Failing to Control a Market - Why Players Fail at the Wow Auction House

Knowledge is power. The difference between a player that understands a market as well as its sub markets compared to a player who only focuses on the 'surface market' is like night and day. A lack of knowledge regarding the web of interacting markets on the wow auction house is what leads to a noob auctioneer focusing all their attention on the surface market.

What is a surface market? Why do 99% of players that try to control a market fail? Let's use some examples.

Let's just make up a name here, um how about Gevy. Little Gevy the goblin is not happy that her netherweave bags are being undercut by two people. They are posting three bags each for 1 gold less than Gevy and she's pissed. An auction house noob like Gevy will look at this situation and think that she has to undercut her competition in order to control 'her' market. What Gevy doesn't realize is that she still doesn't control the market even after undercutting her competition. In order to truly control the 'surface market' of netherweave bags then little Gevy needs to look at the markets that support it. Netherweave bags only have one supporting market and that's netherweave cloth. With a little research Gevy would realize that simply buying up all netherweave cloth below X gold would allow her to force out her bag market competition because they would no longer be able to make bags cheaper than Gevy.

This little bit of knowledge... the understanding of a sub market controling the lowest possible price of a surface market is what makes or breaks auctioneers in world of warcraft. If you understand and apply this concept then you become way more likely to succeed on the wow auction house.

Now expand on this concept and think about something complicated like snowfall inks. Just think for a moment how you would control this item. First off, you need an understanding of not just what creates a snowfall ink but what it's used for. Just because you control it does not mean people will buy it in droves. You need to force the price to your liking but also have it reasonably affordable for the buyer.

Let's see... you would need to regulate the price of every wotlk herb (by regulate I mean constantly buy it out below price X). You then would need to buy the inks themselves below your new threshold for snowfall inks. The price you pick will need to be affordable for someone buying the inks to make nobles or other items.

Ok you ready for a real mental challenge? How would you regulate infinite dust. Just think for a moment about that, really think about every single market that exists which you can create infinite dust from and then the items used to create those items and so on. For an item like infinite dust which has multiple paths to getting to the same goal, ie disenchant a dust, the answer is actually a lot simpler than you would think... find the cheapest way and regulate that.

Regulating is NOT the same as undercutting everyone with the cheapest goods possible. Regulating a submarket to effect a surface market is about taking away items from your competition which they need to craft/modify and compete with your surface market. Stop allowing your competition to set your prices and instead set the competition's! You don't want to end up like Gevy and participate in undercutting wars for minimal profits.

22 comments: on "Failing to Control a Market - Why Players Fail at the Wow Auction House"

  1. And remember, it's not because you have the bags that they have to be on the auction house, when prices go to low, just wait it out.
    Just set a fix price in your head above which you'll never buy resources and don't go "all the way" if you don't have the gold to back it up.

  2. Oh noes not Gevy the Goblin.

    LMAO

  3. I got to interject here, why bother trying to control a market? I'm making a lot of gold per day simply channeling a variety of different items into the AH. Flasks, Dragon's Eye, Epic Gems, Titansteel bars, Titanium, Herbs, Ore, Ebonweave, Spellweave, Moonweave. Basically everything that takes advantage of my professions.

    I normally post small amounts of items that are undercut by a few gold. Posting too many of a certain items drives undercutters into a rage. I'd really prefer my competition to not see me as a threat. There is no point in going to war. At the end of the day I'm still making a ton of gold. With that said, I do agree attacking the source of a specific item is a good strategy in attempting to control a market. It isn't fool proof though, as your competition may have a reliable farmer, or may have a stockpile of mats, or most commonly in the WOW AH game .....not really care if they turn a profit or not. A lot of AH undercutting is really just ego. I've seen prices for items go from a huge profit to well below cost of mats because two players want to prevent their competition from selling. This kind of "market control" is pointless, and futile. Even if you knock your completion out, there will always be new players as getting into the WOW AH game takes no real risk. It doesn't even take capital if you get lucky, and are smart.

    Bottom line. I'm happy with the gold I'm earning per day. Even with all the new gear I've had to gem and enchant, I'm still banking 1-2k per day. I don't wish for the lion’s share of the pot. Gold (as well as real money) is really pointless once you get to a point. I’ve never seen anything sell for over 20k, so if you got 40k you have enough for anything x 2. It’s like being a millionaire while still being concerned about making more money…..although I do find it fun to horde gold, so it’s not completely pointless for me. Perhaps I have a mental disorder.

  4. You are so Right Markco about this thanks.

  5. Silly Gevy

  6. Very nice post, one way to control infinite dust is buy up saronite ore that is cheap and find the suppliers of it, most infinite dust comes from JC's crafting uncommon rings then DEing, because of that infinite dust is at 1.5g, so other outlets include borean leather for leatherworking DE's but JC DE is the cheapest on my server

  7. Subtle but classic.

  8. I'll admit one of my weaknesses (and it is probably the only thing I need to fix to really start making good gold) is reading markets. Knowing when to buy, and when to sell. How/When should I look?

  9. Very nice. People have a hard time realizing that just undercutting isnt the only thing to do.
    like the name too. lol

  10. Any Jewelcrafter knows this first hand, as prospecting is a perfect example.

    You can't control (I prefer influence) the prices of Huge Emeralds if there is tons of cheap thorium ore available to be prospected.

    As thorium ore rises in price, so will the gems, but don't be surprised if it takes a few days or even a week for the lack of supply in the supporting market to affect your gem market.

    I used thorium and gems because that is what I have most experience in.

    BTW, Markco, are you going to post/comment about the whole bullets/arrows sold in stack of only 100, in which a lot of people buy thinking they are a stack of 1000? I admit to doing it...

    At first it was just to see if it would work...and it did, and again, and again. I've probably split about 7 - 1000 stacks into 100 stacks and only once did any return to my mailbox

  11. Well underestimating your competition aside, there's another problem with regulating the dust market. You can't beat the price I pay for dust I get from random heroics when farming for my badge ring/shoulders/headpiece/etc. These items do not need dust for enchanting and so all the dust I win for de rolling is gravy. Why would I care the price I get for it when I dump it on the ah?
    (Okay I admit I do care, because I am in the jc / de business and scroll markets, but what about the million other putters that are not in the market)

    I can regularly pick up dust for 1g each if there's another pugger from my realm in there with me.

  12. Right on man! I totally agree with what you are saying. I'm was getting ready to post on my blog about a very similar topic. Just undercutting is not always the best way to go, especially when there is a small amount of items undercutting with a huge gap to the rest of the pricier items. Items that move quickly need not always be undercut either. Great post.

  13. Wiggin the scam you are doing is exploiting a game limitation which is a bannable offense. I hope justice will be served for all those people you scammed by Blizz catching you and banning your account, making you lose all the scammed gold.

    And I applaud Markco's integrity not to post such a scam+exploit as "tip" on his website like Gevlon did (Gevlon calling the players scammed by this exploit "morons" was the last straw that made me never visit his blog again).

  14. @ Anon,

    Splitting 1000 stacks of ammo and selling 100 stacks is NOT bannable. You sir, fail.

  15. Splitting a stack of items before posting is not exploiting. You can clearly see that it says 100 instead of 1000. Also, if you turn on the option that shows you price per item then there is absolutely no way to be confused about that.

    If people are so lazy they can't even be bothered to LOOK at an item before they buy it, then it is their own fault if they pay a higher price.

    And no, I don't sell those myself. If I did, I would not choose to sell them in stacks of 100 because I wouldn't want to be harrassed by idiots who bought them from me and decided to complain. A little extra gold isn't worth the aggravation.

  16. @April

    To me - a little extra gold is always worth the aggravation... mostly because it doesn't aggravate me - I just ignore them and move on...

    and on the idea of splitting into stack sof 100 - I have every right to sell my product at whatever quantity and price I would like, and you have every right as the consumer to choose not to buy them if you don't like the price...

    very simple example...

    in a convenience store in my state (pennsylvania) I can buy a 20 oz soda for say $1.50 (just using nicec round numbers here) or a 1-liter soda for $1.80 or a 2-liter soda for $2.00 - clearly the best deal is the 2-liter - so why do people buy the smaller ones? some for convenience, some because they can't figure out the simple math that it is more expensive...

    but they all make a choice to pay more per volume for the same product... you have the choice as the consumer to not buy the item at my price...

    if you can't be bothered to do simple math, or check a simple UI option - then you are at fault for buying my product at the price I charge - I am not at fault for posting it

  17. The default UI doesn't show more than 3 digits, thus 100 and 1000 looks the same on an AH listing. Yes that is a scam and an abuse of game systems provided by Blizzard. If you would be so kind to provide your banking toon's name and realm so I can register there and report you in a GM ticket, we can test my theory if you are so 100% sure it's not a bannable offense. :P

  18. @anonymous - I think it's funny you ask for our identities without the courage to show yourself, but more importantly:

    http://lh4.ggpht.com/_TkQUof6Z5gM/SydVPttKckI/AAAAAAAABR0/cwBp0PswcFQ/s800/standard.jpg

    This image shows how a stack of 100 vs a stack of 1000 appear on the AH without any auctioneerng addons.

    People buying the smaller stacks aren't doing so because they can't tell the difference, it is because they sort by price without double checking what they are buying.

  19. When two stacks appear one after the other, the differences are apparent, yes.

    However, in most cases where I've seen someone posting stacks of 100, they usually post 50-100 auctions, making sure not many people will scan forward to see examples of the 2 quantities side by side.

    If it's merely a matter of "conveniece", why not post in stacks of 99 or 101 or any other number that's ~not~ 100?

    Because you know full well that no one is buying your stacks of 100 knowingly.

    The convenience store comparison only works regarding price, not quantity. A 20 oz bottle doesn't look like a 2 litre bottle. The customer makes a concious decision to pay for the convenience of a smaller container. This is more like a customer paying for a package of 12 eggs and upon unpacking them at home finds 1 egg and 11 rocks.

    Is it against the ToS? Probably not. But just because something isn't specifically illegal doesn't exclude it from being ethically questionable and just plain downright annoying to your customers.

    If you're gonna do it, there's no stopping you. But as far as being legitimate business advice, it falls under the same category as "Ninja the loot and hearth out."

    In my opinion, only a "Moron of the Weak" (spelling intentional) would take pride in bragging about what is clearly a scheme to rip people off.

    You're writing to the wrong blog.

  20. Forget it. You CANNOT control the auctionhouse, because everybody is free to post. And yes, you can try to buy that and relist it, but if there is someone who has a cheaper way to make the stuff you want to control you'll go broke. He'll produce even more(it's selling fast) and you'll have to buy more, untill you run out of space or money or more people notice what's going on and make some nice profit from you.

  21. Fully agree with Whitewolf.

    At any rate, I always preferred Markco's blog because he showed integrity and in-game skills, both missing in the case of Gevy(TM). I really wish people who think scamming is a sound business idea would not try to tarnish the image of this blog and would rather go troll a blog whose author shares those same dishonest views.

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