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Invention & T2 BPOs - Will this ever change?

Author
Karim alRashid
Starboard.
#41 - 2011-10-10 12:11:07 UTC
Malcanis wrote:
To put things in perspective: if you're an inventor, the biggest squeeze on your profits is not T2 BPOs, but the owners of Technetium and R64 moons.


The owners of Tech and R64 moons affect T2 BPO owners too, so in that aspect they are on equal starting position with inventors (or better, because they consume less materials).

And the cost of materials is passed onto the consumer, anyway.

Pain is weakness leaving the body http://www.youtube.com/user/AlRashidKarim/videos

Skyly
Baba Yagas
The Initiative.
#42 - 2011-10-10 12:12:10 UTC
TBH I would argue that, whatever the percentage of a given ship / module coming from T2 BPOs, it is largely irrelevant as it should be a pretty tiny number.

There were only ever a limited number given out (as you know) and these were to match the size of the playerbase back then.

When you say "I can't produce X, Y or Z profitably because someone is undercutting me" it is most unlikely to be due to a T2 BPO. Look at the margin's on T1 stuff (for which there are BPOs widely available) and you will see the same issue. This is because people either built the ship / mods "cheaper" when market prices were different, or don't fully understand the worth of the materials they are putting in to construction (Mined minerals = Free ship, right?).
VaMei
Meafi Corp
#43 - 2011-10-10 12:12:37 UTC
Karim alRashid wrote:
A lot of ships are completely unprofitable to invent, while the market price is such that it makes them profitable to produce even from a ME0 BPO.


Some ships may be unprofitable to invent, but if you're looking at ships like Command ships, Blops & Mauraders, I don't think it's because of all of those BPO holders.
Skyly
Baba Yagas
The Initiative.
#44 - 2011-10-10 12:15:24 UTC  |  Edited by: Skyly
Karim alRashid wrote:
Malcanis wrote:
To put things in perspective: if you're an inventor, the biggest squeeze on your profits is not T2 BPOs, but the owners of Technetium and R64 moons.


The owners of Tech and R64 moons affect T2 BPO owners too, so in that aspect they are on equal starting position with inventors (or better, because they consume less materials).

And the cost of materials is passed onto the consumer, anyway.


What Malcanis is getting at is the OP is likely being undercut by people that have the contacts to get Technetium at a reduced rate, therefore massively cut down on their costs.

This logic is flawed as it's not what you paid for the resource, but what it is worth that should matter when building, but people still do it (I.E. "I got the ship for free because I mined the minerals myself").
Karim alRashid
Starboard.
#45 - 2011-10-10 12:22:25 UTC  |  Edited by: Karim alRashid
VaMei wrote:
Karim alRashid wrote:
A lot of ships are completely unprofitable to invent, while the market price is such that it makes them profitable to produce even from a ME0 BPO.


Some ships may be unprofitable to invent, but if you're looking at ships like Command ships, Blops & Mauraders, I don't think it's because of all of those BPO holders.


For BlackOps and Marauders there no doubt. Lol

For Command Ships there is doubt.

CCP can clear it, by releasing information what proportion of each Command Ship (and other ships) is produced from BPOs and from invented BPCs.

Sleipnir is (marginally) profitable to invent. Absolution, Damnation, Claymore are not, but somehow I don't consider them "fail" ships, like, say, Eos, for which one is even wondering why it is produced at all, BPO or invention. Big smile

Pain is weakness leaving the body http://www.youtube.com/user/AlRashidKarim/videos

VaMei
Meafi Corp
#46 - 2011-10-10 12:23:09 UTC
Skyly wrote:
What Malcanis is getting at is the OP is likely being undercut by people that have the contacts to get Technetium at a reduced rate, therefore massively cut down on their costs.

This logic is flawed as it's not what you paid for the resource, but what it is worth that should matter when building, but people still do it (I.E. "I got the ship for free because I mined the minerals myself").


When you're talking about an individual with minimal market control/influence, you are right. When you're talking about a consortium that is able to price everyone else out of the market, not so much.
It's not just how much profit you could make if you did this or that, it's how much profit did you make relative to the competition. If you price them out, you make less profit than you would have, meanwhile they make nothing.
Lucas Kell
Solitude Trading
S.N.O.T.
#47 - 2011-10-10 12:23:29 UTC
Tippia wrote:
Lucas Kell wrote:
like i said above, I have previously run into this issue before I moved to my current location, and though it deserves a discussion.
Then you need to address the arguments made in Akita T's thread and try to debunk them. Good luck with that one.


…you're going to need it.

It's not really that hard, it's not really very well thought out or constructed.

Points 1 & 2 are the same, and miss the definition of fair.
Fairness is about everyone havign the same opportunity. People that were around during the lottery, win or lose had the same chance. New people don't. That's unfair.

Points 3 & 4 are bascially the same and the same argument we are having here. Ignoring T2 items that BPOs dont exist for, as they don't come into it, BPO vs invention is in favor of BPOs and thats stated in her own post! This makes me laugh:
Quote:
It does give them SOME advantage, in form of cheaper production cost... but it is by no means an UNFAIR advantage, as it comes at great cost. Sure, it's maybe not actual cost, but opportunity cost (the option to just sell the T2 BPO)... yet it's still a cost.

Like the cost of owning a BPO is that you have to decide whether or not to sell it. I wish I had a cost like that. Having to decide whether to make stuff with a BPO I got for free, or sell it for high billions of ISK. That's not a cost, that's just a business decision.

And as for point 5, sure the market would spike, but it would stabilise, and when it didnt there would be no more prices that meant inventors had to sell at negative profit or sod off.

I'd go into more detail on all of the above but I have to go out so you get the short version. Damn you real life!

The Indecisive Noob - EVE fan blog.

Wholesale Trading - The new bulk trading mailing list.

VaMei
Meafi Corp
#48 - 2011-10-10 12:27:26 UTC
Karim alRashid wrote:
VaMei wrote:
Karim alRashid wrote:
A lot of ships are completely unprofitable to invent, while the market price is such that it makes them profitable to produce even from a ME0 BPO.


Some ships may be unprofitable to invent, but if you're looking at ships like Command ships, Blops & Mauraders, I don't think it's because of all of those BPO holders.


For BlackOps and Marauders there no doubt. Lol

For Command Ships there is doubt.

CCP can clear it, by releasing information what proportion of each Command Ship (and other ships) is produced from BPOs and from invented BPCs.

Sleipnir is (marginally) profitable to invent. Absolution, Damnation, Claymore are not, but somehow I don't consider them "fail" ships, like, say, Eos, for which one is even wondering why it is produced at all, BPO or invention. Big smile


My mistake, I'd thought that Command ships were in the same boat. If not, then it goes to the point I made above, where the existance of those BPOs provides supply of things that wouldn't otherwise be built. Who knows... I might want to buy an Eos one of these days rather than flying my T3 (not likely, but it could happenBlink)
Smoking Blunts
ZC Omega
#49 - 2011-10-10 12:30:14 UTC
Lucas Kell wrote:
Tippia wrote:
Lucas Kell wrote:
like i said above, I have previously run into this issue before I moved to my current location, and though it deserves a discussion.
Then you need to address the arguments made in Akita T's thread and try to debunk them. Good luck with that one.


…you're going to need it.

It's not really that hard, it's not really very well thought out or constructed.

Points 1 & 2 are the same, and miss the definition of fair.
Fairness is about everyone havign the same opportunity. People that were around during the lottery, win or lose had the same chance. New people don't. That's unfair.

Points 3 & 4 are bascially the same and the same argument we are having here. Ignoring T2 items that BPOs dont exist for, as they don't come into it, BPO vs invention is in favor of BPOs and thats stated in her own post! This makes me laugh:
Quote:
It does give them SOME advantage, in form of cheaper production cost... but it is by no means an UNFAIR advantage, as it comes at great cost. Sure, it's maybe not actual cost, but opportunity cost (the option to just sell the T2 BPO)... yet it's still a cost.

Like the cost of owning a BPO is that you have to decide whether or not to sell it. I wish I had a cost like that. Having to decide whether to make stuff with a BPO I got for free, or sell it for high billions of ISK. That's not a cost, that's just a business decision.

And as for point 5, sure the market would spike, but it would stabilise, and when it didnt there would be no more prices that meant inventors had to sell at negative profit or sod off.

I'd go into more detail on all of the above but I have to go out so you get the short version. Damn you real life!



eve is fair?? news to me

OMG when can i get a pic here

Tippia
Sunshine and Lollipops
#50 - 2011-10-10 12:30:30 UTC  |  Edited by: Tippia
Lucas Kell wrote:
Points 1 & 2 are the same, and miss the definition of fair.
Fairness is about everyone havign the same opportunity.
…which everyone does. That's the whole point.
Quote:
People that were around during the lottery, win or lose had the same chance. New people don't.
New people have the same opportunity to get their hands on a BPO. So yes, it's fair.
Quote:
Like the cost of owning a BPO is that you have to decide whether or not to sell it. I wish I had a cost like that.
Ugh You do. Every time you produce something. It's just that it is much higher for T2 BPOs.


Btw, last time we got any numbers on it, 97% of all T2 jobs and 67% of all T2 items produced in EVE were done from BPCs…
Also, the determining factor between the profitability of BPOs and BPCs is whether or not they respond to a great demand in the product — BPOs are only ever marginally useful when there is no demand for the product, so the amount of money you make from one is equally marginal.
Tallian Saotome
Nuclear Arms Exchange Inc.
#51 - 2011-10-10 12:31:35 UTC
Lucas Kell wrote:
[quote=Tippia]And as for point 5, sure the market would spike, but it would stabilise, and when it didnt there would be no more prices that meant inventors had to sell at negative profit or sod off.

I'd like to make one small suggestion to you. Fire up your manufacturing calculator(you DO have one, right?) and set up a build of say, a single run of T1 ammo. It will show you that you are manufacturing at a loss. Now, increase the number of runs. You will see that your per unit loss decreases with each increase in volume. Eventually, that item, which you lost isk on for making single run on, will turn you a per unit profit, once you make enough of them.

http://en.wikipedia.org/wiki/Economy_of_scale

The same basic rules apply to ALL manufacturing. The more you make, the more profit per unit. This is why invention is more profitable that everyone with a T2 BPO would be. If everyone had them, then the noobs would use them, and the people making money would run invention and actually turn a profit due to the volume they are able to trade at.

Nowadays all T2 BPOs really are is status symbols.

Inappropriate signature removed, CCP Phantom.

Lucas Kell
Solitude Trading
S.N.O.T.
#52 - 2011-10-10 12:45:13 UTC  |  Edited by: Lucas Kell
Tallian Saotome wrote:
Lucas Kell wrote:
[quote=Tippia]And as for point 5, sure the market would spike, but it would stabilise, and when it didnt there would be no more prices that meant inventors had to sell at negative profit or sod off.

I'd like to make one small suggestion to you. Fire up your manufacturing calculator(you DO have one, right?) and set up a build of say, a single run of T1 ammo. It will show you that you are manufacturing at a loss. Now, increase the number of runs. You will see that your per unit loss decreases with each increase in volume. Eventually, that item, which you lost isk on for making single run on, will turn you a per unit profit, once you make enough of them.

http://en.wikipedia.org/wiki/Economy_of_scale

The same basic rules apply to ALL manufacturing. The more you make, the more profit per unit. This is why invention is more profitable that everyone with a T2 BPO would be. If everyone had them, then the noobs would use them, and the people making money would run invention and actually turn a profit due to the volume they are able to trade at.

Nowadays all T2 BPOs really are is status symbols.

Yes I do, and are you mental?
if you were losing 10 ISK per item, and you made 5 items you'd lose 50 ISK. if you are making a loss, you won't suddently make profit cos you made a million of them.
I can only think you mean cos you are weighting the cost of the BPC against a single run, when its a multi run BPC, which is silly as you'd balance the cost in your initial calc.

Really, I don't know what you are getting at.

[edit]
Just to clarify based on your link, you're not applying economies of scale directly to EVE are you? Cos you are aware that doesnt work for EVE right? Economies of scale works because buying in bulk reduces overall cost of raw material, and manufacture in bulk reduces per item cost of things like rent on a building and other overarching things like that. It doesnt work in EVE since its a flat system. If 1 item costs 10 ISK and takes 1 minute, 5 items will cost 50 ISK and take 5 minutes
[/edit]

The Indecisive Noob - EVE fan blog.

Wholesale Trading - The new bulk trading mailing list.

Karim alRashid
Starboard.
#53 - 2011-10-10 12:50:15 UTC
Tallian Saotome wrote:

I'd like to make one small suggestion to you. Fire up your manufacturing calculator(you DO have one, right?) and set up a build of say, a single run of T1 ammo. It will show you that you are manufacturing at a loss. Now, increase the number of runs. You will see that your per unit loss decreases with each increase in volume. Eventually, that item, which you lost isk on for making single run on, will turn you a per unit profit, once you make enough of them.

http://en.wikipedia.org/wiki/Economy_of_scale

The same basic rules apply to ALL manufacturing. The more you make, the more profit per unit. This is why invention is more profitable that everyone with a T2 BPO would be. If everyone had them, then the noobs would use them, and the people making money would run invention and actually turn a profit due to the volume they are able to trade at.

Nowadays all T2 BPOs really are is status symbols.


This is an extremely contrived, misleading and wrong example.

In every production jobs, there are cost per item unit, cost per time unit and a starting cost.

If you item cost exceeds the items sale price after taxes, increasing the volume will only increase you loss. And that's the case with many ships.

Pain is weakness leaving the body http://www.youtube.com/user/AlRashidKarim/videos

Smoking Blunts
ZC Omega
#54 - 2011-10-10 12:52:52 UTC
Karim alRashid wrote:
Tallian Saotome wrote:

I'd like to make one small suggestion to you. Fire up your manufacturing calculator(you DO have one, right?) and set up a build of say, a single run of T1 ammo. It will show you that you are manufacturing at a loss. Now, increase the number of runs. You will see that your per unit loss decreases with each increase in volume. Eventually, that item, which you lost isk on for making single run on, will turn you a per unit profit, once you make enough of them.

http://en.wikipedia.org/wiki/Economy_of_scale

The same basic rules apply to ALL manufacturing. The more you make, the more profit per unit. This is why invention is more profitable that everyone with a T2 BPO would be. If everyone had them, then the noobs would use them, and the people making money would run invention and actually turn a profit due to the volume they are able to trade at.

Nowadays all T2 BPOs really are is status symbols.


This is an extremely contrived, misleading and wrong example.

In every production jobs, there are cost per item unit, cost per time unit and a starting cost.

If you item cost exceeds the items sale price after taxes, increasing the volume will only increase you loss. And that's the case with many ships.



i think tahts more of a case of the minerials i mine are free. you cant change that mentality unfornatly

OMG when can i get a pic here

Tippia
Sunshine and Lollipops
#55 - 2011-10-10 13:01:35 UTC
Lucas Kell wrote:
Just to clarify based on your link, you're not applying economies of scale directly to EVE are you? Cos you are aware that doesnt work for EVE right?
His example is incorrect, but for rather different reasons, but no, economies of scale most certainly exist in EVE.
Jack Paladin
State War Academy
Caldari State
#56 - 2011-10-10 13:05:52 UTC
T2 Invention is absolutely profitable, you just need to know what to invent and where to sell it.

I am inventing 3 items and mass producing - 1000 items of each per week.

Profit per week roughly 800m-1000m AFTER costs.

TIP: it helps if you can arrange a supply contract with a regular buyer.

T2 BPO's fail - market fluctuates. Invention allows you to adapt to market trends. T2 BPO leaves you out of wallet - especially once you calculate how long/how many items you need to produce just to pay off for the damn thing before you actually make a profit.
Xtraneous
Sam's Space Guys
#57 - 2011-10-10 13:17:09 UTC
I started playing after the BPO lottery was replaced with invention and I fully support keeping existing T2 BPOs in the game.

There are many arguments for keeping them but personally I think they should be kept because they represent 'end-game' content that can be accessed by casual players.

When I started I built T1 missiles in Motsu, and progressed through invention, cap ship production, reaction towers etc to finally purchasing my first T2 BPO after I'd been playing for 18mths. For large stretches of this time I've played effectively solo due to time constraints. Today I have a fair collection of T2 BPOs and make reasonable ISK from them for the time I play.

I've done nothing special - anyone starting Eve today could work towards owning T2 BPOs if they desire.
Lucas Kell
Solitude Trading
S.N.O.T.
#58 - 2011-10-10 13:28:16 UTC
Tippia wrote:
Lucas Kell wrote:
Just to clarify based on your link, you're not applying economies of scale directly to EVE are you? Cos you are aware that doesnt work for EVE right?
His example is incorrect, but for rather different reasons, but no, economies of scale most certainly exist in EVE.

Could you elaborate?
Other than finding someone that will give ou a bulk discount, or taking POS costs into account (Which I don't as I cover the cost of my POS outside of manufacture)

The Indecisive Noob - EVE fan blog.

Wholesale Trading - The new bulk trading mailing list.

Tippia
Sunshine and Lollipops
#59 - 2011-10-10 13:37:59 UTC
Lucas Kell wrote:
Could you elaborate?
Other than finding someone that will give ou a bulk discount, or taking POS costs into account (Which I don't as I cover the cost of my POS outside of manufacture)
Any time you have a cost that remains consistent no matter how much you produce in one go, or an item that is reused across several runs, you get economies of scale.

NPC slots have an install cost, for instance, and yes, the running costs of POSes go into that category as well (regardless of whether you choose to amortise that cost over your production in your books). For invention, in particular, we have the creation cost of the BPC itself — most notably the costs of decryptors and interfaces (although whether the former generates scale benefits or not also depends on the supply of decryptors).
Karim alRashid
Starboard.
#60 - 2011-10-10 13:39:10 UTC
Lucas Kell wrote:
I cover the cost of my POS outside of manufacture


This makes no sense whatsoever.

You MUST cover your POS costs with manufacture. If not, then there's no reason to do manufacture at all, just do what you used to do in order to "cover" you POS costs and you'll have bigger income.

Here's an example, if something is still not clear.
Taking into account only recurring costs. Say, you have a medium POS, which takes 160M/month fuel cost. You cover you fuel cost, say, with missions. In the same time, You profit from the POS less than 160M/month, say, 159M, Remember, the proposition is you don't cover you POS costs from manufacturing.

Bottom line:
+160M from missions
+159M from manufacturing
-160M for fuel

159M profit

If you don't have a POS at all:
+160M from missions

160M profit

Pain is weakness leaving the body http://www.youtube.com/user/AlRashidKarim/videos