Sunday, June 9, 2013

Competing with Crazy Alchemists

Alchemists are a crazy bunch. Never satisfied with how things are, they concoct, blend and transmute. The fumes get to them after a while, and in a drunken stupor they roll up to the Auction House and just dump their goods at whatever price they feel like. Some alchemists even pick their own herbs and have convinced themselves that their [Golden Lotus] are free. Some alchemists have taken to gardening, and are surprised they even get paid for their wares after having fun in the sun, messing about with the soil and communing with mother Pandaria.

What the $#@% is an Enterprise to do?

Thanks to The Undermine Journal, you can see just how crazy the alchemists on your server are. Looking at the graph above, you can see just how often the price of materials is above the sale price of [Flask of the Earth]. Of course, the cost basis for flasks is significantly reduced by elixir specialisation, but even so, what kind of margin is that? A abysmal margin. That's what.

Automate sales with TSM

Getting the basics out the way, use TSM to sell your stuff. My philosophy with most consumables, is to get started creating a working stockpile, setting my thresholds for a reasonable profit margin and then just refilling my stock as required. If alchemists are being crazy, my stuff doesn't sell, but I don't care. I wait for a spike in demand, or for alchemists to sober up, and take my sales in those windows of opportunity.

If I haven't had sales in a little bit, or I notice something happening with the materials prices, I investigate and take action as necessary. It might mean raising or lowering my threshold and fallback, resetting a market or altering my materials acquisition to keep up with demand.


Never make an alchemy product without the correct specialisation:
  • Elixir Master - Elixirs and Flasks
  • Potion Master - Potions (but not Elixirs (see above))
  • Transmutation Master - Transmuting (e.g., Living Steel, Gems, Meta Gems)
One of the reasons the alchemy markets are so cut throat is because there is roughly a 20% gain in end product by using the correct specialisation. So I recommend having (at least) three alchemists so you can cover all of the markets. The only reason to have more than one Transmutation Master is because some transmutes (e.g., Living Steel) have a daily cooldown and the only way to increase your yield is to have more alchemists to create that product.

So far in Mists of Pandaria, I have created 7259 flasks, 1218 of which were additional procs (20.16%). There is just no way I would try and compete in the flask market without that advantage.

Don't take a loss

Don't be pressured into lowering your threshold below your cost price. That's not competing with crazy alchemists, that's just dropping your pants. Don't join them, beat them. Aside from the enormous downward pressure on the market because of competition, the alchemy markets fluctuate in price quite a bit. If you are patient your goods will sell, at a profit.

The exception of course is when something dramatic happens to the market. Earlier this expansion, Blizzard adjusted the drop chance for [Golden Lotus] and people started growing them on their farms. The price crashed from about 80g to under 30g before rising steadily back to around 40g. When you start snapping up "bargains" and the price continues to drop, you need to be aggressive posting your existing stock to clear it at a profit, before the price of the product crashes to follow the materials.

Cover all the Alchemy Markets

On my server, the flask market has been flat for a few weeks. However, the gem markets and potion markets are ripe for the picking.

Potions are consumed by raiders with reckless abandon. In a progression night, I'll go through a couple of stacks, and I'm also the type of player that will use 6 pots just for LFR. I highly recommend making potions in batches of at least 120 with a potion master (240 herbs fits nicely in a mail to your potion master). Unlike transmuting living steel, which is prone to estimation bias, large batches of potions will more likely yield a return of an additional 20% every batch which more is than an extra stack of pots. In the last 30 days, I've bought [Green Tea Leaf] at 1g75s, [Silkweed] at 1g70s and sold [Potion of the Jade Serpent] 10g88s. Cost of less than 3g and selling for more than 10g? Now that's what I call a margin.

In general I have been pretty lazy with prospecting and selling gems. Until however, I saw cut rare gems going for over 300g/ea on my auction house. What the what? That is highway robbery. As I mentioned before, with [Golden Lotus] sitting around 40g, anything over 100g is more than doubling your coin. As I usually do when I see low hanging fruit, I got to work harvesting, skimming from the bottom of the lotus prices and lopping off the top of the gem market. The lotus price also makes for some cheap meta gems, where you get to double dip as a transmutation master.

Let Crazy Alchemists do your work for you

If the market is relatively stable, factoring in specialisation, and there are alchemy products on the auction house under cost, buy them out. It takes more than three minutes to make a decent batch of potions. Sure, you can go make a coffee, alt-tab to a blog post (or actual work) or leave your computer entirely and go do something else during that time. However, it can take 20 seconds to buy a whole bunch of potions and re-list them at a more reasonable price. Here's some tips I prepared earlier for resetting markets.

On my server, the price of [Master Mana Potions] goes up and down like a fiddler's arm. It's possibly because Blingtron gives them out pretty freely, or because using three herbs to create two potions is hard to figure out without a spreadsheet. Who knows? On the weekends the price can dip as low as 1g, and I think they are worth 3g, plus a generous markup for my troubles, damn it! Also, just because their materials are cheaper, I don't see why healers should get away with imbalanced potions costs! I mean, they get away with only taking one freakin' potion per pull already! So, I buy them all up and bide my time until payday, just before a raid on Wednesday night.

Sell in larger stacks and quantities 

I used to sell potions in singles. Twelve whole potions each time I'd post on the AH. It wasn't until I started putting my sales data into a database I noticed that most of the time when someone buys a potion from me, they buy ALL the potions. Did they need more potions? They probably did, so I got to feeling bad about the crappy service I was providing my loyal customers. So I experimented with putting more up for sale at a time and monitoring my unsold auctions, with great success.

Now I sell my potions in stacks of 10. I can put up a lot more potions and spend less time retrieving unsold potions from the mailbox. Similarly for flasks, I sell in stacks of 3, since the average raid goes for 3 hours it makes sense that even the most cashflow challenged raiders won't be turned off by the total cost of the transaction.

Do keep in mind how much you are prepared to spend in deposit costs. Depending on when you are posting and how competitive your server economy is, there is little point in flooding your auction house with multiple stacks of flasks, only to sell a small percentage of them a large percentage of the time. Just bump up your quantities in moderation until you get a yield of sales you are comfortable with.

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