Science & Industry

I'm sorry Steve, and you don't?

Some people, as always has been the case in Eve, can't do maths and will drive market prices down to next to nothing. I've seen a large drop in Capital Equipment Sell prices on the market already, some having lost over 3m per item. I'm assuming this is from people taking the reduced production time now and massively undercutting the market. Something I'm sure you're well aware of from peoples understanding of maths & effort in this game.

Aside from those that can't do maths, and seem to think that 5-10% is a great profit for all the time and work involved, how do you see this turning out? I only see it as increasing prices in the longer term, as many things take longer to produce but some larger items now take a little less time (fighters, bombers, capital equipment). There is an obvious impact to null/low sec cap builders here, where large volumes of mineral supply come from empire. I don't expect floods of miners to be going to null sec, and to be honest I'm still amazed mining in this game is still in the shape it's in.

I will be glad if I am incorrect, but I too agree that prices will be going up. Look at what has happened to much of the T2 ship market prices already, and whilst I understand and appreciate speculation will occur around patch times, I think those prices are going to stay or increase further.

I will be happy to being proven wrong.

I don't pay attention to margin.

I pay attention to isk/hr, which is far more important, when your assets reach a certain point. High margin is useless, if you can't invest enough into it to make a decent profit in concrete isk terms.

I'm not saying prices won't rise (Some certainly will, with the changes to T2 materials with rebasing) but it's the /spiral/ that I contest.

Isk/hour is a better measure.

Margin is just the gap between your purchase and sale. On it's own it's a relatively pointless figure, even in business. Margin alone is not profit. It's no good having a great margin if you can only cycle that margin once in a while. You're better off making a smaller margin lots of times within the same time period. So if you have 10m isk, and you can make 1 sale a week that nets you a 50% margin, you'll make 5m. But if you can make a 5% margin twice per day, even without compounding you'll make 500k twice a day for 7 days, making 7m in the week. So you're better off picking that faster selling item with the lower margin.

When you get to the higher end of industry, high margins really aren't sustainable, and you waste too much time with your isk sitting on the market waiting for the orders to sell.

No offense meant Steve but I think this is limiting your viewpoint somewhat.

There are three essential ways to make sustainable profit by manufacturing in EVE, from what I've seen and experienced over the years:

1) Build commodities and sell *everywhere*. We started our corp selling ammunition. Sure, ammunition isn't great isk/hour when you throw it up against, say, a covert ops cloaking device. But several players (note, not characters, but players) can make a LOT of ammunition working together, and then list it up to sell everywhere. Not only that, but the skill requirements are minimal, even for the T2 stuff. In terms of raw isk we made billions (at very high profit margins) selling ammunition in a very short time, enough to allow us to bootstrap our corp into the things we do now.

2) Build high isk/hour things and sell in one (or two or three) spot(s). This is the method that most solo industrialists that I have come across tend to use. It's not bad, but many folks doing it put themselves in a vulnerable position - vulnerable to market shifts, vulnerable to competition (because everyone else looks at isk/hour too), vulnerable to snags in their supply chain. Even worse, many of those folks overproduce and end up competing with themselves, by encouraging people in the markets they sell in to try to undercut them. Obviously, the best people following this approach have planned ahead in order to be able to rapidly retool production, or have diversified a bit, or at the very least have made allowances to handle things like resource price spikes and so on, but the vast majority of people following this approach don't do it perhaps as smartly as they should.

3) Build high-return items and sell strategically. This is what my corp focuses on now. The key to this approach is realizing that how you sell an item is as important as how you make it. You can't just go flood the market with this stuff, you have to understand how much you can list and where you should be listing in order to maximize your gain over time and resources invested. In different terms, you're looking at all three values - profit margin over resource cost, isk per hour, and sales volume and planning your production chain out to incorporate all three.

Put another way - Think of production like an investment. You want to get more money out than you put into it at the end of the day. As an industrialist you have to choose between high, low, and medium risk AND return items.

In my experience the best combination for sustainable profit over time is a diversified set of products that includes both higher-risk/higher-return items and low/medium-risk/medium-return items. With one player, this is hard to pull off simply because of the limits that real life and the game impose on you. However, a small corp of even just 4-5 players working together can take this approach and make trillions over time. You not only need to have your supply chain down (and now your operational logistics, post-Crius), but you also need to really understand the markets and even more importantly, human behavior in those markets - both the behavior of your buyers and other sellers you're competing with.

TL;DR: I think it's disingenuous to say that ISK/hour is the only thing that matters. It's important, yes - but margin per item is important too, as is historical sales volume and market behavior in your chosen markets. I think it's dangerous for newer industrialists to focus exclusively on ISK/hour, as it can lead them into poor decisions that actually make it harder for them to get their businesses off the ground.

Anyway, just soapboxing a bit.

Interesting stuff over the last few posts. I think I have been doing my industry all wrong then :), I have made ISK, several billion ISK and I was happy with that, I made stuff that I fancied and it was, and I guess still is used as a method for me to replace PVP loses, buy shinies and generally be comfortable knowing that I have some ISK behind me if I need to spend out some dough unexpectedly.

Before Crius and before I stopped my indy in anticipation of it I was thinking that my wallet balance, whilst going up, was not going up the way I want it to, ie quicker lol.

I don’t mind admitting I don’t really understand the market, market trends, price history and its relevance etc but I see something that sells at X price, I research and I can make at Y price which will give me Z profit and that was fine for me.

Now despite my hate for this price index lark, industry is certainly more interesting and I am currently training account alts in more invention type skills but (despite reading a number of online resources) I cannot seem to get my head around in depth market stuff and I guess that is and will be my downfall in terms of making lots of isk more quickly.

Whether or not an item crumbles overnight has nothing to do with it's margin. I've personally collapsed high margin prices just to hear the screaming. And when you get to large scale industry, you generally won't find high margin items sustainable. And the funny thin is, by being snobbish about margins and ignoring how fast you can cycle a given item, you are often doing yourself out of profit, which at the end of the day is the part that matters.

Consider why an item is high margin, could it be because nobody is producing it, because it produces less profit in a given timespan than a lower margin item?

To those, who complain
Ok - move out from industry.
After patch my profits on investments rose from 5-15% to 50%.

My profits on my investments to date IRL this year are at about 126%!!

Context matters.

you can still use ISK per hour, that tool has not been updated yet.

however, that's completely useless. the fundamentals have changed in such ways that you can simply no longer compare the old and new way.

if you want to ramble about the advantages ebil nullsec empires have about poor little highse industrialists, you need to compare the two directly. you can easily do that at http://eve-industry.org/calc/. you will find out that the advantage for the ebil guys is much lower than you thought it was, especially if you consider all the things that need to be paid before and while you are producing. the cheapest way to get access to a nullsec system is renting. the shittiest station system you can rent costs 1.5b a month, a station that offers a real advantage costs ~60b, a JF costs ~6b and needs a lot of fuel to run. recalculate that and try to run highsec out of business once again.

unfortunately for my massive profits jita is telling me i was not the only one to go big on ships, we're now all fiercely .01isking each other and my margins are no longer so obscene they might be illegal and are now merely good

so basically the overmen of industry have already replaced all of the people bleating that they are fleeing industry