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Planetary Interface - worth it to control entire supply chain? Specific example

Author
Papryka d'Nact
The Scope
Gallente Federation
#1 - 2013-06-27 20:26:59 UTC  |  Edited by: Papryka d'Nact
OK so I've been doing some research in order to get into Planetary production. I found that if I had 3 planets working together - Lava, Storm, and Temperate - then I can produce Wetware Mainframes and Nano-Factories from scratch.

But as I've been running market prices for everything, I ran into something... interesting.

Right now the market price for a Wetware Mainframe is 1,288,299. The component costs are as follows:
Super Computers - 86,311
Biotech Research Reports - 60,613
Cryoprotectant Solution - 48,635

It takes 6 of each to make a single Mainframe. If I were to buy these materials instead of produce them, the total cost would be 1,173,354. That means a PROFIT of 114,945! However if we include taxes etc that profit would probably be greatly reduced, or even negated.

I took that logic to the next step and compared the cost of buying the materials to make the super computers etc, and found that each of them actually LOSE value if you buy the materials and make them. So for example if you make Biotech Research Reports by buying Construction Blocks, Nanites, and Livestock, you'll end up LOSING 47,194.

And going further on, I found the Tier 2 products, some of them are profitable and some are not to buy their materials. So for instance if you buy the materials to make Coolant, you'd come out 12,270 ahead (if you were to sell them at that level), whereas if you do the same with Water-Cooled CPUs, you'd face a loss of 9,195.

So what the hell? Why is the market so destabilized for these products? And does that mean that I should buy some higher tier materials, while producing others from scratch, or should I make everything from scratch?
Katsumoto Moliko
Native Freshfood
Minmatar Republic
#2 - 2013-06-28 06:54:23 UTC  |  Edited by: Katsumoto Moliko
Papryka d'Nact wrote:

So what the hell? Why is the market so destabilized for these products? And does that mean that I should buy some higher tier materials, while producing others from scratch, or should I make everything from scratch?


First of all, round of applause for doing your homework! Big smile

From what I have seen, the market tends to destabilize like this because other players in search of easy isk start noticing the gaps between total cost of the earlier tiers to the higher tiered finished products, and continue to churn out said products until they are no longer profitable to produce by buying the earlier tiers and then producing the products.

Simply put, they also see that Item A + Item B that both have a total cost of only 30,000 isk produce Item C valued at >35,000 isk, and tend to "burn out" these opportunities by continuing to churn out Item C by buying Items A + B and reacting them to produce Item C until the supply of Item C goes over demand and drops in price below 30,000 isk.

Either that, or some other method that puts a lot of Item C on the market which causes a price drop to below the cost of the earlier tiered materials.

As for your question about producing from scratch vs. buying the higher tiered reactants:

This is entirely dependent on how long you are planning on doing this for isk alone. If you are looking for a short term stream of profit, you may benefit more from just buying the earlier tiers you are not producing to just get to the products. If you are thinking of continuing this long term for a steady isk income, you may want to consider obtaining said ability to make everything from scratch.

Be careful of stuff you make for "free." Consider how much time you are investing in going the extra mile, and if it is worth the effort in the long term compared to what you are doing now.
Kathina Tryndal
The Mitre Corporation
#3 - 2013-06-28 10:11:41 UTC
The problem of Planetary interaction is simple:

Low and null-sec planets produce more resources than hi-sec.

That means if you want to produce higher-level products, you really need to extract in low/null-sec and manufacture in hi-sec - because the people you're competing against to sell at a profit are doing that, (and not paying customs fees to boot), and so can sell at a lower price for the same profit.

Buying goods/resources to manufacture higher-level goods in hi-sec is again, not really worth it, either, because there is one way to make an ok amount of money using PI in hi-sec:

Certain P2 goods make a fair amount of money, purely in hi-sec - (such as coolant) - (~10k each) - not a lot of money, but enough to supplement any other income, and the most realistic amount of isk/h without involving low/null.

((Extracted resource (P0) -> refined resource (P1) -> basic manufactured good (P2)).

So if you want to use Planetary Interaction to make ISK, then check what (P2) good you want to make, and then try and find a suitable planet to extract from. I usually set mine up on 2-day cycles, and sell every other cycle (4 days).
Papryka d'Nact
The Scope
Gallente Federation
#4 - 2013-07-01 15:44:48 UTC
I extended my logic out, and if given that I make everything from scratch, then I make more profit selling Tier 2 components bulk than if I combine them into tier 3 OR tier 4! Given the current market averages, the following items are INefficient to produce from scratch for profit:

Tier 4
Wetware Mainframe
Nano-Factory

Tier 3
Super Computers
Biotech Research Reports
Cryoportectant Solution
Industrial Explosive
Ukomi Super Conductors

Tier 2
Synthetic Oil
Test Cultures
Consumer electronics
Water-cooled CPU

I wish I had figured that out BEFORE I set up my 3 production planets >.<
Papryka d'Nact
The Scope
Gallente Federation
#5 - 2013-07-01 15:57:37 UTC
Actually I still come out ahead, each of my planets can produce 2 tier 2 products for profit. And I'm in lowsec so no taxes ^_^
Gizznitt Malikite
Agony Unleashed
Agony Empire
#6 - 2013-07-01 18:27:40 UTC

If you extract materials yourself, and refine them to Tier 1 or Tier 2 products, you always are "making money", assuming it does't cost much to move them from planet to market. This often isn't the "most money", but it is sustainable!

Sometimes, you can make boat-loads of isk by buying tier 2 products and manufacturing tier 3/4 products, but that heavily depends on market swings. These opportunities generally come and go, and so you'll have to watch the market to know when to pull out.

Keep doing your research, and you'll be fine.
Papryka d'Nact
The Scope
Gallente Federation
#7 - 2013-07-01 20:48:53 UTC
Gizznitt Malikite wrote:

If you extract materials yourself, and refine them to Tier 1 or Tier 2 products, you always are "making money", assuming it does't cost much to move them from planet to market. This often isn't the "most money", but it is sustainable!

Sometimes, you can make boat-loads of isk by buying tier 2 products and manufacturing tier 3/4 products, but that heavily depends on market swings. These opportunities generally come and go, and so you'll have to watch the market to know when to pull out.

Keep doing your research, and you'll be fine.



Well according to the numbers I saw, I don't see how it could possibly be economical to manufacture tier 3 or 4 items for a profit. I'm talking several hundred thousand ISK in difference, and that isn't including the customs taxes