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PI Commodities Valuation

Sebiestor Tribe
Minmatar Republic
#1 - 2015-05-13 07:08:10 UTC
Are PI commodities free? I want to say no since you can always sell them for ISK on the market but you also don't spend any time making them, and my time is what I value the most. You can set up your planet to run for 2 weeks and then come and pick up the goods all while doing something else for ISK, or conversely nothing at all. I am currently running T2 production and was wondering how to value my PI commodities. Should I look at the Jita average? Or the highest Jita buy order? Surely not the highest Jita sell order? I doubt anything would ever be profitable if I did that. Can I use my own PI products to help me be more competitive with my T2 items?
I started producing my own robotics due to the price being more than I'm willing to pay on the market which was 66k ISK at Rens. My personal opinion is since my PI is low risk and mostly hands off why not devalue it in my production costs to help make T2 more affordable. Just curious if anyone else has thought about this and what their conclusion was.

Shiloh Templeton
Cheyenne HET Co
#2 - 2015-05-13 13:35:56 UTC
I created PI setups to supply materials I needed for invention or to build BPC's I found exploring. Sometimes I find that it's better to sell the PI when there's a price spike.

Zebra Corp
Goonswarm Federation
#3 - 2015-05-13 13:36:28 UTC
You can't devalue it when factoring it into production costs for one very simple reason:

You can sell the PI commodity for price XYZ on the market.

You have to factor this into your calculations as otherwise you may end up making less money than selling the PI products and other materials raw and thus saving you the TIME in making the product (as you said time is of more value, making products at a loss compared to selling the materials is the definition of wasting time...and slots).

Now you may be one of those 'what I 'mine' is free as I didn't pay for it' type of people. In this case the 'mined' item is PI materials. Even if you didn't pay for them, they still have RESALE value on the market and are thus not free, simply potential profit locked in the product till you sell it for the highest amount possible.
Sebiestor Tribe
Minmatar Republic
#4 - 2015-05-13 14:39:43 UTC
So T2 is just a waste of time at this point at least with the modules I'm building? No I don't feel they are free cause I mined them they do have a resale value I get that. I'm just miffed that controlling the supply chain doesn't make things cheaper/less competitive for me, EvE market seems a little messed up.
Also isn't it normal for a large industry to use its profits from a more lucrative product in order to subsidize the expense of a less lucrative product in order to undercut and control the market of said product? Wouldn't PI Commodities be the natural starting place to do this since you only have to cover the installation fee and import/export taxes of the goods?
Tau Cabalander
Retirement Retreat
Working Stiffs
#5 - 2015-05-13 18:37:10 UTC
Please contract me all free resources you harvest.

I'll even reimburse you 10,000 ISK for the contract.
Sebiestor Tribe
Minmatar Republic
#6 - 2015-05-14 07:40:35 UTC  |  Edited by: Kaydance
I think the conflict is the idea that you have to sell it for the highest amount possible. You don't have to sell it for the highest amount possible and I wouldn't think this is always the best marketing strategy. I can sell a toilet for 10,000 to an idiot that doesn't mean every toilet company has to sell their toilet for 10,000 or they are a sucker.
A business doesn't just look at profit margin per unit but also the volume moved. So if I produce 10,000m3 a week of robotics and I sell it for the highest amount possible but only move 5,000m3 per week of my product I wouldn't be making more than if I sold it for slightly less and moved the entire 10,000m3 before I finished my next batch. So if someone is making more money per week than the person who is selling their item for the highest amount possible then they are making a greater profit. So this should translate to my T2 production costs as well, my base cost for the PI commodity included in the T2 item is the import/export tax divided by the amount of PI commodities produced plus an acceptable level of profit.
Again PI is different than mining in the fact that their is no time investment the only investment is the startup of the facilities and the upkeep/overhead from import and export taxes; once you sell the commodities to cover those costs then everything else is profit. I suppose if you are a real stickler you can add the price of your time to haul the goods around and the cost of the skill books. Either way each planet pays for itself and then some after the first load. Unless you are the kind of person that values themselves at 1bil ISK an hour in which case you probably wouldn't be doing PI for the ISK anyway.
The acceptable level of profit for raw materials seems to be pretty subjective and based on what you are willing to sell them for or how long you want to wait before they sell. I prefer to sell everything in a day or two and make enough to cover my base costs and make a decent profit.
Free for me doesn't mean it will be free for you Tau, but I don't actually think my minerals or commodities are free. A more accurate statement would be cheap for me doesn't mean it will be cheap for you, but it'll probably be cheaper than most. Big smile
Infinitus Sapientia
#7 - 2015-05-17 05:13:30 UTC
When you are using your own materials I would use lowest Jita sell price to value them, since that's what you'd otherwise have to buy at to manufacture.

If you can't make money manufacturing at minimum Jita sell prices, you might as well just sell your stuff in Jita. If you can only make money using maximum Jita buy prices, then you might as well just resell the stuff you buy instead of using it to manufacture.