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{BLOG} Getting started as an Industrialist
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Nevryn Takis
University of Caille
Gallente Federation
#21 - 2012-12-18 17:03:38 UTC
Beckie DeLey wrote:
Derath Ellecon wrote:

Anyhow back on topic. The problem the MIMAF crowd has, including you is that you are in fact saying the minerals you mine have no VALUE. And this is patently false. They may be "free" in terms of you not having to spend isk to get them, but they have an innate VALUE, which is based on what you could sell them for on the market. This VALUE should be a part of your cost calculations, regardless of how you acquired those minerals.

And to the anti MIMAF crowd, maybe you should talk more about mineral value than "free". I know its a minor distinction, but it may help explain the difference to people better.



Like i said, way too complicated thinking for a thing that is really really simple.

I disagree .. ish
Whilst you put it succinctly, Derath is explaining the underlying principle, which becomes important when moving to T2 production.
If you can build a T1 module for X from the minerals you mine but buy it for Y, and Y < X then you buy it rather than mine the minerals and make it. The principle then further extends into PI produced goods .. are these free as well just because you don't have to mine them?
So for a T2 item ..if your buy costs for the base T1 module + additional materials + invention costs < sale price then you don't build it.
Once you get into T2 manufacture then running backwards and forwards to trade hubs becomes a significant part of what you actaully do .. at which point Eve Central and Cerlestes Ore Trends become useful tools as setting buy orders for minerals locally may not be the best option.
They can also be used to indicate where you may sell your production for better profit, and if you can combine a sales drop with a material pickup so much the better.
Hans Tesla
RigWerks Incorporated
#22 - 2012-12-18 17:20:48 UTC
Here's how I look at it:

Would I create an item exchange contract with a 0 ISK payout and put all of my minerals into it? If no, then I'm adding a mineral value into my calculation for my sales price At that point, the question comes in whether you use a Buy or Sell price. I'm pretty lazy and would probably sell most stuff to buy orders within a few jumps, so I use that value. It results in more cheaply priced goods, but less potential ISK, but I'm okay with that because I don't like to babysit Sell orders, I do enough of that with Buy orders as it is.

Head Rigger In Charge
Kiger Wulf
Imperial Shipment
Amarr Empire
#23 - 2012-12-18 17:38:57 UTC
celebro wrote:
Interesting thread, you got the spirit to play the game and do something your way. There is nothing wrong with that. As long as you realize you might be losing isk from manufacturing.

You could be earning more just selling the minerals!


The bolded statement is the underlying issue we're all having here. It's abundantly clear that there are times when I could make more by just selling the minerals. But, if I play the market appropriately, then that doesn't always need to be the case.

For example, I could have bought Nocxium this morning for 757 each. I could have mined the Nocxium and sold it for 752 in my local trade hub. I had already decided to mine my Ore Hold full this morning (On my Mackinaw). I chose to mine Pyrox instead of Kernite. However, instead of selling the Nocxium I got for 752 then buying more at 757 from someone else (at least 6 jumps away, mind you), I chose to keep the 2000 units I needed and sold the rest. It makes sense in my head. What's the value of that Nocxium to me? 5 ISK each, for a total of 10,000. Because that was the difference in price. By mining it myself, I saved myself 10,000 ISK. (But I also made more than that, because I sold the rest of the Nocxium, as well as all the Mexallon, Tritanium and Pyerite.)

It took me some time, but I was going to be mining anyway. I took a small hit, financially because I didn't mine Kernite, and mined Pyrox instead, but in the end, it feels like a win.

---

Also, as Celebro says, I may lose ISK from manufacturing. But, I'm okay with that, I'm a RPer at heart, and I want to run a manufacturing corp, not a mining corp. Today, I feel like I'll be coming out ahead. At any rate, I appreciate the debate. It's making me think about the entire thing.

I definitely don't fall into the Minerals I Mine Are Free category, because I know they aren't free. They just didn't cost me any ISK to buy. Is there a price I could set on them if I were selling them? Absolutely. But, I never mined them with the intention of selling them. I mined them with the intention of using them. So, no cost directly to me, just potential ISK lost because I could've sold them directly.

It really feels like a potato-potahto type situation.

Please continue reading. I'm taking all this feedback to heart, Beckie's point was VERY well received, if I can sell it for more than I can buy it, I should sell it. That's the route I'm going down 99% of the time.

---

Now, I have a question for the group, do you set your prices based on YOUR cost or based on where the market is? I am currently attempting to set my prices where they are both profitable and movable. There is a place where those two lines cross, I'm certain, and I'm trying to hit it. I'm not lowering my prices because I'm not calculating minerals into some of the equations, I'm using the market to dictate my prices (too low and they move quickly, but not much profit; too high and the profit is greater, but they don't move as quickly).
Nevryn Takis
University of Caille
Gallente Federation
#24 - 2012-12-18 18:20:36 UTC
Kiger Wulf wrote:
Now, I have a question for the group, do you set your prices based on YOUR cost or based on where the market is? I am currently attempting to set my prices where they are both profitable and movable. There is a place where those two lines cross, I'm certain, and I'm trying to hit it. I'm not lowering my prices because I'm not calculating minerals into some of the equations, I'm using the market to dictate my prices (too low and they move quickly, but not much profit; too high and the profit is greater, but they don't move as quickly).

If you set the prices based on anything other than your costs then you're up for making a loss.
If the market price is below what you can produce it for (eg T1 frigates (excluding the venture) and T2 cruisers currently) then it's not worth your time and effort to build .. find something else that is.
Also you have to watch the market trend .. if its on the way down .. don't build it or think carefully about doing so .. if it's on the up then build it and sell it .. the trick here is being able to gauge the "rate of sales", "your price", and the market peak ..
Ginger Barbarella
#25 - 2012-12-18 18:45:38 UTC  |  Edited by: Ginger Barbarella
Kiger Wulf wrote:

Now, I have a question for the group, do you set your prices based on YOUR cost or based on where the market is? I am currently attempting to set my prices where they are both profitable and movable. There is a place where those two lines cross, I'm certain, and I'm trying to hit it. I'm not lowering my prices because I'm not calculating minerals into some of the equations, I'm using the market to dictate my prices (too low and they move quickly, but not much profit; too high and the profit is greater, but they don't move as quickly).


I'm not going to presume to tell you what you SHOULD cost your stuff at, I can only tell you what works for me and makes my wallet grow.

The "cost" I use in my calculations is whatever my ACTUAL ("accounting") COSTS are: if I bought Hypersynaptic Fibers 6 months ago and got a killer deal on them and still use them to build Thermonuclear Triggers for my ACs and drones, then that is factored into my ACTUAL COST for those final products. However, if there has been a significant shift upward in the price for hypersynaptic fibers since I stocked up I'll use THAT as a factor in the VALUE I set for those final products (yes, I track that stuff, since I build all my own components). I never--- NEVER--- sell something (like 425mm ACs) below the VALUE I determined for that item in my market (unless I'm dumping stock to get out of an item to move on to something else). I NEVER price based on buy orders, since buy orders tend to be well below what *I* want to make for an item: I will always undercut local market if I'm still making money on something. We're here to make money, not donate to capsuleers, but we're also here to have fun (it's a game, people).

And I never sell in Jita. Ever. Period.

Edit: Oh, and I price based on local (regional) market. Don't care what it's selling for in Jita if I'm 25 jumps out of Jita.

"Blow it all on Quafe and strippers." --- Sorlac
leoplusma
Delfus Inc.
#26 - 2012-12-18 19:27:20 UTC  |  Edited by: leoplusma
celebro wrote:
Interesting thread, you got the spirit to play the game and do something your way. There is nothing wrong with that. As long as you realize you might be losing isk from manufacturing.

You could be earning more just selling the minerals!


i must confess here that in the past,
i have made even more profit
by selling the ore as it is, instead of minerals

you know, if you notice a wicked ore sell order,
always make the math... perhaps the seller need isk
d e s p e r a t e l y and not yet skilled enough to reprocess...
(sound like every newbie in game)

or he may be just an idiot lol

and never forget, a nice idea is to always have ORE buy orders
in systems that are newbinfestated ... :)

kisses / fly strange

leo
Derath Ellecon
University of Caille
Gallente Federation
#27 - 2012-12-18 23:22:15 UTC
Kigen Wulf wrote:
I definitely don't fall into the Minerals I Mine Are Free category, because I know they aren't free. They just didn't cost me any ISK to buy. Is there a price I could set on them if I were selling them? Absolutely. But, I never mined them with the intention of selling them. I mined them with the intention of using them. So, no cost directly to me, just potential ISK lost because I could've sold them directly.


But this is exactly where you do fall into the minerals you mine are free mentality. Especially when you use the costs as 0 for these minerals.

It is irrelevant what your intentions are when you mined them. The minerals have an inherent isk value just by being there, whether you intended to sell the, directly or not.

This is why you should consider the mineral value in your cost calculations. It also helps because at some point you will never be able to mine enough to keep up with your production. In doing so, you will have a consistent price model making profit in both cases, and more profit using the minerals you mined yourself.
Kiger Wulf
Imperial Shipment
Amarr Empire
#28 - 2012-12-19 00:40:22 UTC
Derath Ellecon wrote:
It also helps because at some point you will never be able to mine enough to keep up with your production.


That's been the one hangup I've had with the whole idea, is that at some point I won't mine anymore. This strategy is only effective right now, while I'm making small amounts of things.
Kiger Wulf
Imperial Shipment
Amarr Empire
#29 - 2012-12-19 05:41:31 UTC
I've posted a lengthy update this evening for your consumption. I've appreciated all the feedback, and you Industrialists are winning the argument, so don't say internet arguments can't be won!

www.wulfbrothers.blogspot.com

I look forward to more feedback tonight.
leoplusma
Delfus Inc.
#30 - 2012-12-19 08:53:48 UTC
ahoy Kiger :) i am quoting some phrases from your latest blog post.

Kiger Wulf wrote:
IThe 90 Acolytes were all purchased today. Interestingly, someone bought all 90 of them, but actually paid more for the last 22 than he did for the first 68. I'm not sure what exactly happened there, but I'll take the extra 8,714 ISK. I literally did nothing for that money.


i really look forward to reading comments on this ^^

Kiger Wulf wrote:
Research - I've checked all the lowsec stations in my immediate vicinity that have labs in them (Thank you Ombey). They are all booked solid. This is something I'll have to really start to figure out.


imho if u dont have a pos of your own, then the BEST way to do this
is to make trusted friends :) they will do your research for free :)
i have full researched more than 100 BPO for my eve trusted friends
and i am pretty sure many of us do so...

Kiger Wulf wrote:
Jump Clone - My standings with Ishukone broke 8.0, meaning I can install my first jump clone with a skill book. I don't know what the whole benefit of jump clones is, but I imagine there's a good reason to work on this! What's the most effective way to use a jump clone for an Industrial player?


its quite useful, even for an industrialist, to have jump clones. imagine yourself getting in and out of a friendly wh
(mining and manufacturing inside the wh while your other clone is still in highsec). basically jump clones have
2 important things: ability to appear 3000 jumps away in a second and the different set of implants you may have
on each... i guess its only imagination limited what you can do with them ;)

kisses / fly strange

leo
Derath Ellecon
University of Caille
Gallente Federation
#31 - 2012-12-19 12:51:58 UTC
leoplusma wrote:
ahoy Kiger :) i am quoting some phrases from your latest blog post.

Kiger Wulf wrote:
IThe 90 Acolytes were all purchased today. Interestingly, someone bought all 90 of them, but actually paid more for the last 22 than he did for the first 68. I'm not sure what exactly happened there, but I'll take the extra 8,714 ISK. I literally did nothing for that money.


i really look forward to reading comments on this ^^



The way the market works is that the person with the lowest sell order ALWAYS gets the sale.

So say you had 50 acolytes on the market and you were the lowest sell order, at 1000 isk

Also, lets say there was another sell order for 300 acolytes at 1050 isk.

Now I come along and I need 250 acolytes. If I want to save isk, I will click on your order and buy 50, and then click on the next order and buy 200.

If however I'm lazy, I will click on the order that is higher than yours, but had 300 items. I will then buy 250 at 1050 isk. What ACTUALLY happens however, is that the first 50 I purchase are actually yours, at 1050, and the remaining 200 from the order I actually clicked on.
Chelly Tau
Science and Trade Institute
Caldari State
#32 - 2012-12-20 23:34:36 UTC
Derath Ellecon wrote:
The way the market works is that the person with the lowest sell order ALWAYS gets the sale.

So say you had 50 acolytes on the market and you were the lowest sell order, at 1000 isk

Also, lets say there was another sell order for 300 acolytes at 1050 isk.

Now I come along and I need 250 acolytes. If I want to save isk, I will click on your order and buy 50, and then click on the next order and buy 200.

If however I'm lazy, I will click on the order that is higher than yours, but had 300 items. I will then buy 250 at 1050 isk. What ACTUALLY happens however, is that the first 50 I purchase are actually yours, at 1050, and the remaining 200 from the order I actually clicked on.


I had the same happen to me once and never got around to finding out what went on there, good to know how that happened. At the time I thought it had something to do with people putting up buy orders for more.

So now I wonder, what happens in that situation if you didn't even check sell orders at all and instead decides to put up a buy order for 250 acolytes at 1100? Would I get 1000 ISK per acolyte, or 1100?
Droxlyn
School of Applied Knowledge
Caldari State
#33 - 2012-12-21 03:57:00 UTC
Chelly Tau wrote:
I had the same happen to me once and never got around to finding out what went on there, good to know how that happened. At the time I thought it had something to do with people putting up buy orders for more.

So now I wonder, what happens in that situation if you didn't even check sell orders at all and instead decides to put up a buy order for 250 acolytes at 1100? Would I get 1000 ISK per acolyte, or 1100?



In the real world, you would pay 1100, the seller would get 1000 and the broker would pocket the difference. In Eve, the seller gets 1100 and you pay the 1100.

Drox
Kiger Wulf
Imperial Shipment
Amarr Empire
#34 - 2012-12-21 04:05:51 UTC
Tomorrow, the three batches of goods I have been working on will come off the line. Hopefully, this explains the lack of updates on the blog for today and yesterday.

We'll be back tomorrow!
Kiger Wulf
Imperial Shipment
Amarr Empire
#35 - 2012-12-23 17:02:01 UTC
Greetings, capsuleers.

There's a new post over at www.wulfbrothers.blogspot.com

I'd appreciate if you read it and let me know what you think!
Dudley North
Interstellar Investments and Securities
#36 - 2012-12-23 18:58:52 UTC
The one thing that ultimately saved me a lot of pain was realising that mining,manufacturing and selling are entirely seperate activities and should be priced and calculated as such.

It's tempting to value things according to the end-to-end cost of am item from mined ore to final sale on the market, but that herds you into the MIMMAF trap and is vulnerable to severe losses and missed opportunities.

Say you are making an item all the way from mined materials to selling them on the market, there are multiple seperate processes there:

1.) Mine Ore - OK straightforward enough.

2.) Refine Ore - can you sell the ore for more than the minerals can be sold for? Possible, especially if your refining skills aren't maxed.

3.) Manufacture Item - can you sell the item for more than the minerals cost bought from the market? If not it's a good indicator that you should sell your minerals rather than build a loss-making item! (Forget you already have the minerals in stock - you could reasonably sell them for what they'd cost you to buy!)

4.) Market the Item - can you even sell the item at all? How long is it going to stay on the market for before it sells? Is it going to be stuck on the market that long that it's worth dumping it to an existing "buy" order so effectively you act as a wholesaler passing the pain of selling individual items to people who make money by doing that?

Decisions, decisions! I found that considering each step as a seperate process made things much easier and I was able to compromise on those aspects I ddn't like and do more of the stuff I liked

e.g. I hate marketing. I found that it was worth taking a small hit in sales profits by selling to buy orders in order to massively improve my cashflow so I could buy more materials to make more stuff. Essentially I improved my turnover by reducing my profit margin to the point that I improved my overall income. I was able to do that by concentrating on just the marketing stage of the process - trying to include the mining and refining stages in that decision would have made it wildly over-complicated.
Skorpynekomimi
#37 - 2012-12-23 20:00:05 UTC
Dudley North wrote:

e.g. I hate marketing. I found that it was worth taking a small hit in sales profits by selling to buy orders in order to massively improve my cashflow so I could buy more materials to make more stuff. Essentially I improved my turnover by reducing my profit margin to the point that I improved my overall income. I was able to do that by concentrating on just the marketing stage of the process - trying to include the mining and refining stages in that decision would have made it wildly over-complicated.


Pile 'em high, sell 'em cheap?

Economic PVP
Dudley North
Interstellar Investments and Securities
#38 - 2012-12-23 20:26:53 UTC
Skorpynekomimi wrote:
Dudley North wrote:

e.g. I hate marketing. I found that it was worth taking a small hit in sales profits by selling to buy orders in order to massively improve my cashflow so I could buy more materials to make more stuff. Essentially I improved my turnover by reducing my profit margin to the point that I improved my overall income. I was able to do that by concentrating on just the marketing stage of the process - trying to include the mining and refining stages in that decision would have made it wildly over-complicated.


Pile 'em high, sell 'em cheap?


Exactly! And it's not something I would have spotted had I gone through the whole chain as one huge transaction.
Kiger Wulf
Imperial Shipment
Amarr Empire
#39 - 2012-12-24 04:44:35 UTC
The Planetary Interaction post I promised is UP!

www.wulfbrothers.blogspot.com

Thanks for reading!
knowsitall
Native Freshfood
Minmatar Republic
#40 - 2012-12-24 14:36:02 UTC
I work out what stuff cost by working out what they cost to replace at that point in time. So however i am going to replace them that is the cost.

Eg

raw materials cost me A (at the time i bought them)
manufactoring cost is B
wallet is at C
sell price of all the item (for the quantity i produce) is D

basically i put buy orders (if the market says buy orders are filled in the quantity i need) otherwise the sell price for the quantities i need up for the raw materials . Build the item and sell them.
So long as the below is true
The price to replace materials is E
So if E + B < D it is profitable to produce.
ie A is irrelivant.

If the above is true, you end up increasing your total assets.
You end up with
raw materials (same as before)
wallet = C + D - E - B (but we know E + B < D) so D - E - B should always be a positive number. ie your wallet is bigger than it was before and you have still have all the raw materials you had before.


Knowsitall