Science & Industry

Well I though I might as well post on this as I am one of the evil people that do the large price drops all the time, I have to admit I love the tears that I get with it all the time. It is amazing how many people will buy 1 unit of some of an item I unload just to see who is selling it. BUT that being said the main reason I do it is for the stupid profits I make off it, I loved how the one guy said billions a week like it was something special. The way I look at it why bother buying off buy orders when I can knock the price of the Item I want down to just about build cost hold it there and get a bunch of guppies under me selling there wares. Jack my price back up and buy out all the under priced goods' Takes a little bit of capital to do and have been burnt a time or do but for the most part I love the little one's filling my orders and doing most of the work for me.

Sometimes, when I'm bored, I get a spare industry alt to build a massive load of something that has a good margin at the cheapest possible price I can. I'll often pick an item where the buy orders would still make me a profit. I then nuke the margin on that item, with massive undercuts until I bring the margin down to a point where buying then reselling would cost more in tax than the profit. Then I chuckle to myself a bit.

OP, you're assuming a) people are doing it the exact same way you are with the exact same skills, and b) that they are selling below market value (assumed by your post). First, they may be producing the stuff more efficiently than you are, and may CHOOSE to sell below the current market value because they have plenty of room to do so. Maybe they're not interested in playing your inane .01 isk game: I ROUTINELY undercut current market price when selling mission drops just to sell the items. I really don't give a crap a) what the mineral value is and b) what anyone thinks about me doing it. You don't like it? buy my stuff. Help me pad my wallet even further and free up my sell orders. Much appreciated.

Everyone's already addressed the PVP aspect of market pricing, but there is another element at work: people undervalue their own time. Too many industrialists don't factor in the time element into their pricing, especially if they're mining their own minerals. This is one of the biggest differences between the EVE economy and the real economy -- in the real economy, you have to value your time at market value, or you'll go broke pretty quick.

The economic term for this is "oppportunity cost". Basically, it means "is the ISK I make from doing thing Y equal to or greater than the ISK I could make doing thing X". That's why mining your own minerals if you're a manufacturer is almost always a bad idea: the time you spend out in the belts busting rocks is almost always better spent doing something else with higher ISK return. If you price your product without factoring in your time, you're pricing it too low.

But, again: EVE is a game, so by definition people value their in-game time very cheaply. (Otherwise they wouldn't be playing a game, they'd be doing something else.)

Now, it's not all ISK. Maybe you enjoy sitting in a belt mining sometimes. It's some quiet time to make some ISK while you're semi-AFK, or just chatting with friends in local. Maybe you need to generate some ISK to replace ship losses in PVP. BVut these are still ways of valuing your time -- it's not a fixed value, but a variable.

On the "supply" side of the supply -and-demand machanic, the most precious resource is always your time.

I too must confess to purposely undercutting, but probably not for the reasons mentioned or assumed. I constantly research the market and study blueprints and have never built anything i couldn't profit on. I buy all my materials and seldom mine anymore. Anyone who has manufactured a while always finds that special item that sells for 3 or 4 times its cost to build. (For a while anyway) I make simple tech 1 stuff all the time at good profits. As an example...............

A year or so ago the enormous container was introduced. They became popular with miners, especially ice miners, as they lasted longer than jettison containers and held a lot of cargo until your corp freighter came to empty them. Mining ops flourished after their introduction. I was making and selling them in a lot of ice and ore systems. Back then they cost about 250k isk to build and were selling easily for 750k isk and eventually over 1 mil isk. I made thousands of these and the boom lasted quite a while too. Guess what?? I wasn't the only one making these things. Other manufacturers were making them and selling them for the same inflated prices. There seemed to be some kind of "code of silence" where nobody bragged about their huge profits and the factories just kept rolling them out. Eventually the profits started to fall as i knew they would. I had 2000 of these in systems all over and they stopped selling. Since I already had my fun making billions off of them I suddenly dropped my prices to 10% over cost everywhere. I giggled in my overstuffed chair each time my wallet blinked as i sold each one of them for a "meager" 10% profit!!!

I used those containers as an example. They aren't nearly as profitable now. I have found many other items since i have exploited the same way. Everything i manufacture and sell has been carefully calculated. I have made a few mistakes but never any large enough to bring me down. Whoever could have told me i could have fun with spreadsheets?? LOL -chuk

The good thing about other people crashing a market is that it drives down the price. That means reduced margins and that means people stop making stuff. And that means that a shortage is about to develop. You can make a lot of money of shortages.

Plenty of big companies routinely sell below market "value" because they often make up for it in other ways. See Amazon & Microsoft (Xbox) for starters. Same concept applies, only here you get wanna-be economists screaming "opportunity cost!!!" without really having a clue what it means in practice.

Yup, if you don't like how a certain item is trading in a certain system, I would move or switch items. Problem solved :)