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Question about T2 ship production

Author
EMT Holding
EMT Holding Corporation
#21 - 2014-05-10 21:36:39 UTC
BlueWo1f wrote:
Owen Levanth wrote:

Holy ****, according to your numbers the last ship my industry-alt sold took either 250 hours to complete, or there are more then just the two T2-ships you found. Since it didn't take me 250 hours, I must be lucky. Lol

As an aside, counting ISK per hour in industry doesn't make much sense, since you end up with a lot of time spend waiting for build times to finish, which would make even high profits look small if you take all the time into account. The important point is however, you don't have to be logged in to make your worker crews work. They do the work even if you're offline. With contracts to let other people do the hauling you could pull your actual time so far down you get something like 50 million ISK per hour on your average HAC. If you spend 1-2 hours hauling **** around yourself, I guess the "ISK per hour" would shrink to 25 - 16,667 million ISK per hour.

Now I really want to know how you calculated a so ridiculous low profit. Did you use decryptors giving you -5 ME BPCs as a calculation base or something?


I assure you I've ran an extensive test of the market in the main trade hubs to be assured of the conclusion, literally every ship checked without decryptors and with each decryptor. Furthermore I used the same database I use to track my usual products so the system is extensively bug tested. The of all the ships tested below are the potential iph values above 200,000 iph (names are redacted for the benefit of anyone that has done the market research and to not spoil the little isk they are making).

(Redacted Name) = 540,000 iph
(Redacted Name) = 230,000 iph
(Redacted Name) = 562,000 iph
(Redacted Name) = 241,000 iph
(Redacted Name) = 263,000 iph

If I'm getting this wrong I would love to know but I'm pretty sure this is correct. If you would care to message me in game with this valuable t2 ship that is being produced at a profit I would gladly verify its profitability and trade you market research on a more profitable item.

You aren't grasping the concept of isk per hour though, industry is the most practical profession to measure isk per hour. You're manufacturing slots have an inherit value, you can only have a maximum of 10 per character, therefore generally meaning each slot is worth about 70million per month or approx 70pence (the price of a plex divided by 10). You want to ensure you're getting the most value out of those slots.

Sure when the manufacturing times are weird you may not get the full value, i.e. the slot may be completed for 10hours before you log in to get it, subsequently the value of items such as drones which require a log in every 3 hours may result in the same profit as a t1 cruiser which takes days . But nevertheless iph is the correct way of calculating the profitability of manufacturing so long as you factor in the practicality of renewing your jobs, so picking items that fit your availability.

Your points about time logged in and hauling are unrelated, my industry time is fairly stream lined so i measure my effectiveness ingame time by other means; if you're measuring you're effectiveness as a manufacturer you use iph and minus hauling costs from the item values. Likewise if you're trying to trade in outer regions you need to split you're activities between 'the manufacturer' who produces an item that increases in value instantly and 'trader' who uses supply and demand to increase value.

I think part of the problem is that you are finding is that you're buying the T2 components instead of building them. You lose a huge chunk of profit buying instead of building yourself.

http://imgur.com/r5MyT0v,WUUMF1F

The numbers shown above are based on all the T2 components being built but buying any minerals or PI products. Almost every T2 ship has profit in it when you start doing that.
BlueWo1f
BlueWo1f Corp
#22 - 2014-05-10 21:52:16 UTC
EMT Holding wrote:

I think part of the problem is that you are finding is that you're buying the T2 components instead of building them. You lose a huge chunk of profit buying instead of building yourself.

http://imgur.com/r5MyT0v,WUUMF1F

The numbers shown above are based on all the T2 components being built but buying any minerals or PI products. Almost every T2 ship has profit in it when you start doing that.


You're right and I've ran the numbers on raw material production and subsequently manufacture many of the T2 components to fill slot gaps (big tips so we'll see how that market changes) however the problem then is, the thing that is making you money is not T2 ship production, its the components....so just make components.

The only point that changes is where you need to produce the final object because the components don't sell such as with orcas/freighters to an extent, and for unknown reasons people are actually buying the T2 components to make T2 ships?
EMT Holding
EMT Holding Corporation
#23 - 2014-05-10 21:59:50 UTC
BlueWo1f wrote:
EMT Holding wrote:

I think part of the problem is that you are finding is that you're buying the T2 components instead of building them. You lose a huge chunk of profit buying instead of building yourself.

http://imgur.com/r5MyT0v,WUUMF1F

The numbers shown above are based on all the T2 components being built but buying any minerals or PI products. Almost every T2 ship has profit in it when you start doing that.


You're right and I've ran the numbers on raw material production and subsequently manufacture many of the T2 components to fill slot gaps (big tips so we'll see how that market changes) however the problem then is, the thing that is making you money is not T2 ship production, its the components....so just make components.

The only point that changes is where you need to produce the final object because the components don't sell such as with orcas/freighters to an extent, and for unknown reasons people are actually buying the T2 components to make T2 ships?

I sort of see what you're saying but when I checked (many months ago) the volume of the T2 components in Jita was pitiful and while the margin was good, you'd spend an awful long time just trying to shift them. While the profit appears in the components, it's never released until you change the components in to the final product which does sell.
Gilbaron
The Scope
Gallente Federation
#24 - 2014-05-10 22:19:06 UTC
if you want to do that you need to also consider the ISK/hr on your components. because they use slots to be build.

for the final product:


add the cost for the stuff you bought from the market (average datacores needed per BPC, minerals, components, reaction stuff ...)

after that, divide it by:

the production times for ALL the stuff you actually build with your own lines, components, t1 hull, t2 hull, ...

do this for your T2 ships and you will find out that the ISK/hr you can expect is absolutely anemic compared to other stuff that is (much !) easier to make,
SurrenderMonkey
The Exchange Collective
Solyaris Chtonium
#25 - 2014-05-10 22:30:08 UTC  |  Edited by: SurrenderMonkey
BlueWo1f wrote:

I can't believe that this is all due to BPO's. The only answer that I can find is that for the same reason I want to make ships, everyone wants to make ships, as such for the same reason the early t1 ship market is mainly loss making, people make t2 at a loss either knowingly (my materials are free!!) or just without caring about return.


That's a bingo!

Most industrialists in Eve are, frankly, kind of stupid, and don't exploit the agility of invention to make whatever generates the most profit. They want to make ships because making ships is cool, so they're generally over produced by people who want to make the cool thing instead of making the profitable thing. This doesn't bother smart industrialist, who just switch to more profitable items.

There are, however, some other reasons why a person might prefer to make ships instead of something more profitable. The long build times and higher profit per unit means that you can produce them with considerably less player effort and clicking than modules require, at the expense of ISK-per-slot-hour. Of course, the pending industry UI overhaul will substantially impact this aspect of the issue.

"Help, I'm bored with missions!"

http://swiftandbitter.com/eve/wtd/

Kylar Renpurs
Dusk Blade
#26 - 2014-05-11 01:48:45 UTC  |  Edited by: Kylar Renpurs
Quote:
I think part of the problem is that you are finding is that you're buying the T2 components instead of building them. You lose a huge chunk of profit buying instead of building yourself.


Gilbaron wrote:
*stuff about isk per hour in response*

This. Kinda like the "I built it myself, therefore it's free" logic, unless you're making more ISK per hour (or as I prefer to rate it, ISK per minute**) on making the components, then it's not worth it, regardless of the profit margins.

Lets say you run 1 line of a T2 ship, and it's doing 1,000 ISK/min profit (i.e manufactures in 1 hour, sells for 60,000 isk profit).

You decide to manufacture the components of it yourself, which themselves turn a profit of 500 ISK/min. You need to run 5 lines of these.

Simplifying the maths somewhat, but this gives you a total ISK/min of 3,500.

If you just bought the components, and instead ran 5 lines of building the T2 ships, that's 5,000 ISK/min. Much more profitable.

That said, if the inverse is true (components make more ISK/min than the T2 ship), you're better off just manufacturing components and never actually manufacturing the ship.

"Wait, so there's no reason to make components then?". No, there's plenty of reason, most important one being market movements. When I used to manufacture T2 components, I didn't just make all of the most profitable item, mostly because I'd flood the market, which tanks the price, and results in a loss overall. Diversity is key.

This also brings in the reasoning of my other claims that T2 BPOs are useless, and as pointed out don't impact the market as much as people think. A typical BPO costs a certain amount of ISK, which can be remade in profit in a few months, maybe a year or two, depending on the BPO. A while back I did this calculation for some of the highest-valued T2 BPOs*, and you'd need to constantly manufacture for 20+ years to make this money back, making them from an industrial point of view, virtually worthless. If you reverse bottle imp it successfully, yes, you'll make a pretty good profit.

Raw T2 BPO ROI's are significantly better than normal BPOs, but unless you can resale the BPO for equal or more than what you paid for it, you stand to lose a lot of ISK.

* Pre-invention, the ROI for these things were much higher, as the lack of competition meant T2 item prices were *much higher* than their manufacturing cost. Back then, the high price of T2 BPOs was justified. What's happened between then and now is the ROI on T2 BPOs has dropped dramatically, but the price to buy them has gone up. More reason why, from an industrial perspective, they're a stupid investment.

** I used to manufacture T2 components several years ago,, they take 2 minutes/item to manufacture, so it was easier to use ISK/min than ISK/hour.
Gilbaron
The Scope
Gallente Federation
#27 - 2014-05-11 02:07:26 UTC
T2 BPOs work much like a taxi license IRL

they are expensive. very expensive. buying one is a bet. You will make money while you have it, while hoping that it's value will increase or, at least, not decrease.

Up until today, T2 BPOs have been a (very) good investion. many of them have gained additional value from CCPs balancing changes (a buddy of mine owns an Eagle BPO, he hardly ever used it before the changes because nobody used eagles. ever. nowadays, his BPO is running almost 24/7).

However, the fact that CCP is working on some changes for the whole indu process made betting a whole lot more risky.
Kylar Renpurs
Dusk Blade
#28 - 2014-05-11 03:12:35 UTC  |  Edited by: Kylar Renpurs
Quote:
(a buddy of mine owns an Eagle BPO, he hardly ever used it before the changes because nobody used eagles. ever. nowadays, his BPO is running almost 24/7)


So taking this up as an example for the moment. I'm going to assume the BPO is used/research to "ideal maximums" i.e skills/researched values are all maxed/optimal.

Using this 2012 sale thread of the Eagle BPO as a reference, the Eagle BPO is worth 110 bil. I can only assume it's gone up in value since then.

Eagle sells for =~ 167 mil.
If you buy all your components off sell orders, cost to manufacture is 145 million.
If you buy all your components using buy orders at current average rates, you're looking at 122 million.

Lets favour the lower manufacture cost to give the Eagle the best profit margin possible.

Eagle, when fully researched, takes =~ 2132 minutes (1 day, 16 hours) to build. There's a big assumption here that this is manufactured in a normal NPC station, *not* a POS. This is not insignificant, but I cbf doing the numbers now, and most people are risk-averse when it comes to a 110b piece of paper.

At the lower manufacture cost, that's almost 20,000 ISK per minute profit from the Eagle BPO. That blows our pithy 500-1500 isk per minute out the water for sure. I won't deny this.

But even at this gloriously high ROI, you're looking at just under 11 years to make back your 110 billion ISK on the blueprint. At the lower profit margin, you're looking at over 20 years.

There's blueprints out there worth 5 million isk which turn a 1000-1500 isk/min profit, which return your initial investment in half a year.

Maybe it's just me, but this makes T2 BPOs absolutely not worth the money. I'd agree that the fact you've crammed 20 times the profit per minute into one job makes it "logistically easier" to deal with, but an efficient logistic chain, an alt account running 30 slots which self-funds through GTC is a far better option. The *only* way you make money off a T2 BPO is if you successfully resale it for equal or more than you paid for it.

This is why people get their knickers in a knot about CCP potentially destroying the value of T2 BPOs by removing/seeding them. Not because their industrial advantage will be lost, but because they'll lose all their investment on what I see as a poor choice for industrial types to go for, buying instead a hyped-up collectors item. Too bad, so sad.
Gilbaron
The Scope
Gallente Federation
#29 - 2014-05-11 03:21:31 UTC
like i said. taxi license. don't expect to (ever) make back the money you pay for the license. it's a bet that you will make money with the help of something that will increase in value while using it. if you take that into account, a T2 BPO is a good investment (compared to other investments you could make with hundreds of billions)
Kylar Renpurs
Dusk Blade
#30 - 2014-05-11 05:11:16 UTC  |  Edited by: Kylar Renpurs
Gilbaron wrote:
like i said. taxi license. don't expect to (ever) make back the money you pay for the license. it's a bet that you will make money with the help of something that will increase in value while using it. if you take that into account, a T2 BPO is a good investment (compared to other investments you could make with hundreds of billions)


I get what you're saying, and I completely disagree, but we could go down this path forever. I understand your taxi analogy, and it's grossly unrepresentative of the T2 BPO market, mostly due to the magnitude of figures involved, but your comparison would only work if you charged =~ 1 cent per taxi fare, plus numerous factors that simply aren't represented in a T2 BPO purchase.

Good analogy. The only major difference I'd point out is that taxi licences don't carry any effect analogous to T2 BPO's ability to hamstring CCP's capability to sensibly develop technology and industry in the EVE universe. That massively segues from this topic though. I'd also happily call a taxi licence a poor investment too, carrying the analogy through.

I happily turned a 4bil investment into 12b of pure profit over 6 months, twice the speed of the Eagle BPO's income, and didn't need to offload anything massive at the end, which kinda just reinforces my point.

But whatevs. If I haven't convinced you (or anyone reading) that they aren't worth it, I probably won't ever, and that's cool. Getting this slight derailment back to the original topic rails, T2 BPO's don't impact the market as much as people think. Just so happens that my reasoning behind that is that they're simply poor industrial investment choices. This leads to many other rants of mine, but they're all quite off topic :)
Gilbaron
The Scope
Gallente Federation
#31 - 2014-05-11 06:39:52 UTC
New York City Taxi Licenses are pricy. very very pricy

http://www.nyc.gov/html/tlc/downloads/pdf/january_2014_medallion_transfers.pdf
Otti Ottig
Hesso Business
#32 - 2014-05-11 06:43:02 UTC
Kylar Renpurs wrote:
Quote:
(a buddy of mine owns an Eagle BPO, he hardly ever used it before the changes because nobody used eagles. ever. nowadays, his BPO is running almost 24/7)


So taking this up as an example for the moment. I'm going to assume the BPO is used/research to "ideal maximums" i.e skills/researched values are all maxed/optimal.

Using this 2012 sale thread of the Eagle BPO as a reference, the Eagle BPO is worth 110 bil. I can only assume it's gone up in value since then.

Eagle sells for =~ 167 mil.
If you buy all your components off sell orders, cost to manufacture is 145 million.
If you buy all your components using buy orders at current average rates, you're looking at 122 million.

Lets favour the lower manufacture cost to give the Eagle the best profit margin possible.

Eagle, when fully researched, takes =~ 2132 minutes (1 day, 16 hours) to build. There's a big assumption here that this is manufactured in a normal NPC station, *not* a POS. This is not insignificant, but I cbf doing the numbers now, and most people are risk-averse when it comes to a 110b piece of paper.

At the lower manufacture cost, that's almost 20,000 ISK per minute profit from the Eagle BPO. That blows our pithy 500-1500 isk per minute out the water for sure. I won't deny this.

But even at this gloriously high ROI, you're looking at just under 11 years to make back your 110 billion ISK on the blueprint. At the lower profit margin, you're looking at over 20 years.

There's blueprints out there worth 5 million isk which turn a 1000-1500 isk/min profit, which return your initial investment in half a year.

Maybe it's just me, but this makes T2 BPOs absolutely not worth the money. I'd agree that the fact you've crammed 20 times the profit per minute into one job makes it "logistically easier" to deal with, but an efficient logistic chain, an alt account running 30 slots which self-funds through GTC is a far better option. The *only* way you make money off a T2 BPO is if you successfully resale it for equal or more than you paid for it.

This is why people get their knickers in a knot about CCP potentially destroying the value of T2 BPOs by removing/seeding them. Not because their industrial advantage will be lost, but because they'll lose all their investment on what I see as a poor choice for industrial types to go for, buying instead a hyped-up collectors item. Too bad, so sad.


one of the clearest post about T2 BPO's I've read in 10 years...ccp should sticky that
Zifrian
The Pannion Domin
Ghostbirds
#33 - 2014-05-11 11:07:02 UTC
Gilbaron wrote:
like i said. taxi license. don't expect to (ever) make back the money you pay for the license. it's a bet that you will make money with the help of something that will increase in value while using it. if you take that into account, a T2 BPO is a good investment (compared to other investments you could make with hundreds of billions)

This is probably the best analogy of T2 BPOs I've seen yet.

NY City taxi medallions are incredibly expensive yet most taxi drivers know that when they are done, they (or their company) can sell that medallion to make more than the initial investment. They are betting that 1-the number of medallions will not change and that 2-people will continue to need cabs at a equal or higher demand. This is a really bad way to run a free market but it works as expected economically. When the city government changed the number of medallions one time or even suggested getting rid of them, the taxi cab industry went crazy.

T2 BPOs are no different. Wait till our "government" changes them.

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Kylar Renpurs
Dusk Blade
#34 - 2014-05-11 12:40:28 UTC  |  Edited by: Kylar Renpurs
Gilbaron wrote:
New York City Taxi Licenses are pricy. very very pricy

http://www.nyc.gov/html/tlc/downloads/pdf/january_2014_medallion_transfers.pdf


Jesus, the US and Australia are quite different it seems. For context, you'd make that monthly fee back + profit with just 2-3 fares a day here in Aus, assuming $30-50 per fare. Adjusting my comment based on that example.
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