-trick pony anyway? I mean all you get is one trick, rational thinking, but when you're good and crazy, oooh, oooh, oooh, the sky is the limit.

Mr Epeen
It's All About Me
#15 - 2014-04-06 00:27:46 UTC
Jessica Duranin wrote:
Don't build ships.
Everyone thinks it's cool doing that. Especially the 'minerals I mine are free' people.


Sure makes your ship hangar look good, though.

Mr Epeen Cool
mynnna
State War Academy
Caldari State
#16 - 2014-04-06 00:29:59 UTC
Thorus Gallen wrote:
Tippia wrote:
Assuming you're not calculating off of the base numbers of the BPOs (since that most likely increases the material reqs by 10% over what people are building with), there's the “minerals I mine is free” crowd, who think that since they didn't spend any ISK acquiring their materials, it's all profit no matter what the price they sell at.

They will gladly pour 1M ISK worth of minerals into a ship that sells for 800k, and think that they made an 800k profit rather than a 200k loss.


a. I'm seeing a good 30% in difference in profit. I'm running of a non-upgrade BPO but played those numbers a bit too and whittled a 289K loss down to $6900. Still a no-go technically and if I do all that research, I sure as hell expect profit over cost!

b. They are wrong. Before I found IPH, I set up a battery run. I now know that it is costing me 600K in lost profit. It's not about the resources being "free", it's about getting the most money out of them. Everything else is ascii.


Man I have no idea what numbers you're looking at.

Use a Merlin for an example. Build cost at ME0 with PE5 trained is 447k; with PE not trained at all that's 550k. They sell for 504k in Jita, so if you've got skills, you're not only making a profit but making a 10% profit, which is actually a very handsome margin for Tech I production. So much as ME5 researched on it and you're down to 413k, with 'perfect' being 406k.

So where 289k comes from is beyond me. I suppose you could be looking at prices in some outlying station where minerals are expensive and hulls are listed way cheap? I dunno.


The "minerals I mine are free" crowd's effect is overstated though, since in any healthy market (read: not those outlying backwater ****holes) people'll just buy up their underpriced stuff and flip it for a profit.

Member of the Goonswarm Economic Warfare Cabal

Nevyn Auscent
Broke Sauce
#17 - 2014-04-06 00:44:42 UTC
Chances are the frigates you are looking at are part of the ships given out in the newbie tutorials, which skew the market through created ships from thin air so to speak on those frigates.
Caviar Liberta
The Scope
Gallente Federation
#18 - 2014-04-06 01:08:01 UTC
Thorus Gallen wrote:
I ran the numbers on resources to build a frigate and discovered I could make more selling the resources. I then discovered IPH and confirmed it there. I also checked some basic components and some higher end ships and got the same result.

This leads to two head-scratching questions:

1. Why are minerals and ores more expensive alone than in a final product? This is not as stupid a question as it sounds. Resources by themselves are worthless. They are only worth something because of their utility in making something else.

2. Why are manufactured goods selling at prices below their resources? This is actually a different question. How can something be cheaper than the resources required to make it when you have to buy those resources? The only way this can happen is if many people are willing to sell at a loss, which means everybody runs out of money eventually.

So, what's the story here? Why is the economy so "backwards"?

And, yeah, I'm off to mine stuff that people are buying to make other stuff at a loss. Whatever.


I've bought modules that I calculated would make me isk by simply reprocessing it reselling the minerals.
Teyr Schmitt
An Errant Venture
#19 - 2014-04-06 07:29:54 UTC
I'm a MIMMAFer

Partially because I enjoy building things for my own usage.
Partially because I don't give a ****.
But mostly because Industrial tears are delicious.
Silvetica Dian
Imperial Shipment
Amarr Empire
#20 - 2014-04-06 10:18:03 UTC
Thorus Gallen wrote:
Jayem See wrote:
Thorus Gallen wrote:
Jessica Duranin wrote:
Don't build ships.
Everyone thinks it's cool doing that. Especially the 'minerals I mine are free' people.


OK, so what should I be looking at for manufacturing? I've noticed some modules have the same problem. Any suggestions?


Million dollar question. You have to do the research (time/effort/maths) and work that out - nobody is going to tell you for obvious reasons.

Edit to be more useful.

Think about where you want to operate, if you want to make stuff for mission runners then look what they need. If you want to supply people who PvP then look at the mods they need. There are a lot of options. You don't have to be amazing to start out, just sensible. I started out with a goal that everything I sold would have a 10% mark up.

It wasn't great but I did ok. Look for your target markets, use tools out of game and enjoy it - don't expect billions instantly. It's a game first and everything else is a bonus.


That is actually very useful. "Purpose oriented" manufacturing. I never thought of it that way.


There is also a highly specialised market in mining barges /exhumer + fittings.
step one build some and put them on the local market.
step 2 buy a catalyst.
step 3 suicide gank a miner.
nothing better than creating a local market for your own products

Money at its root is a form of rationing. When the richest 85 people have as much wealth as the poorest 3.5 billion (50% of humanity) it is clear where the source of poverty is. http://www.theguardian.com/commentisfree/2014/jan/20/trickle-down-economics-broken-promise-richest-85

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