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Valuing BPOs
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Sidunas
Mordor Industries
#1 - 2011-10-06 12:45:29 UTC
Hello MD,

how are the prices of a BPO set? Are there any valuation techniques, that can determine the fair price of a researched BPO?

Cheers,
Sid
Atima
Inevitable Outcome
E.C.H.O
#2 - 2011-10-06 13:27:29 UTC
Sidunas wrote:
Hello MD,

how are the prices of a BPO set? Are there any valuation techniques, that can determine the fair price of a researched BPO?

Cheers,
Sid



Whatever someone is willing pay for it.
Sidunas
Mordor Industries
#3 - 2011-10-06 13:39:17 UTC
That's not entirely true. Look at the Sell Orders forum.
The prices are hundreds of millions high, but I personaly think that those BPOs are overvalued. The profit out of those BPOs might not be that high and it will take a lot of time until the BPOs are amortized.
Atima
Inevitable Outcome
E.C.H.O
#4 - 2011-10-06 13:43:39 UTC
Sidunas wrote:
That's not entirely true. Look at the Sell Orders forum.
The prices are hundreds of millions high, but I personaly think that those BPOs are overvalued. The profit out of those BPOs might not be that high and it will take a lot of time until the BPOs are amortized.



If the prices are that high then people are willing to pay it.

I personally think titans are overvalued, but I don't make a thread about how they are overvalued and everyone should sell them cheaper so I can afford more of them.
Sidunas
Mordor Industries
#5 - 2011-10-06 14:18:11 UTC
I'm talking about real-world pricing theories and valuation techniques, not some platitudes. And I don't have any intention to let the BPO prices plunge, I just want to discuss how BPO sellers set their prices, that's what this forum is good for.

Where does the additional value come from? Cost of research time? That's the only possible logical source, but then people would overvalue the value of their time, or rather the opportunity cost of researching the BPO.
Jackie Fisher
Syrkos Technologies
#6 - 2011-10-06 14:20:21 UTC
Sidunas wrote:
Hello MD,

how are the prices of a BPO set? Are there any valuation techniques, that can determine the fair price of a researched BPO?

Cheers,
Sid

Define fair.

As others have said its set by the market.

If you want to try and add some logic to it try something along the lines of NPC cost + lab rental costs + opportunity cost + convenience premium.

Fear God and Thread Nought
Atima
Inevitable Outcome
E.C.H.O
#7 - 2011-10-06 14:24:41 UTC
Sidunas wrote:
I'm talking about real-world pricing theories and valuation techniques, not some platitudes. And I don't have any intention to let the BPO prices plunge, I just want to discuss how BPO sellers set their prices, that's what this forum is good for.

Where does the additional value come from? Cost of research time? That's the only possible logical source, but then people would overvalue the value of their time, or rather the opportunity cost of researching the BPO.


I believe it is the valuation of the opportuity cost of researching that BPO coupled with the demand for it. For example people used to sell ( maybe they still do ) researched t2 component BPOs for significant markup. This was because the profit from building them was huge. Where as buying carrier bpos etc I think it relys more on the opportunity cost.

I used to flip capital ship BPOs. They would sell at or below NPC prices for researched prints because of the oppertunity cost of holding them any longer, on the flip side people would but them fpr 50-150mill per ME because of the time it would take for them to achieve it themselves.
RAW23
#8 - 2011-10-06 14:30:59 UTC
As a rule of thumb I try to get NPC +5% for prints with a bit of useful research on them; NPC +10% for those that are well researched; and NPC +15% for those that are over-researched.

However, almost all my prints come from defaulted loans so I don't value them in terms of the effort that has gone into researching them so much as the margin I think will get me quick sales with a bit of profit.

There are two types of EVE player:

those who believe there are two types of EVE player and those who do not.
Mara Villoso
Long Jump.
#9 - 2011-10-06 14:43:21 UTC
RAW23 wrote:
As a rule of thumb I try to get NPC +5% for prints with a bit of useful research on them; NPC +10% for those that are well researched; and NPC +15% for those that are over-researched.

This with some slight adjustment for current market concerns. For example, earlier this year there was a huge demand for Tempests and Typhoons. The sell price for both BS put them at roughly 10 to 15% profit margin, which is pretty high (or was) for BS. The number of well researched prints available for sale was low and they sold fast, so that tacked on approx another +10% or so.
Elise DarkStar
Garoun Investment Bank
Gallente Federation
#10 - 2011-10-06 14:43:36 UTC
Tasko Pal
Spallated Garniferous Schist
#11 - 2011-10-06 17:34:45 UTC
The answers pretty much covered it all. You have a choice of several things which you can do with BPOs. So you can figure out your cost (including effort at the keyboard) and some idea of what this stuff sells for on the market (return). If any of these scenarios sound sufficiently appealing, then give it a try. But you should work the numbers and get an estimate of what you'll be committing first so that you know what you're getting into.

I have found that BPO-related activities have a low barrier to entry, so they tend to be low profit. There are opportunities out there (depending on your constraints), but one needs to look for them.

FWIW, I usually look at BPO-related activities as part of a larger supply chain (basically, I look at "vertical integration"). A lot of the time, the end product has greater volume and a bit more profit than attempting to sell intermediate products.