Market Discussions

When did "I make my own PI" and "I manufacture my components" join "I mine the minerals so they are free" to become the prevailing economic wisdom in EVE?

Admittedly I've never been much of a manufacturer, but I recently stumbled on an item in jita that doesn't make any sense. Using perfect T1 and T2 prints the inputs total 360m in jita for production. This excludes build fees, system cost index fees, pos fuel, brokers fees, taxes, and time to build the items. Plus the upfront cost of the T1 and T2 bpos.

Producing from invented prints can add another 20m to the price tag + the cost of the bpc.

Yet when I look at the units for sale in the forge (nearly all in jita 4-4) virtually every single one of them is listed at a loss. There are multiple sell orders at 314m and the buy orders are at 300m even. How is this even possible?

If you have a pile of components sitting in your hangar that you can sell for 360m in jita they are worth 360m. It doesn't matter if you mined the trit, produced the PI, or built the components yourself. The mats are still worth 360m. Putting those mats in a cooker with a print to produce something that is selling for 314m in jita means you lose 46m+ per unit produced. This makes absolutely no sense.

Since they were selling these at a loss I decided to buy all of them that were below build cost. I bought everything <360m. I paid about 320m average price for the lot. I also placed buy orders at 300m since that was the highest buy order price. I then relisted all of the units at 360m so they would at least be selling at build cost instead of a loss.

I sold a number of them at 358m. Surprisingly people actually sold them to me at 300m buy order price during this same time. I noticed that at least 1 person who had an earlier sell order also later filled my buy order price which means he is likely a producer.

I thought about messaging him and suggesting he send me 60m isk once per day (about the production time) and not produce the items. this way he loses the same amount of money, but doesn't have to do all the clicking.

So now I'm 10b deep into this venture, and they keep selling them to me at 300m/unit.

On the sellers side after a couple days of having the only units for sale on the market more units showed up. they quickly 0.01 isked themselves almost back to where it was before. I considered lowering my prices, but if I do that then i'm doing the same thing of selling them under build cost. Thus I repriced all my units higher to about build cost +7% or 385m a unit. I suspect they won't sell fast with this strategy. :)

I feel like i'm catching falling daggers here. I'm not sure how many of things I really want to own. :) I would think even if they aren't smart enough to realize they are losing money that eventually they will feel it in their wallets and change their behaviour. Or am I too optimistic?

Not to be a killjoy, but I think your too optimistic. I'm sure your numbers are correct and logic is sound although you may have missed a key variable of xxx^x number of illogical people in the game. The power of those people is enough to ruin any spread. The really bad part is even if you wait out that guy, another one will probably take his place.
/cynicism

They seem to be doing pretty good at the moment.

This is hilarious.

What's the sales history on this item, for Forge and other regions?

And the market then shrinks with 1 item per day. Don't forget to mix that in your sell strategy.



This is completely true: "I make my own PI" and "I manufacture my components" join "I mine the minerals so they are free", have several corpies who do not understand this is not true.

Beside that, your isk wallet is bigger as most EVE players, don't turn that against them.

Think to consider when other people dump stuff under cost in jita;

• Corp ore buying programs are paying under price most of the time, producers then can produce under cost.
• People dumping out speculation stocks, if you made back your initial invest, you can sit on the rest of your stock for ages, without any direct isk losses. Indirect isk losses however could make you dump out on any price.
• Inter regional traders who are dumping from buy orders all over EVE to sell orders in jita, don't care about the profit, they care about turnover.

It's possible the input materials (let's say minerals) used in production were purchased by speculators, and they are using manufacturing as as way to sell their stock. Manufacturing also compresses the minerals, and you have to take into account the shipping cost that you save (or the shipping cost that people incur by moving the minerals to Jita). Minerals are a hassle to move, and I'm sure you know that 99.99.....% of the minerals are not mined at trade hubs.

If you have say 600 Billion worth of minerals spread out evenly across the mineral basket, it would be quicker to sell minerals as well as ships.

So it's possible that someone holding a big mineral stockpile choose to manufacture ships as a way to liquidate their holdings, as well as selling the minerals themselves.

Manufacturing also has the effect of compressing the minerals. Take the Megathron BPO for example. A Megathron requires about 120,000 M^3 of minerals. But the Repackaged ship is just 50,000 M^3.

So if you have a few hundred Billion worth of minerals located in some remote system (as many corps / alliances do), it would be easier to manufacture the ships, rather than directly selling all of the minerals, because it would save a few shipping trips, and also the market cannot absorb all those minerals.

But when they are shipping, they also have to be careful about not turning themselves into a high-value target, because if their cargo is too valuable then they are subject to ganking. And Courier contracts would not work if the cargo value is too high, as not many couriers will have the ISK to put up for collateral, or willing to take the risk.

You have no idea how tempted I have been to do this with piles of mineral that I know were purchased in 2008. I have considered doing "Minerals I got in 2008 are free" several times.

I don't see what there is not to understand

Whoever is selling these things to you, either doesn't care about the money, just wants to build them, or is getting the materials at a far cheaper rate than your calculations and is therefore making a healthy profit

I am a vertically integrated producer - not because it is the most efficient way to do business, but because I enjoy participating in every step of the value chain. We are, after all, playing a game - not running a business. None the less, my business is very profitable because I've learned - through trial and error - what works.

One point overlooked in this conversation is that a single character can mine, harvest PI, invent, manufacture and sell their finished goods simultaneously. With a few skills like scientific networking and supply chain management, you can run your business siting in an exhumer just as easily as sitting in a station and the minerals you harvest don't need to be purchased. You can debate the opportunity cost of selling the ore instead of incorporating the minerals into manufactured goods and selling them instead but - bottom line: if you are making isk and enjoying the process, you're doing it right!

Why do firms (corporations) exist? Why not have everything done in the market place? Or think about this,



In other words, suppose you find a buyer and he'll buy your goods at regular intervals. Would you charge him a different price than you might charge if you tried to sell the goods on the market? Maybe give him a slightly better price than he could get off the sell orders on the market? After all, this could be a long term relationship (i.e. more than just a buyer-seller relationship). You benefit from selling all of your goods immediately vs. taking time to sell them to many customers. He benefits by getting a large quantity and possibly not having to travel around picking up smaller amounts in many systems.

In other words, markets are great, but they aren’t so awesome that corporations do not form—i.e. there is still a benefit to integrating your process.

In EVE by building your own components you are not paying somebody else’s mark up, taxes, fees, etc.

Using this website,

http://eve-industry.org/calc/

We see that building an obelisk costs 1.858 billion ISK, and you can sell the obelisk for 1.317 billion ISK. However, if you build your own components, e.g. Capital Propulsion Engine, it will cost 1.285 billion ISK and you make a 25 million profit. Part of the reason is the cost of the things like the Capital Cargo Bay cost you far less than buying them off the market. In other words, there is a considerable mark up on the Capital Cargo Bay.

In short, market transactions are not costless. Transaction costs are a thing.