Money & Dr. Teeth

The lore of Warcraft had always interested me more than maximizing the amount of gold I made while playing. I vendor trashed everything I wasn't using: whites, greens, blues, everything! It was all grays to me. Markco's work on the AH and my own economic ideas came together to try to make a better return on my items than just vendor trashing.

I have received several whispers in-game and with a little of Markco's prompting, I've
decided to share how I made 2,000 gold in less than three days, by applying simple supply and demand economics in the virtual world. So here goes!

The Goldclover Experiment

I picked up herbalism to prepare for Wrath, and consequently I had lots of herbs in my
bags. Since I had so much goldclover (more than 10 stacks of 20) I decided to try my
technique with that. I went on the AH and checked all the prices for goldclover and found
a rough average for a stack as well as for individual goldclovers.

About 2/3 of all the auctions were way more expensive than the average.

I spent several thousand gold and grabbed up all the goldclover on the AH, while
simultaneously posting all those herbs just higher than the average I had calculated,
about 10% more. This created the following scenario: The vast majority of the herbs on
the AH were mine and all posted for the same price, while those not posted by me were
very expensive. Undercuts happened here and there, which I promptly bought out and
reposted to my new average.

My auctions now looked like a fair price.

In three quick sentences, this is what I did:

  1. Became the primary supplier of a gold clover.
  2. Monitored the price of gold clover by buying out undercuts that fell below the average I wanted to maintain.
  3. Once I felt that prices were going to fall again, I stopped buying out herbs and let the market correct itself.
This Method is Risky
New people are constantly putting items on the AH. You are always at risk of being
undercut either by someone who knows what they're doing, or the noob who doesn't know
what anything is worth. Because of this, I had to be vigilant about the price of my
commodity. All of my auctions were put on the shortest time possible to allow me to
follow changes in prices more quickly. If the auctions were selling for more, the next
round went up higher. If the auctions weren't selling, I had to drop the price.
I had to research to make sure that the herb would even be in demand and sustain this
kind of inflation. Remember, you're trying to raise the price as high as the market will
bear. Raise it too little and you'll lose money instead of making money. Raise it too
much and market demand will collapse, leaving you with a stockpile of goods no one wants.
The more demand for an item, the higher you can raise the price.
In Conclusion
I know that anyone could use this strategy to make money. I also know that this method has
an incredible amount of risk associated with it. I had to plan ahead to get my timing just right for the marketing of this herb.
But, risk isn't enough to keep me or anyone else away from the chance to make money! As
Dr. Teeth of the Electric Mayhem said:

Don't want no lovin,
Don't want no kissin,
Don't want no gal to call me
honey.
Don't want my name,
In the hall of fame,
Just want a big fat
pile of money!

6 comments: on "Money & Dr. Teeth"

  1. This is an excellent post for anyone interested in 'playing the market.' There's a lot of inherit risk but a whole lot of profit in this method as well. I'd advise doing this kind of thing after building up a decent amount of gold.

  2. I think it's worth emphasizing that you need a HUGE treasury of funds before even thinking about attempting anything like this. I made a stab at simultaneously controlling the Cobalt Ore and Saronite Bar markets on my server and it wasn't long before the money wasn't coming in fast enough for me to outpace the undercutters. (Saronite in particular was a stupid gamble - it's much too abundant for anyone to monopolize, and the deposit cost is insane.)

  3. Yes obviously you need a lot of capital to pull this off. But if you have the gold, huge profits can be made. The size of your server also affects this method a lot.

  4. While I don't necessary agree with their judgment, isn't doing this considered an exploit by Blizzard, and possibly a bannable offense?

  5. In response to Dave, no it is not a bannable offense. In fact there is nothing you can do no the AH that will get you banned. Atleast as far as pricing goes.

    If this method is a little too extreme for you (it does take a big bank roll and is really risky), I'd recommend checking out http://justmytwocopper.blogspot.com/2009/01/video-bid-low-sell-normal.html

  6. I think the seller has to consider other variables as well, including the perception of the seller by the buyer. I don't think I'm the only one that sees only one seller of an item and is apprehensive.

    One strategy I have used to address the above, while also trying to control the price of a certain item is by sending the same item to alts and have them post their items at an even larger markup, this is a short term way to artificially inflate the price of an item, as they see multiple sellers with your main's being the lowest (but still above the average)

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