Wednesday, November 12, 2008

Money Making (Part 1 of 2): Core Rules

What would you do with 40,000 gold?

Well, besides opening a trade window and showing it off to people (it garners some interesting forms of begging), you can essentially buy anything you want. To meet the 10,000 limit for server transfers, I spent a good portion of my nest egg on epic gems, a couple of Amani Bear mounts and relearning Professions. JC in 1 day for a trinket? 3,000g? Sure! Want to drop it and learn Engineering for that nifty flying mount? 4,000g? Sure! You quickly learn that when you have tons of money, everything is for sale. These days, some guilds are even selling the KJ kill achievement!

So the big questions that I get asked when talking about making money is "How?" and "Will you teach me?"

The answers are, "Sure" and "If you want to learn". To illustrate the points, we'll use the most recent 'gold mine': Inscription, as a reference point in Part 2 of this article. The reason why I like using Inscription as a tool for examples is because the other big money maker, Jewelcrafting (and Enchanting to a lesser degree) is going to follow suit with pattern/design accessibility in WotLK. But, we're getting ahead of ourselves. Let's talk about some general stuff before we get into details.

For the majority of players, gold is an extremely limited resource which can realistically limit game enjoyment and game play. Have you ever wanted to respec to help a guild run or buy that pattern on the AH that you've been lusting over but didn't have the funds? Understanding the WoW economy and using it to leverage (quite literally) a gold mine of possibilities can lead to lucrative results. As reference, prior to transferring off of Mannoroth (end of Arena Season 3), I had amassed upwards of 40,000 gold and was possibly in a position of making even more when I chose a lower ping environment. Hey, a guy has priorities! The majority of that 40,000? Made off the AH and at some point, I gave up doing dailies because they just felt so pedestrian. With WotLK right around the corner, massive opportunities are approaching to explore a brand new market and establish a presence.

In general, I follow a few core rules when I sit down to try to make some cash and I'll lay them out right here:

  1. Participate in your markets as much as possible. Get up a few extra minutes early every day and manage your auctions. Do it again in the evening if you have time. I prefer to post my auctions for the minimum duration every 12 hours, which happens to work well with my work schedule. This frequent AH'ing gives you two things, a) the ability to see trends in your chosen markets and b) a lower overhead cost if you have to re list stuff. Having to eat a 48 hour listing fee multiple times because you weren't quick enough to catch on to a dying market means alot of overhead. Amusingly, it's also what's giving many businesses the shaft right now, IRL, due to their product financing exceeding low retail sales. This participation also gives you the ability to see trends in your sales so that you can adjust by providing more or less product. If you are using a crafting profession to create your product, constantly check for material prices.

  2. Minimize your undercut. Anyone who undercuts for more than a few silver is smoking crack. They are giving away free money. When someone needs a certain item, they'll always go for the item that's cheapest, often times regardless if its 1 copper less than the next cheapest or 5 gold less. Why give away that ~5 gold? Also, by minimizing your undercut, you maintain the stability of the market for a longer period of time as well as instill an expected value in your segment of the market. A healthy market niche is better for all participants. A completely tanked market niche is of no use to anyone except the one who's watching for when the 5 gold undercutting rats all bail and the true market value can be re-established.

  3. Maximize profits when there is no competition. If you find a niche market, play it smart because you will have competition somewhere down the line. Set a reasonable price and gradually move it up or down depending on market reaction. Over time, you'll get a good idea on how to price it and similar items in the future.

  4. Don't rely on an auction mod. Auction mods are often touted as the way to make money, but while they do make money, the profit margins, unless strictly controlled and supervised by the user, are often much slimmer than they could have been if the user had been paying attention. Additionally, while it may be great when you find a rare niche that could possibly bring in a good return one day ("Wow! 300% markup on Troll Sweat!"), I find that players that rely on a mod such as Auctioneer end up diversifying so much that they don't see market trends. As such, these individuals end up reacting to the market instead of being proactive.

  5. Choose a market and then diversify. If you're constantly in and out of several different markets, it gets difficult to spot trends and can end up hurting your potential profit in the long run. When you do diversify, stick with it for a while and see where it takes you. Obviously, if the market isn't profitable, you wouldn't be there in the first place, but now that you're there, try to see who are the big players and who are hanger on's.

  6. Take risks. If you've got your core business down, take some risks and try to anticipate the market response to world events or other impactful dates such as...oh, I don't know...November 13th. Everyone's heard the story of Small Eggs going for 5 gold/egg when Father Winter rolls around. Why not be 'that' guy who profits from it? Did you have extra gems and enchant mats to sell when Arena Season 3 rolled around and Gladiator gear was purchaseable through Honor? I made 10,000 gold that night. It was like Black Friday, but on a Tuesday. While you take risks, remember that they are risks and that you can wind up in the negative. Understandably, don't feel bad if your guesses aren't as stellar as you would have hoped. It's just a part of the game.
So, those are my core rules and they absolutely work. I haven't made thousands of gold in the last couple of days purely off of my good looks (although I could if I wanted to). The next section will talk more about specifics and managing both the core market and specifics about diversification, just in time for WotLK.

5 comments:

Anonymous said...

You mention you don't use auction addons, but do you use any addons to make bulk selling and mail handling and such easier? Which ones do you use?

Looking forward to part 2

Chu said...

It's not so much of 'don't use auction addons', but 'don't -rely- on addons'. Somewhat of a subtle difference. I know some people (myself included) who use/have used auctioneer to great success, but it takes quite a bit of tweaking. It's the lazy people who don't want to spend that extra minute checking their auction values and instead just blanket post auctions with something silly like %15 undercut across 300 auctions, that are literally screwing themselves and others.

As for bag/mail mods, I find that any that support mass collection and/or sorting of mail are helpful.

WOW power leveling said...
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Elysiane said...

As far as auctioning mods go: Auctioneer's usefulness isn't so much as tracking trends as making posting auctions easier, in my opinion. Especially with Appraiser and the new posting interface, posting auctions takes so much less time than it used to. I couldn't live without Auctioneer - with just Auctioneer and the principle of "sell everything that's not nailed down", I've obtained 42k gold so far.

I also avoid dailies like the plague - playing four healers, anything that involves grinding is not viable :P

Sonny said...

@First Commenter

I use Postal as my preferred mailing addon. I used to use MailLoot and also found it entirel adequate, but Postal worked first after the 3.0 patch. Both have a "Get Everything" button and I wouldn't recommend one over the other.

@elysiane

Yes, praise to Appraiser! Also, I never found dailies as fast for earning gold as straight-up farming. Now that I'm dual-boxing that *might* change.