EVE General Discussion

No, they purchased what you do with your time.

If they could purchase your time, they wouldn't need you.
They could just allocate that purchased time to an existing employee.

Hilariously, EVE is a wonderful, virtual, inverse demonstration of this.
If I buy a PLEX from you, I bought 30 days of your virtual time that I can allocate to whomever I wish.
But I didnt buy you, or what you do.

You are confusing the definition of arbitrary, with this.
I explicitly stated that yours was not the definition I used in my post, for which I provided definition.
You are furthermore conflating economics as a tiny sector, with the totality of the notion of opportunity cost, as a concept, in EVE, or throughout human determination.

Tell me now, what is the monetary value of fun?
Can you give me a concrete universal figure, or do you acknowledge that it is arbitrary?



A person deciding to play EVE, must make IRL opportunity cost choices.
I explicitly stated this, and it is incontrovertible fact.
Assuming they want to play EVE, they must do so either by buying sub with currency earned by IRL means, or expend ingame assets to do so (as a function of earning enough isk ingame).

This is a PERFECT example of opportunity cost and eminently relevant to every single player in EVE.



Seems to me that you are, albeit with no substantiation.
Where is your rebuttal?
The definition does indeed not change.
I applied the definition correctly. I am not attempting to change it.
You are, by refuting that I used it correctly.



Or, you have grossly misunderstood me, or do yourself not understand that the concept of "opportunity cost" is wider than in economic terminology, especially in this virtual environment.

I dont disagree with the term "cost" in the nomenclature of the concept, only in how you and others contrive it to be real, when infact it is not. There is no "cost"or "loss" inherent in making one choice over another, until after the fact

Pining and whining about what you could have gained, had you chosen otherwise, is not material to opportunity cost.
That is just a result of having made a sequence of bad decisions and other circumstances, which make the alternative, seem in retrospect, better.

The concept of opportunity cost, is ONLY a comparative tool to evaluate options so as to inform a choice between them, before making a choice. There is no loss, or cost, in it, in and of itself.

You are confusing a mere tool for aiding decision making, with the outcome of that decision.

The idea that someone is arguing that opportunity cost doesn't exist is kind of astounding.

I bill 150 dollars an hour. It takes an hour to mow my lawn.

I can either spend an hour mowing my lawn... or I can spend an hour working at my computer and pay a kid 20 dollars to mow my lawn.

Unless I get 130 dollars worth of "satisfaction" from mowing the lawn... I'm losing money by choosing to do that as opposed to paying someone else to do it while working at my normal job. That 150 dollars I could be earning is the opportunity cost. It's a real thing. it does exist.

For manufacturing in eve... the opportunity cost is the amount you could get by selling the raw materials as opposed to using them to make a product.

If the raw materials used to make a ship can be sold for 100 million isk... if I can't sell the ship for at least that 100 million isk I'm losing profit off of the materials. This isn't complicated. It's elementary school level math. Manufacturing is supposed to ADD VALUE to the raw materials. If it does not, you don't bother manufacturing.

Think about it this way. Let's say you wanted to USE a ship. Let's say the ship cost 90 million on the market and 100 million worth of minerals to manufacture. Are you going to use all 100 million isk worth of materials to make the ship... or are you going to sell 90 million worth of the materials (keeping 10 million) and just buy the ship?

Most reasonable people would do the later.

Actually, I can understand it being compared to PLEX in another way: players have always bitced and moaned about the rising PLEX prices for like.. all the time!! Yet players still found the ISK to buy them and use em, cause theres alot of activities ingame that can produce disgusting amounts of ISK.

So why can players spend 1.635B ISK(as of writing) for these drones?
Because they have the ISK for it.

Also, this has been mentioned, to producers and sellers: They can pay more! The prices for these should be higher! They're mining so much out there in null, its affecting mineral prices in Hisec! It will probably still sell at 2B, 2.5 even 3B!!

By arguing that your profit margin changes based on if you mine your minerals or buy them is pretty much denying that opportunity cost exists.

And it's really a stupid thing to say.

If you can sell the minerals you mined for 100 million isk and instead you build a ship that you sell for 90 million isk... you lost 10 million isk in potential profit because of... opportunity cost. You lost the opportunity to sell your minerals for 100 million when you instead made a ship you could sell for 90 million.

Raw materials have a value. That value is easily determined by looking at the market. Discounting the opportunity cost of passing on selling those minerals is dumb. So yeah... they're not free... or put better... not selling materials is a cost of manufacturing your product... regardless of how you acquired the materials.

Opportunity cost is just a comparative analysis to inform which choice to make. It is not actually a real cost, despite the name.

If you mine the minerals, it doesnt cost you a single isk. If you buy them, it costs you isk.
Your margins are adjusted accordingly.



You didnt actually lose 10 million isk, nor did it cost you 10mil.
10mil isk where not suddenly detracted from your current wallet balance.

You just didnt acquire those additional 10mil due to your choices.

You are confusing opportunity cost, as a device and concept to compare opportunities, with actual loss or cost.



Not selling your minerals does not change their value as defined by the market. They are not on the market, thus dont change it.
That materials are expended in manufacture, as a cost equal to their value, does not change that if you mine those minerals yourself, you incurred no cost in acquiring them. Infact you saved yourself the expense of buying them

Production expends specific quantities of minerals, regardless of their market value.
This can be construed as a cost, as compared to selling them instead.
But it really isnt, since you chose not to sell them, but to use them in production instead.
You didnt "lose" the value of those minerals, nor their cost.

Example 1:
If I mine, or buy, a gold nugget, I can sell it at market value
OR
I can produce a piece of jewelry from that gold, and earn more than its weight.
If I choose the latter, I didnt "lose" the value of the gold, nor did it "cost" me the value of the gold, as opposed to having sold the nugget.
The gold is still there in the jewelry, as value of the material, as well as my added value.

Example 2:
-You need 1000 minerals, which are currently valued at 1 isk per unit, to produce x.
-If you buy those 1000 minerals at 1isk per unit, you expend 1k isk.
-If you mine those 1000 minerals yourself, you expend 0 isk.
-Thus your margin is 1k isk higher, if you mine them yourself, rather than buying them.

Whether you choose to buy those minerals, or mine them yourself, incurs a concrete cost only if you choose to buy them.

This notion that as a result of a choice you have "lost" or it has "cost" you something, as opposed to having made another choice, is applying the concept of opportunity cost a**-backwards.

You cant lose something you never had, nor can something you never chose cost you something.

Opportunity cost is something you consider beforehand, before making a choice.
Its not something you apply after a decision, as if it cost/lost you something had you chosen otherwise.

I'm just going to answer this one because everything else seems to be based on this incorrect assumption.

I worked for 5 years writing and supporting software for a large textile manufacturing company. That company had multiple plants dealing with fiber formation (creating polyester), spinning the fibers into yarn, weaving or knitting the yarn into fabric, applying chemical treatments and dyes to the fabric and then cutting and sewing that fabric into final products.

My area was mainly dealing with financials (though I did quite a bit of programming for the manufacturing processes as well).

Simply put... at ever step of the manufacturing process we tracked both the cost to manufacture and the market value of the product. And at each step we'd cost the raw materials at the MARKET cost, not the cost for us to make them (as we tracked each step as a distinct business... "fabric formation", "spinning and knitting", "fiber formation", etc.

When our plants weren't able to create fiber at a cost that beat what we could purchase fiber at... we shut down our entire fiber formation business and instead bought fiber to spin and knit from others. Even though those businesses were still profitable on paper due to the value added later in the manufacturing process, we shut them down...

because materials aren't free... even if you make them yourself. If you don't include the market price of materials and instead you use an internal price, you can't judge where the profits actually come from. In our case it wasn't coming from fiber formation. In the case of eve if you view minerals as free, you'll find you may be losing value from manufacturing a product (or manufacturing the wrong product) that you won't be able to see unless you cost your manufacturing at market raw material prices.

Look... I'm not more than a dabbler in eve manufacturing because it feels too much like a job to me. That kind of thing was a large part of my job for many years. But I'm telling you your view of opportunity cost is not how manufacturing works in reality. And I'm betting none of the more successful eve manufacturers share your view of calculating profit margins as "mined minerals are free". If you cost (and thus price) your product based on that assumption, you're shooting yourself in the foot.

I think I see the problem you're having... and it has to do with not understanding cost accounting.

When figuring out your cost to make a product, you have to price raw materials. You are pricing raw materials at 0... because in your example you expended nothing to get those materials.

That's simply not the correct way to do it. You price the raw materials at the market value.

Why? Because you need to identify if your material acquisition is a profit center or a loss center in your process. It's a separate business unit from the manufacturing.

So... in your example, let's say your finished product sold for 2000 isk. If you mine your own materials, you made 1000 isk from mining... and 1000 isk from manufacturing. If you just bought the materials your manufacturing profit would still be 1000 isk. You would just have passed on exchanging your time mining for the 1000 isk profit there.

Why is it important to cost it this way? Well go to my example.

You mined minerals that can sell for 100 million isk. Your mining profit is 100 million.
You then manufacture a product with those minerals that you sell for 90 million isk. Your manufacturing profit is -10 million (a loss).

Regardless of where you get the materials, your manufacturing is running at a loss. Yes, you're covering that loss with your mining operation... but if you're not costing it out properly you lose the visibility of the fact you're actually LOSING money by manufacturing the product you chose to make.

A) Yes, if you manufacture a product that is worth less than the value of its constituent minerals, that is a real loss.

B) Nobody is stating that self sourced minerals should be considered as having 0 value

C) But they are nonetheless free to someone that has acquired them without cost. They gain that asset (and hence its market value), for free, without cost.

I'm telling you that manufacturing businesses DO view opportunity cost as a real cost.

The cost of a raw material when determining the cost to produce a manufactured good is NOT the cost that you get the material at if you gathered/manufactured/mined/harvested it yourself. It's the market price.

You get a false view of the profit of your manufacturing process if you cost the raw materials at anything other than market price. You're blending the profit of your material acquisition (in this case... mining) with the profit from manufacturing. These are two different sources of profit.

This is an opportunity cost... because you can choose to sell what your mine or use it for manufacturing. At that point there is a market price and that price is the cost of materials for the manufacturing process regardless of how you acquired the materials. That market value has to be used to compute the profit of the manufactured product or else you're blending your material acquisition profits with your manufacturing profits... which will hide how profitable each aspect of your business is.

If you collect berries, you're acquiring materials. The market price of those berries tells you how much your material acquisition made in profit.

If you make pies from the berries and make more than you could from the price of the ingredients (including the market value of the berries) your pie manufacturing process is profitable. If it's not then it is not profitable.

This goes for a business owner's time working as well. If you're working at making pies you should pay yourself what you would pay someone else to make those pies when looking at costs. When costing a product, nothing is free.