Thursday, July 5, 2012

Auction House Deposit Fees

I sent in mail to Faid, and my questions were discussed on the ClockworkRiot LiteCast - Ep 005. In using her responses, I have heavily paraphrased her answers to be more like 'what I heared' and less like 'what she said' so make sure you head over to ClockworkRiot and check it out for yourself.

Here is the questions I posed.

Hi Faid, I hate AH fees. One of the reasons I love the glyph market is that aside from time posting and collecting from the mailbox, there is no negative consequences for NOT selling a glyph. I love high priced markets, like the epic gem market. The profit per sale is so high for me that the AH fee of posting an epic gem seems trivial. However, in the non-ruby cut rare gem market, AH fees drive me crazy. For anywhere between a 15g and 65g sale, an AH fee of 2g25s can really put a dent in the profit margin for each sale if you need to relist multiple times. I know the capital I’ve outlaid for these ‘byproducts’ has already returned a profit, and I’m not going to try and sell them through trade to avoid the AH fee. Could you talk about your approach to AH fees and minimising your losses? Did you get into the non-ruby cut rare gem market, and was the AH fee something you considered?
    Thanks, Twitchie (the Gnome Warlock)

Faid made some excellent points, and I'll address them below.

#1 Deposit fees are doing exactly what they are supposed to do.

Faid is absolutely right. Deposit fees are designed as a deterrent to posting auctions at a higher price than is reasonable. If you post too high, your auction may expire purely because your goods are just not worth that much in the market. Bam, deposit gone. If you post too high, you encourage competitors to undercut you reducing the chance of a sale because you need enough demand to plow through your competitors auctions and then buy yours.

So the take home message here is to post for less, to encourage purchasers and discourage competitors. The issue with the rare gem market of course (which Faid also talked about) is that they are a biproduct of a profitable market, the shuffle for inferno rubies and other more profitable biproducts. The rare gems are left over after you've shuffled your way to the bank. In some cases competitors will post for just over the deposit fee, and that market can safely be considered, 'dead to me'.

#2 If you want to avoid auction fees, sell it in trade you sissy!

Asking Faid's advice with the "I don't want to sell in trade" caveat is kinda like going to a nutritionist about weight loss saying, "I just want to eat bacon and cake all day long".

Selling in trade has a couple of advantages. Firstly, our goal is satisfied... no deposit fee. Bam. Secondly, you don't have to precut your gems. This amounts to a fairly large saving of bag and mailbox space. It also helps that my major AH slave is my DK who is also my jewelcrafter.

So after going so far as to put my objections to selling in trade in my initial question, Faid prompted me to think a little more about it. I can probably develop a subtle and professional trade bark that I use once at the start of my posting session, advertising cuts of rare gems and a set price for the different colours. If I have some takers, I make some sales, and if I don't it only adds a split second to my auctioning process.

#3 Post during peak demand for the specific market

Faid had some great suggestions about posting at times that people require gems in their play cycles. After Tol Barad for PvP cuts, or at suitable times during the raiding week. The idea here is get an idea of the demand cycle for your market, which is something I hadn't thought to much about in relation to gems. Like most people, my posting fits around my real life schedule, but for specific markets there's no harm in not posting when the demand is low to avoid as many unsold auctions as possible.

I think most entrepreneurs are used to thinking about the supply cycle for buying materials. For example, I'm straight to the auction house on Thursday mornings to pick up all the [Essence of Destruction] from the Wednesday night farm bosses. If you are unhappy with the number of cancelled auctions from a specific market, have a think about the demand cycle as well.
#4 Get out when it's just not worth it

Not all markets are created equal, and no one has enough time, energy or perhaps even the compulsive tendancies to rule every market all the time. If after analysing your pricing, your posting and perhaps dabbling in trade sales you are still not enjoying a market... GET OUT!

I haven't shuffled for quite a while, since I have plenty of rare gems, I'm gemming epic gems anyway and there's just other markets and interests in WoW that I perfer to spend my time on. However, rather than just continuously bounce these rare (and uncommon for that matter) gems from mailbox to mailbox, I thought I'd reach out for a kick in the pants from a fellow gold blogger for a different perspective and think about moving some stock.

Thanks Faid, for taking the time to address the question on your LiteCast, and if you're interested enough in gold making in WoW to be reading this post... I highly recommend checking out ClockworkRiot.

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