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Chris and his pricing tactics, strike again.
Not to toot our own horn, but we're fairly prolific when it comes to getting advice from us about things to make, how to make them, sometimes even what price to charge. However, it occurs to me, as I am posting my glyphs for the third time today, that we have discussed very little about undercutting strategy. That, ladies and gents, is about to change.
The first thing you need to understand about your item, is if the item is fungible. In business, all voting shares of IBM, or Microsoft, or Oracle are exactly the same. They have one price, and nobody's shares are higher quality than anyone else's.
Since your stack of Cinderbloom is not any better than someone else's stack of Cinderbloom (quality factor), players make buying decisions based on two alternative factors: PRICE and QUANTITY. Price is the most effective lever you can pull, although quantity does matter.
If you are lost, prepare to be found: If someone else in the AH is posting the exact same thing you are, either sell your shit for less, or find a way to package it more conveniently. Trust me, nobody who needs 30 Volatile Life likes buying 30 Volatile Life one at a smegging time, even if you have an addon (Auctionator) that makes it not much harder than clicking a button 30 times. And as we have discussed previously, undercutting your competition by a copper will net you 100% of the business, every time.
You can undercut for a copper, and you can undercut by considerably more. See Episode 10 of the podcast for more details on that.
Posting: 12 hour sales, period, especially if you're trying to sell a high priced Epic. Running a business means you should focus on two costs: Top line and bottom line. Top line, is the items you sell and their revenue generated. Bottom line, are the expenses you incur to make those items. These include raw materials, and for the purpose of this discussion, auction house fees. To keep your costs to a minimum, when you are posting an item/good with ANY sort of competition, post your items at the shortest allowable period. If you post for 48 hours, then have to cancel and repost because you have been undercut by a copper, you end up losing more than if you had posted it for 12 hours, and reposted.
Friends List: If Blizzard renamed the Friends List to 'People Tracker', more people would take advantage of this sneaky strategy: put your major competition on your friends list. I don't care if you hate them with the heat and intensity of a thousand suns, you're adding them to your friends list because every time one of them logs on or logs off, you get a little yellow message in the lower corner telling you: Hey, your competition has logged off for the night. Let's go undercut everything he posted. Get it? (To avoid being an easy target, give your bank alt one of those horrific names with the ASCII characters in them - most people will not be able to add you to the friends list because your Bank alt is named "Pàáâãäåæçèéêëy").
Don't Always be the Lowest: Every now and then someone will post an item in the AH and you get a situation that looks like this...
- Random Crappy Item - 1 stack of 1 - 15g 20s 43c
- Random Crappy Item - 10 stacks of 1 - 23g 86s 10g
Don't bother undercutting the first person. Undercut the second person. His supply of one Random Crappy Item is probably going to get bought out (and you can even consider buying it yourself and reposting it if the volume is high enough), leaving the rest of the server clamoring for the 23g Crappy Item from auctioneer #2. Don't undercut the idiot who posted at 15g, undercut the other guy at 23g. If you have 20 of that item to post, you just earned yourself an additional 160g for that one stack, by not being the 'cheapest' in the AH. Experience in a given market will help you learn when it is best to be the cheapest, or the second cheapest.
Pricing: Get your money back. Seriously, do not sell things for lower than they cost you to make. I say this in all seriousness, because you have no idea how many people will devote WEEKS of their life making and then selling items for zero to negative profit. Thankfully, over time they get bored as they make sales but earn no profits, and then they go back to the tried and true method of farming, aka, being poor. Do not get dragged into a price war with an idiot who does not value or respect their time and the cost of the materials it takes to make an item. Farming your own mats IS NOT FREE, but some of your competition will view it like that and sell flasks and glyphs with that incredibly shortsighted mentality in mind.
Who is crazier, the crazy person or the person who tried to match wits with crazy people? If someone decides to move into your current market and put items on the AH so low as to get paid little to nothing, move on. However, keep close tabs on the market, checking it 3-4 times per week, because eventually the morons who don't price in profits, will quit the market. Crafting items is work, and selling finished goods for less than the farmed materials, is something even the dimmest of bulbs will eventually figure out.
Gouging: If you are the only one selling an item on your server, how much do you sell it for? Answer: it depends. If more of the item are potentially on the way (crafted epics, new metas/enchants) then you want to sell your item high enough that you get a decent monopoly price for it, but not so much that you cause people to simply wait you out for a better deal. If the item is somewhat scarce (BoEs from raiding, etc.) and not likely to be replenished soon, then you have a little more leeway because people can't seek guildies or other people to make it for them.
I personally will raise the item 10%-20% higher than the average selling price; pigs get fat, hogs get slaughtered. Don't be a price hog.
(If you need the average price of something, go to the Undermine Journal and check the selling price.)
That's it for now; later on this week, I will talk about actual undercutting tactics. Let me know if there is anything you want me to touch on, but I think this is a pretty good primer for those posting items in the AH.)
-Ryan (Lohrdook/Stilleiro - Hydraxis, Dynam - Gilneas)
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