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a question about manufacturing profit margins
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Syrinx Saldaner
Perkone
Caldari State
#1 - 2011-11-16 07:53:14 UTC
I am just wondering what is seen as a 'good' profit margin for manufacturing. as in is 5-10% profit seen as good? reasonable but not that great or plain crap and need to look into something else (5-10% was just a random number but I'm sure you understand the question).

What sort of margin should I really be hunting for that is realistically achievable with manufacturing T1 products? I know T2 items can have massive profit margins and also have zero profit margins.

Currently I'm working within a 5-12% profit margin, depending on products and market price variances. Am I doing well for a beginner?
Tekota
The Freighter Factory
#2 - 2011-11-16 09:46:02 UTC
I find it best to look at isk per manufacturing slot per day rather than percent profit. For regular T1 manufacturing my rather lazy target was 10m isk profit per manufacturing slot per day. Important to note that said target is profit after sales tax and broker fees and using Jita sell orders for mineral pricing (even if you bought your minerals elsewhere or via buy orders, set profit calcs to Jita sell orders otherwise you may as well just be mineral trading).

In terms of percentages, some cruisers can reach upwards of 20% profit, but this will still translate to (often under) around 10m per slot per day. Similarly popular battlecruisers run on razor thin margins of maybe 2 or 3% over and above costs/taxes but might still net a 5-10m isk per slot per day profit figure.

In short, the percentage margin is going to be very variable (but always remember to ensure you're calculating that margin correctly) but once you're making any margin over taxes/fees and sell order mineral pricing then what really matters is how much isk per slot per day are you pulling. Like I say above, my lazy target was 10m - it's undoubtedly possible to achieve much better than that.
Syrinx Saldaner
Perkone
Caldari State
#3 - 2011-11-16 10:26:58 UTC
Thanks for the input about profit/day/per slot. Some reason I hadn't thought of it in that light. I was always going by IPH and once I hit over say 600k IPH, I started hunting the highest turn over and profit margin products. I guess that translates to roughly 12 mill/slot/day but I don't run my slots on 24 hour rotations currently. My funds do allow me, but I like the freedom of 8-12 hr jobs, with the slight chance of missing up to an hour of production time a day due to RL things.

Thanks again for the insight, made me think about a few new and possibly viable items to dabble in.
Tekota
The Freighter Factory
#4 - 2011-11-16 10:40:03 UTC
You're most welcome. Isk per slot per hour is perfectly viable as is running in 8/12 hour batches (but do keep those lines running 24 hours a day one way or another), I'd only typically load up for 24 hours minimum because, as previously noted, I'm lazy and can't be bothered to click a button more than once a day :o)

With low margin (that is low percent margin, regardless of isk per slot per hour / day) products it's sometimes inadvisable to load up for too long. It's quite feasible for the mineral basket as a whole to swing a couple of percent in a couple of days and if you're only working on 3% margins to begin with you could end up with some seriously overpriced (or flipside, underpriced) goods coming off the lines.

But so long as those lines are rolling 24 hours a day, whether you stock them 3, 2, or 1 times per day, and so long as you're working out what you're getting then you're golden. Manufacturing doesn't produce the isk per hour of other PVE activities and nor should it - it's advantage comes into play running in bulk and running non-stop.

Best of luck.
GreasyCarl Semah
A Game as Old as Empire
#5 - 2011-11-16 16:24:49 UTC
I only build ammunition right now and I buy all of my ore. I price my ore buying so that I can make a 10%-12% margin if I choose to sell the minerals. When I use the minerals for manufacturing I typically shoot for a 15-20% margin. I also buy and trade salvage parts, I am not interested in buying unless I know I can make 10% on those. I am new to the game but have managed to put together roughly $1.8 billion in assets thus far using these methods.

If you manufacture, you will see that there are certain items that you simply can not make enough of, the price will be stable and you will be able to sell as many of them as you can make at a high margin. Those should be your only items at first. That reliable income will allow you to start experimenting with other things. It will also allow you to hold inventory and wait for price dips to reverse so you don't have to sell into a weak market.
Axearm Thunk'um
Brutor Tribe
Minmatar Republic
#6 - 2011-11-16 20:04:44 UTC
GreasyCarl Semah wrote:
I only build ammunition right now and I buy all of my ore. I price my ore buying so that I can make a 10%-12% margin if I choose to sell the minerals. When I use the minerals for manufacturing I typically shoot for a 15-20% margin. I also buy and trade salvage parts, I am not interested in buying unless I know I can make 10% on those.


If you can make 10-12% on minerals and making ammo only adds, on the low end 3%-8% or on the high end 5%-10%, you are probably better off just killing the manufacturing and focusing on the mineral trading.

Building ammo, at best you are making 10% which is what you make trading mineral, at worst.

Or maybe these are numbers you made up but it might be worth looking at.
GreasyCarl Semah
A Game as Old as Empire
#7 - 2011-11-16 22:04:19 UTC
Axearm Thunk'um wrote:
GreasyCarl Semah wrote:
I only build ammunition right now and I buy all of my ore. I price my ore buying so that I can make a 10%-12% margin if I choose to sell the minerals. When I use the minerals for manufacturing I typically shoot for a 15-20% margin. I also buy and trade salvage parts, I am not interested in buying unless I know I can make 10% on those.


If you can make 10-12% on minerals and making ammo only adds, on the low end 3%-8% or on the high end 5%-10%, you are probably better off just killing the manufacturing and focusing on the mineral trading.

Building ammo, at best you are making 10% which is what you make trading mineral, at worst.

Or maybe these are numbers you made up but it might be worth looking at.


My margin on ammunition assumes I pay market price for the minerals I have. So my total haul on ammunition is going to be 20-30% if I buy the ore. One thing that helps my entire operation is that I have perfect refining in the stations I use. It takes forever to get the faction standing but it is well worth it if you are going to be an industrialist.

Right now I am working on getting perfect refining on mission loot, I have months and months of loot stored up (from getting the faction standing, lol) just waiting to be reprocessed.
Quinc4623
Space Explorers Federation
#8 - 2011-11-16 22:14:16 UTC
I think profit margin as a percentage becomes more relevant if you can create goods representing X% of your capital value in a relatively short amount of time. I've alternating between Tech II modules and rig production. The rigs take a LOT less time to create, so the profit margin as a percentage is more relevant, but for the Tech II modules the profit as ISK/hour is more important.

Though to be perfectly honest I don't do nearly as much number crunching as I ought to...

Either way, the time to buy raw materials and then sell finished products is also worth consideration. Especially since maximizing profits means setting up orders on both ends, and updating them regularly. Tech II modules sell faster than I can make them, not so true with the rigs. Though things can go incredibly fast in Jita if you're willing to log in once an hour.
Scrapyard Bob
EVE University
Ivy League
#9 - 2011-11-16 22:47:01 UTC
If you have less then a billion in capital to play with, expect to only earn 1-5 M ISK/week from a station factory line. That's margins in the 5-15% range (maybe more). Since it's profitable, it's still worth doing (a decent ISK/click number). But you should definitely still be mission running / mining / R&D datacore farming / PI harvest planets in order to increase the amount of capital that you can put into manufacturing line inputs.

If you have over 10B in capital to play with, you can start moving up into the 10-30M ISK/week per production line. Other sources of income like PI / R&D / mining / missions will become less important but can still boost your monthly revenues by a very hefty amount (giving you more ISK to put towards new opportunities).
Syrinx Saldaner
Perkone
Caldari State
#10 - 2011-11-16 23:16:43 UTC
Thanks for the repies. Currently I only have 2-3 bill isk liquid and about 2 bill in stock so not got alot by most peoples standards, but I do have a decently set up PoS I'm using for my production/research and dabbling in invention (just done it a few times, waiting till I have about 4-5 bill on hand before I dive in, just as a buffer if it fails/i screw up).

I used to run with alot of robotics production buying and importing the P2 items and spitting out the P3 Robotics, but that market seemed to drop below my 'not worth my hauling time' thresh hold. The R&D agents I am also working on getting up which I agree would be a great boon to the invention I am wanting to do (another reason I'm holding off on it).

Thanks for the insights and advice guys and gals, I really do appreciate it.
General Sauron
Deep Core Mining Inc.
Caldari State
#11 - 2011-11-17 02:08:52 UTC
Scrapyard Bob wrote:
If you have less then a billion in capital to play with, expect to only earn 1-5 M ISK/week from a station factory line. That's margins in the 5-15% range (maybe more). Since it's profitable, it's still worth doing (a decent ISK/click number). But you should definitely still be mission running / mining / R&D datacore farming / PI harvest planets in order to increase the amount of capital that you can put into manufacturing line inputs.

If you have over 10B in capital to play with, you can start moving up into the 10-30M ISK/week per production line. Other sources of income like PI / R&D / mining / missions will become less important but can still boost your monthly revenues by a very hefty amount (giving you more ISK to put towards new opportunities).



Not true. While having more capital is key to profiting in manufacturing, you can still make good ISK with low capital.

For example, I only have 200 million ISK or so in capital for production at the moment, but I can make 10 million per week per production line. While this may not be true in your area, I can make and sell Scourge Fury Heavy Missiles, which are tech 2 items. They take 1 week to make, and net me 10 million ISK. They sell far faster then I can make them.
Scrapyard Bob
EVE University
Ivy League
#12 - 2011-11-17 05:32:25 UTC
General Sauron wrote:

Not true. While having more capital is key to profiting in manufacturing, you can still make good ISK with low capital.

For example, I only have 200 million ISK or so in capital for production at the moment, but I can make 10 million per week per production line. While this may not be true in your area, I can make and sell Scourge Fury Heavy Missiles, which are tech 2 items. They take 1 week to make, and net me 10 million ISK. They sell far faster then I can make them.


At that point, you're talking about T2 manuf, which is a whole other ball of wax. For T1 production, there's not much that is going to give you that much unless you push a very large volume of ISK through the manuf line each week.
Alisarina
Center for Advanced Studies
Gallente Federation
#13 - 2011-11-17 08:17:01 UTC
making that T2 ammo and only pulling in 10 mill per line a week seems a little low to me, even with 200 mill working collateral. It's 5% profit (assuming all of the 200 mill is invested) per line. Now using 10 lines fro it sure is 100 mill and 50% ROI/Week which is nice, I'm sure you could with a bit of digging find T1 items that allow you to free up a research slot or however many you use to invent the T2 ammo for something else.

Not saying I'm any good witht he whole T2 aspect, but I do know you can make crazy sums if you think outside hte box with it.
General Sauron
Deep Core Mining Inc.
Caldari State
#14 - 2011-11-17 18:23:17 UTC  |  Edited by: General Sauron
Scrapyard Bob wrote:
General Sauron wrote:

Not true. While having more capital is key to profiting in manufacturing, you can still make good ISK with low capital.

For example, I only have 200 million ISK or so in capital for production at the moment, but I can make 10 million per week per production line. While this may not be true in your area, I can make and sell Scourge Fury Heavy Missiles, which are tech 2 items. They take 1 week to make, and net me 10 million ISK. They sell far faster then I can make them.


At that point, you're talking about T2 manuf, which is a whole other ball of wax. For T1 production, there's not much that is going to give you that much unless you push a very large volume of ISK through the manuf line each week.


Sorry. I missed that part about only referring to T1.

That being said, I have three lines consistently making Scourge Fury Heavy Missiles. Each batch costs 15 million and they sell for 25 million. The time to manufacture is about one week. They easily sell in 24 to 48 hours.

I dont invent the blueprints. I just buy them and include the cost into my cost of manufacturing.
Shayla Sh'inlux
Aliastra
Gallente Federation
#15 - 2011-11-17 18:34:31 UTC  |  Edited by: Shayla Sh'inlux
I used to build Scourge Fury on 10 slots around the clock on one of my factory alts. The profit on the entire job is 15 million per slot per 10-run job including the invention costs. Ten runs take 7 days and 7 hours, so it's just under 14,5 million per week per production line. Every component in the job was bought in Jita 4-4 from sell orders. I sold the missiles on my own sell orders as well.

It's by far the easiest tech 2 manufacturing to get into as the required skills are pretty insignificant and the startup costs are fairly low. I did invent the BPCs myself though (@3/3/3 skills) and bought the required tech 1 BPCs in bulk off of contracts. If you buy the tech II BPCs this cuts heavily into your margins, but you'll still end up at a reasonable profit.