Science & Industry

I find it hard to believe that people 'dabbling' in tech 2 production is the cause for low profitability.

I would lean more towards people being stupid in some form or another, ie. minerals are free if I mine them.

This is especially egregious in T2 Ship production. 5 M profit on a 95 M Crane ? Yup. Absolutely not worth it and I abandoned all T2 ship production months ago.

But the pathetically low sell orders for T2 ships is a direct result of the use of T2 Ship BPO's that have been Researched within an inch of their lives, and need to be burned at some point (but that's another thread).

Not sure why the same is true for modules though. Just plain and simple Market PvE ?????

It does NOT have to do with T2 BPOs, and you just noted some of the evidence of that yourself, even if you failed to realize what it meant. There are tons of T2 modules and ships that have razor profit margins or are sold at a loss that do not have any T2 BPOs associated with them. It is entirely due to the spectacular failure of manufacturers to do basic math when it comes to what the real costs of production are. That's not even limited to T2 items, there are plenty of T1 items that sell for less than their manufacturing cost, and have for a long time. The T2 market is as much or more affected by the "stuff I mine/manufacture myself is free" crowd as the T1 market is. If people have the ability to mess up basic math of T1 items, of course they're going to screw up the more complex T2 chain.

Most common contributors to people wrecking the T2 market :

Failure to properly take into account the cost of the blueprint. Easily the most common mistake, and usually it's made by valuing the blueprint simply at the cost of that single run of datacores and decryptors. Not only would that only be true if the research job had a 100% success rate, but it also ignores the cost of the blueprint copy.

Pricing your components incorrectly part 1 : using buy order prices. Pricing using buy order prices is wrong because the buy/sell cost spread is not actually manufacturing profit, it's trade profit. If you use buy order prices to manufacture something that is not profitable at sell order prices, then you are most likely losing money by manufacturing it at all, and would be better just selling the components to sell orders after buying from buy orders, you'll probably end up with more money (or at least a smaller loss). Manufacturing costs need to be calculated using the same thing you're going to sell the product to, which usually means sell order/sell order.

Pricing your components incorrectly part 2 : using the base price of manufacturing the component yourself. VERY wrong, and also very common, this is a big part of why T2 ships are unprofitable. People often perform earlier portions of the production chain themselves, and all too frequently they will use the basic price of the first step in the chain and keep applying it from there. This usually means that for that producer, making that T2 ship is overall profitable. But they usually fail to realize that most or all of the profit is from making the components, not the ship. Caveat : this CAN be a correct assumption IF you are simply using the ship manufacture as an easier way to sell your manufactured components. Components don't sell very easily, but ships do, so while the time spent researching and building the actual ship is wasted, it does make those components easier to offload.

Stuff I mine/produce is free. Really just a continuation of some of the above errors, this manifests itself in many ways. From the dude who mines the minerals to produce the base T1 product that the T2 is built from (thus underestimating the cost) to the guy who runs his own tower chain, building the components up from reactions or even from the moon goo itself. There are so many places in the T2 production chain to make this mistake, and it's made ALL THE TIME.

So really man, stop whining about the BPOs, because not only do they not have much of an effect, but it serves to draw attention away from the actual problem, which is the same problem that causes so many products to be unprofitable : incompetent competition. There are as many or more unprofitable T2 items that have no associated BPO as there are ones that have BPOs. It's just that most of them are modules, so it's easier not to notice.

See I think this area is just a matter of how one setups their business model and process. If an item won't sell for profit in a trade hub, I don't make it. If it does sell for a profit, I make it, then see if selling locally is worth while or not.

The worth while part has to factor in how quickly an item sells and what not. No sense trying to sell a worm at say 100 mil isk if no one ever buys that ship in your local market. still, my method factors on your concept of trade profit, I just don't call it trade profit, but rather extra markup.

Yup, very true.

The other thing to do is find your niche. For example, long before I started inventing, my main indy alt lived at a POS in a wormhole. While there, I trained anchoring to level 5 so I could become a POS gunner. When we lost learning skills, I poured those skill points into warp jamming so I could anchor t2 large warp disrupt bubbles. My main pvp toon could fly a hic and had enough standings to use a level 4 r&d agent for grav physics datacores.

Between the two characters, I realized I could fill the t2 mobile warp disrupt market in my area at a good cost. It's a small niche, but good.

This also gets into supply chain management.

T2 warp disrupts require t1 versions. T1 require t1 warp scrams.

Manufacturing t1 warp scrams is a loss, so those you buy.
T1 warp disrupts fluctuate, but still tend to make a profit when I do the manufacturing. Still, i need to check this before each batch to maximize profit.
T2s always make a profit. When I sell them out in my local hub, the profit triples and I seem to be one of the few suppliers.

So really becoming profitable at t2 items is a matter of figuring out what sells, what makes a profit, how to maximize that profit, and how to increase markup by selling away from a hub.

True, but this also depends on skills and attention requirements. Yes, whle playing skyrim on my 360, I could have also tried to run level 4 missions. It would have been a pain. At the time, I chose ice mining as the least attention intensive task that still assisted my indy empire.

That said, a lot of this boils down to how much attention wish to pay, the effort you wish to put forth, and how profit driven you are.

In my example of the mobile warp disrupts, t1 warp scrams can be made at a loss of 400 isk per I believe. You may be able to make more isk mining than traveling to a hub to buy the modules. Or you could just be lazy, view the loss as minor, ans make your warp scrams. I mean is the loss of 3600 isk profit worth the trouble.

It's a manufacturing profit if you manufacture it close to where you sell it (or possibly it allows you to make a trade profit on components you get cheaper elsewhere that you couldn't unload in that system). I guess it depends on the difficulty of shipping the finished goods vs. shipping the ingredients.

My problem with T2 manufacturing is that the full time from invention to production can be too long, which means if you see a golden profit opportunity, likely 20 other people have also seen it and are trying to produce the same thing, but you can't tell until the time you try to sell your stuff and end up playing the .01 ISK game for days. The supply doesn't respond to demand quite fast enough. And that's how you get stuck with 400 runs worth of T2 Tachyon BPCs (The mods were worth 6m each when research started, now more like 3.6m )

This also gets into the other problem. Some of the "good" ISK you can make per item is really bad ISK/hr because T2 mods take so long to make.

Very true, and I forgot to note that you have to take into account the effort of shipping. As Lady pointed out, going through logistical hassle to save what amounts to pennies on the dollar doesn't make much sense, particularly if your manufacturing base is in deep lowsec or 0.0. In those cases it is certainly better to manufacture something that might be slightly cheaper in Jita so that you can sell it to the higher priced market. This holds particularly true for large-volume objects that would require carriers or jump freighters to move.

The extreme length of T2 production is a problem I'm running into right now as well. As you note it makes market fluctuations hurt more, but it also severely depresses the actual Isk/time slot values. Some products have good margins and look like they will remain so, Marauders for example, but the length is so long that I would make more by just continuing to use my manufacturing slots for the T1 products that I'm producing now. It's really starting to look like final product production for T2 is actually going to end up losing me potential profit.

The thing is, 3.8 million per day per slot boils down to just 158K per hour per slot. There are a number of T1 products that make 8-10 times that much per hour per slot, and it's dreadfully easy to find T1 products that break at least 400 or 500k per slot per hour. They're much easier to produce, since you don't have to bother with invention, and most of them have extreme demand. I'm really beginning to think that my invention slots would be overall losers if I used them.

I see a lot of whining and complaining but no real solutions. Perhaps it's because the solution lies with you and your process and it's easier to blame someone else for your market ineptitude.

Consider the following: So what of people sell below cost? How does that affect you? Take any item - The price isn't the deciding factor here, volume is. If you have a low volume item then the price will lower to meet supply. Maybe someone is pissed they got stuck with a bunch of that item and want to get *some* isk for it. How is that a problem? If it was a high volume item and you set the price way too low, again - who cares? The low price item will be quickly bought. If its low volume, ding ding ding - don't make it! In both cases, it's your problem not the people you seem to want to blame for your problem.

If everyone is doing the stuff in the posts above, then the market will self-correct and those that don't use buy orders (not required btw - I buy tons of stuff off sell orders) or take into account bpc or datacore costs will eventually run out of isk.

Your problem lies with you. Why do I know this? Because I made billions making T2 by analyzing the market and not making whatever I wanted but instead making what the market wanted.