"Hey Markco/Call to Auction.
There is something that has been bothering me when I read a lot of forums posts. There is a concept that I believe you may not have addressed yet in your blog/podcast and it is really fundamental piece of information that all Auctioneers need to understand. Money is made on the BUY not the SELL. The best way to beat undercutters is by buying.
"It is at the time of buying when you set yourself up for future profits. But the profit potential that you control is 100% related to your buying decision."
This concept is often misunderstood when someone is complaining undercutters posting below cost. In all likelihood they are not. Unless they are trying specifically to drive competition out nobody will ever post below cost without it being a major mistake. Most of the time when people are complaining about posting below cost they fail to realize that the other person is posting below "your" cost, but probably not theirs.
This loops back to the aforementioned concept. You make your money when you buy, whether that be for flipping or raw materials for crafting. We're dealing in goods where everything is equal and there are very few factors aside from price that influence a buyer's decision. Now that we've acknowledged that we can assume that it only takes one person to set a price ceiling. As long as they keep one auction up all the time at a certain price they have set that limit. Sure you can post above it all you like but you will never sell your auction unless there is a demand spike or someone mistakenly pays more to you.
Now lets apply this concept. That person that is selling below "your" cost is very likely still making a profit if you are basing cost on auction house prices. This means they are getting their materials cheaper than you. This also means they win. Now in order for you to try to "muscle" them out with undercutting you will not only have to sell below your cost, but also below theirs thus taking additional losses. If their cost is below the auction house then we can reasonably assume that you can not manipulate their supply through control of the materials on the AH either. Now you are left with a losing game. On a long enough time line you are going to take greater losses and have to give up.
The real game is buying. Beat your competition buy buying cheaper than them and you always win on the sale end.
You are correct Dale, as I've stated with buying low and selling normal, it's all about getting something cheaper than your competition and posting for the value a consumer is willing to pay. When people state "that strategy doesn't work, the competition are posting below market price" they are wrong. The competition is posting for the value they can and still turn a profit, barring any unusual tactics such as attempting to drive out opponents on the auction house with super low postings.
Be sure to check the tutorials section for how to bid, buy and snatch.