Fair Pricing - the gift that keeps on giving

Or, more correctly, avoid price gauging.


An example

I see this loads of times.  An item that can be bought in Jita for say 48m is being sold in Dodixie for 124m.  It is selling at 1 every 2 days.

Instead, what i do is put the item up for sale for 99m - still a very good margin, almost obsene in itself - and now sales are 1 or 2 a day.  And i am 1 or 2 of those daily sales.

The competition has not moved from 124m.  They still get their 1 every 2 days.  They are happy.

But i now pick up 50-100m profit from this item each day.

The lesson here

The point here is that there is a limit that Buyers wont pay up if the price difference to Jita is absurd.  But if a 'cheap' deal turns up they will pounce.  And if the competition does not realise this then it becomes the gift that keeps on giving.

A secondary point is that a market that looks like it is dead can be sparked into life if the pricing is not absurd.  Its a fine line to tread - i may try and find that there is no demand for the item at a normal margin anyway.  But if i see sales actually happening then i can surely take that risk.  I will eventually sell the item in the normal time scale and then move on or i will accelerate the market sales rate and stay to collect the daily profits.

28 Days in

After 28 days of Omega (+2 days training missions +2 days as an Alpha), my current wealth is 2.4bn isk, after paying 1.4bn to buy 500 Plex and use to extend the Omega time by 30 days.

This compares to my wealth of 1.4bn 6 days ago when i plexed the account.  so, still seeing good underlying growth at this early stage.

Can i Plex the account going forwards

Definitely yes.  The key aim is to play the game for free by using Plex to finance the account.

Going forwards, i will start to buy the plex with 15 days to go until the Omega expires - that should give me plenty of time to merely used the daily profits to buy the Plex and therefore ensure that i do not eat into my existing capital.

What is the next aim?

I want to get to a position where my monthly profit from Trading is 10bn isk after paying for Plex.

Using the current daily profits as a guide, i estimate my monthly wealth will increase by 5bn before paying for Plex.  So, at least 2 more months to go i estimate.

At that point, i will stop expanding the Trading operations in Dodixie and move into other Business areas in Eve, starting with Manufacturing.

I want to experience more of the Eve isk making ventures this time.

Trading in Dodixie is going well

I stick to high margin products that sell slowly.  Items that sell 1 or 2 per day dont attract the big traders.  They cant benefit from scaling this up.

When i talk about profit margin i refer to margin = profit/sales = (sales - costs)/sales.  i.e. if i buy an item from Jita for 40m and sell it in Dodixie for 50m then my margin is 20% = (50-40)/50

Currently, i have 30 items for sale in Dodixie worth 2.6bn isk.

Dodixie Seller character

For now, this is the only seller i have and it is my Main character.

The skills relevant to Trading that i have are:

Accounting: Level 4; means i am charged 2.80% of the sales price on completed sale vs the normal 5%

Broker Relations: Level 4; means i am charged 3.78% to list an item for sale; and for every price change, whether up or down, i am charged 1.14% of the new sales price

Advanced Broker Relations: Level 4; means i can reduce the cost of changing the price of items i already have for sale. I decided by train this rather than go all for Plex.  With no skill i would be charged 1.89% to change every price.  Level 4 has brought this down to 1.14%.

Trade: Level 5; increases the number of items i can list for sale by 4 per level.

Retail: Level 5; increases the number of items i can list for sale by 8 per level

Marketing: Level 2; this allows me to set up Sell Orders in stations other than the one i am in; i don't use this really

Given the level 5 Trade and Retail, i am able to post 65 items for sale (5 + (5x4) + (5x8)).  With no Trading skills you can post up to 5 sell orders

It would take me 38 days to train Accounting, Broker Relations and Advanced Broker Relations to Level 5.  And i still have to train Wholesale and Tycoon to increase the number of Sales Orders i can have up

So, in the mean time i have started to train the basic manufacturing skills on my Jita character and so put on hold the skill training here.

I had thought it would take 4 to 6 months in total getting the Dodixie seller up to a steady state before i start to move into other forms of Eve Online business.  That may still be the case but perhaps i only need 2 more, so taking 3 months in total.  We wil see.

Items i am selling

The days of buying blueprints in Jita for 600k and selling them in Dodixie for 2.5m were good at the start but now dont make a difference.

So, at present, i buy items in Jita for 30m to 150m and sell them in Dodixie for margins of over 25%.

I have moved off Blueprints for now and sell a few Skillbooks and mostly for now tier 2 ship equipment.

Some skill books but also tier 2 rigs and tier 2 ship equipment.  Not really selling implants yet.  One or two bluieprints.

i find evemarketer very useful to find new ideas.  Also, i am using Eve Tycoon which seems to have more of the latest items in ots market browser.

Outlook

September will be my first full month, so lets see how it goes.  6 more days to go.

Aims for September:

1) Continue to expand the Dodixie trader sell orders and reduce trading costs
2) Plex the account - done

Current wealth is 2.4bn ISK made up from:

• items for sale 2.6 ISK

• less a 20% provision 0.5bn ISK*

• ISK in wallet 0.3bn ISK

When i add up my wealth, I don't count assets I use in the course of my business such as ships, fittings etc nor do I add back any expenses such as skills purchased etc.  The wealth I disclose is made up of items that are ISK or are in the process of being converted to ISK.  Any ships or skills or fittings etc i buy are counted as expenses in that month.

* I take a 20% provision against the items I am selling.  Eve calculates wealth by adding up the value of the sell orders hence it is possible to increase your wealth by buying an item for 100m ISK and putting a sell order for 120m ISK (in this case your wealth would increase by 20m ISK).  For me, I want my wealth to be calculated at cost.  I know that the value of my sell orders will likely fall over time as I update my orders downwards as competition reduces their prices before my items are sold.  Hence the 20% provision is my best guess as to what the maximum reduction I would need to make to my sell orders as a whole before they are sold.  In an ideal world I would value my sell orders at the value which I bought the items for.

Account Plexed after 22 days

22 days into Omega (+2 days training missions + 2 days alpha) i have bought 500 Plex and so extended my Omega account by 30 days.

It took me 8 days to buy the 500 Plex for 1.4bn isk in total whilst keeping my Sell Orders on the market flat at 1.8bn isk.  In order words, the 1.8bn Sell Orders generated 175m isk per day which is a monthly run rate of 5.2bn.  We shall see if this is the case over the next week or so.

Right now, I have 1.7bn isk of Sell Orders on the Market compared to the 111m 22 days ago.

I can now work hard to grow the investment in the market until i have 15 days to go until the Omega is due to expire and then i can focus again on raising the Plex to extend the Omega account.

My wealth is therefore 1.7bn less the 20% provision which is 1.4bn wealth in total, after, of course, paying 1.4bn isk to Plex the account.

Good news.  The first aim has been achieved a few days sooner than i expected and i am starting now with a decent 1.7bn of Sell Orders to grow.

21 days in

 After 21 days of Omega (+2 days training missions +2 days as an Alpha), my current wealth is 2.6bn isk.

My wealth consists of 1.8bn isk of Sell Orders in Dodixie less the 20% provision (=400m) and adding cash ready to reinvest into the market of 100m isk.  I also have 400 plex worth 1.1bn.  I spend 100m isk at a time buying about 40 Plex.  

Simple exercise, but if i assume each 100m i invested in Plex i instead invested in the market and each day it generates 10% growth (i.e 100m becomes 110m) then  the 1.1bn in Plex would be worth 2.0bn today.  In other words, my wealth would be 3.5bn isk.

Can i Plex the account in the first 30 days?

Almost certainly yes.  I should have it done by Friday which will be 5 days ahead of the deadline.

The key aim is to play the game for free by using Plex to finance the account.  So far, so good it seems.

The initial aims unchanged

Other than the Plex aim, my current aims with this third foray into Eve Online is to get to a steady state of income from Trading (buying from Sell Orders in Jita and putting these items up for Sale in Dodixie).  I am hoping this can generate 10bn isk per month before Plex costs with minimal effort.

At that point, instead of pushing on i want to move into other parts of Eve industry to see what it is all about and if i can make it generate good isk.



The Business is taking shape

Jita will be the hub of my operations.  Items for sale in Dodixie or for use in the manufacturing process will be bought in Jita and then distributed to their end target.

Dodixie will be the trade hub where i make my sales.

So, in effect, isk will be made in Dodixie and spent in Jita.

When the time comes, i will work out where i want to undertake the manufacturing.

Trading in Dodixie is going well

I stick to high margin products that sell slowly.  Items that sell 1 or 2 per day dont attract the big traders.  They cant benefit from scaling this up.

When i talk about profit margin i refer to margin = profit/sales = (sales - costs)/sales.  i.e. if i buy an item from Jita for 40m and sell it in Dodixie for 50m then my margin is 20% = (50-40)/50

Currently, i have 28 items for sale in Dodixie worth 1.8bn isk.

Dodixie Seller character

For now, this is the only seller i have and it is my Main character.

The skills relevant to Trading that i have are:

Accounting: Level 4; means i am charged 2.80% of the sales price on completed sale vs the normal 5%

Broker Relations: Level 4; means i am charged 3.78% to list an item for sale; and for every price change, whether up or down, i am charged 1.14% of the new sales price

Advanced Broker Relations: Level 4; means i can reduce the cost of changing the price of items i already have for sale. I decided by train this rather than go all for Plex.  With no skill i would be charged 1.89% to change every price.  Level 4 has brought this down to 1.14%.

Trade: Level 5; increases the number of items i can list for sale by 4 per level.

Retail: Level 5; increases the number of items i can list for sale by 8 per level

Marketing: Level 2; this allows me to set up Sell Orders in stations other than the one i am in; i don't use this really

Given the level 5 Trade and Retail, i am able to post 65 items for sale (5 + (5x4) + (5x8)).  With no Trading skills you can post up to 5 sell orders

On one hand, it would take me 38 days to train Accounting, Broker Relations and Advanced Broker Relations to Level 5.  And i still have to train Wholesale and Tycoon to increase the number of Sales Orders i can have up

I will continue down this road for now but at the same time i am going to start getting my manufacturing spread sheets ready.  I may start training my alt in Jita in the manufacturing skills if it makes sense.

I can see myself taking 4 to 6 months in total getting the Dodixie seller up to a steady state before i start to move into other forms of Eve Online business.

Items i am selling

The days of buying blueprints in Jita for 600k and selling them in Dodixie for 2.5m were good at the start but now dont make a difference.

So, at present, i buy items in Jita for 30m to 110m and sell them in Dodixie for margins of over 25%.

I have moved off Blueprints for now and sell a few Skillbooks and mostly for now tier 2 ship equipment.

Some skill books but also tier 2 rigs and tier 2 ship equipment.  Not really selling implants yet.  One or two bluieprints.

i find evemarketer very useful to find new ideas.  Also, i am using Eve Tycoon which seems to have more of the latest items in ots market browser.

Outlook

September will be my first full month, so lets see how it goes.

Aims for September:

1) Continue to expand the Dodixie trader sell orders and reduce trading costs
2) Plex the account

Current wealth is 2.6bn ISK made up from:

• items for sale 1.8 ISK

• less a 20% provision 0.4bn ISK*

• ISK in wallet 0.1bn ISK
• Plex in the wallet of 400 worth 1.1bn ISK

When i add up my wealth, I don't count assets I use in the course of my business such as ships, fittings etc nor do I add back any expenses such as skills purchased etc.  The wealth I disclose is made up of items that are ISK or are in the process of being converted to ISK.  Any ships or skills or fittings etc i buy are counted as expenses in that month.

* I take a 20% provision against the items I am selling.  Eve calculates wealth by adding up the value of the sell orders hence it is possible to increase your wealth by buying an item for 100m ISK and putting a sell order for 120m ISK (in this case your wealth would increase by 20m ISK).  For me, I want my wealth to be calculated at cost.  I know that the value of my sell orders will likely fall over time as I update my orders downwards as competition reduces their prices before my items are sold.  Hence the 20% provision is my best guess as to what the maximum reduction I would need to make to my sell orders as a whole before they are sold.  In an ideal world I would value my sell orders at the value which I bought the items for.

Buying Plex

I have started buying the Plex to extend the Omega game time

I have 12 days to buy 500 Plex to extend my Omega gametime by 30 days.  At todays prices that is about 1.3bn isk.

Mu aim is to maintain the Sales Orders in Dodixie at 1.8bn isk and use the daily profits to buy Plex.

So far I am buying 40 Plex a day (=100m isk per day).  i already have 120.

I could try and liquidate enough Items to get the 1.3bn isk required but the danger here is that i will be trying to raise the last 300m for Sales Orders that may be too slow.  Also, the more Sales Orders i have up then the faster it will be to raise the isk to buy the Plex in October.

So, i am making a judgement call that i can make 100m daily profits from 1.8bn Sales Orders which will get me sufficent Plex with about three days to spare.

If my daily profits are more, i will buy more Plex.

As an aside, 100m daily profits equates to monthly profits of 3bn isk which is not a bad return on 1.8bn of capital required.  These are small numbers and, of course, not scalable.  i.e. when my wealth gets to 180bn i will not be generating monthly profits of 300bn!

Thinking about the monthly Plex requirement

Each month i will need to buy 500 Plex to extend my Omega game time.

That, therefore, will be a known liability that i must settle and therefore should be detracted from my Wealth.

Currently, though, the entire aim of the Trading is to raise the isk to pay buy the Plex as well as expand the Sales Operations in Dodixie even after this payment.

Therefore, I think for now i will leave it out of the calculations and just think of my wealth as being "wealth before Plex payment" but at some stage it will be included.

14 days in

After 14 days of Omega (+2 days training missions +2 days as an Alpha), my current wealth is 1.4bn isk.

My wealth consists of 1.6bn isk of Sell Orders in Dodixie less the 20% provision (=300m) and adding cash ready to reinvest into the market of 195m isk.

This seems to be going better than my first two attempts at this stage.  That may either be because i have more experience and/or i suspect the whole working-from-home or working in an almost empty office is allowing players to be online more to purchase items from the market.



Can i Plex the account in the first 30 days?

I will give it my best shot.  The current Omega runs out after 15 more days.  Hence from now on i plan to put aside 100m isk each day to buy Plex.  The hope is that i can generate profits of at least 100m each day and so my capital invested in the market does not fall.

The key aim is to play the game for free by using Plex to finance the account.



The initial aims unchanged

Other than the Plex aim, my current aims with this third foray into Eve Online is to get to a steady state of income from Trading (buying from Sell Orders in Jita and putting these items up for Sale in Dodixie).

I am hoping this can generate 10bn isk per month before Plex costs wiht minimal effort.

At that point, instead of pushing on i want to move into other parts of Eve industry to see what it is all about and if i can make it generate good isk.



The Trading Business Model is taking shape

I stick to high margin products that sell slowly.

Items that sell 1 or 2 per day dont attract the big traders.  They cant benefit from scaling this up.

When i talk about profit margin i refer to margin = profit/sales = (sales - costs)/sales.  i.e. if i buy an item from Jita for 40m and sell it in Dodixie for 50m then my margin is 20% = (50-40)/50

I have set up my own Corporation (General Industry and Commerce Corporation) and i have an alt with no skils other than what is given at the start of the game.

The alt buys items in Jita using Corporation isk and contracts them to be hauled on hehalf of the Corporation to Dodixie.  My main in Dodixie then puts the items in his own hanger and puts them up for sale.  the proceeds are then transfered to the Corporation account.

I suppose i could always just put the items for Sale on behalf of the Corporation but i am always nervous of a mistype depleting my Corporation Wallet.  Same, to be fair for my alt in Jita . . . . so i need to think how to safeguard my Jita buying from a typo.

So, neither of my characters need leave their station.

Dodixie Seller

For now, this is the only seller i have and it is my Main character.

Currently, i have 27 items for sale in Dodixie worth 1.6bn isk.

The skills relevant to Trading that i have are:

Accounting: Level 4; means i am charged 2.80% of the sales price on completed sale vs the normal 5%

Broker Relations: Level 4; means i am charged 3.78% to list an item for sale; and for every price change, whether up or down, i am charged 1.89% of the new  sales price

Trade: Level 4; increases the number of items i can list for sale by 4 per level.  I should be level 5 by tomorrow.

Retail: Level 4; increases the number of items i can list for sale by 8 per level

Marketing: Level 2; this allows me to set up Sell Orders in stations other than the one i am in; i don't use this really

I trained Accounting level 4 which now allows me to train Advanced Broker Relations so that i can reduce the cost of changing the price of items i already have for sale.  For now, i will put that on hold and focus on getting the Plex.  The cost of the skill book is 26m isk.

Given the level 4 Trade and Retail, i am able to post 53 items for sale (5 + (4x4) + (4x8)).  With no Trading skills you can post up to 5 sell orders

I can see myself being busy learning the Trade Skills for at least 2 more months.

I can see myself taking 4 to 6 months in total getting the Dodixie seller up to a steady state before i start to move into other forms of Eve Online business.

Items i am selling

The days of buying blueprints in Jita for 600k and selling them in Dodixie for 2.5m were good at the start but now dont make a difference.

So, at present, i buy items in Jita for 30m to 110m and sell them in Dodixie for margins of over 25%.

Some skill books but also rigs and ship equipment.  Not really selling implants yet.  One or two bluieprints.

i find evemarketer very useful to find new ideas.

Outlook

September will be my first full month, so lets see how it goes.

Aims for September:

1) Continue to expand the Dodixie trader sell orders and reduce trading costs
2) Plex the account

Current wealth is 1.4bn ISK made up from:

• items for sale 1.6 ISK

• less a 20% provision 0.3bn ISK*

• ISK in wallet 0.2bn ISK

When i add up my wealth, I don't count assets I use in the course of my business such as ships, fittings etc nor do I add back any expenses such as skills purchased etc.  The wealth I disclose is made up of items that are ISK or are in the process of being converted to ISK.  Any ships or skills or fittings etc i buy are counted as expenses in that month.

* I take a 20% provision against the items I am selling.  Eve calculates wealth by adding up the value of the sell orders hence it is possible to increase your wealth by buying an item for 100m ISK and putting a sell order for 120m ISK (in this case your wealth would increase by 20m ISK).  For me, I want my wealth to be calculated at cost.  I know that the value of my sell orders will likely fall over time as I update my orders downwards as competition reduces their prices before my items are sold.  Hence the 20% provision is my best guess as to what the maximum reduction I would need to make to my sell orders as a whole before they are sold.  In an ideal world I would value my sell orders at the value which I bought the items for.

Seven days in

After 7 days of Omega (+2 days training missions +2 days as an Alpha), my current wealth is 366m isk.



The initial aims unchanged

My initial aim is not much different from before - i want to use my tried and tested trading strategy to get to a steady state of income with minimal effort.

At that point, instead of pushing on i want to move into other parts of Eve industry to see what it is all about and if i can make it generate good isk.



Trading strategy unchanged

I buy directly from Sell Orders in Jita, haul them to Dodixie and put them up as Sell Orders to generate a profit margin of over 20%.

when i talk about profit margin i refer to margin = profit/sales = (sales - costs)/sales

One small change in the last seven days - instead of flying to Jita and hauling the items back to Dodixie myself i now have an Alt in Jita that buys the items and through my new Corporation sets up a contract to have a third party haul them to Jita for me.

I am sticking to focusing on the slow moving items which typically sell 1 or 2 items a day but therefore the competition is sleepy and the margins are very high.  The big traders don't bother here because though the margins are very high the actual amount of profits to be made is too small for them.

i.e. buying for 700k in Jita and selling for 2.5m in Dodixie is great for me not won't even be noticed by a trader with billions to invest in the market.

Blueprints, skills and some ship equipment / modules are the current places where i am focusing.  Buying items from Jita ranging from 700k to 10m isk.

Dodixie Seller

For now, this is the only seller i have and it is my Main character.

Currently, i have x items for sale in Dodixie worth y isk.

The skills relevant to Trading that i have are:

Accounting: Level 3; means i am charged 3.35% of the sales price on completed sale vs the normal 5%

Broker Relations: Level 4; means i am charged 3.78% to list an item for sale; and for every price change, whether up or down, i am charged 1.89% of the new  sales price

Trade: Level 4; increases the number of items i can list for sale by 4 per level

Retail: Level 4; increases the number of items i can list for sale by 8 per level

Marketing: Level 2; this allows me to set up Sell Orders in stations other than the one i am in; i don't use this really

I am currently training Accounting level 4 which will then allow me to train Advanced Broker Relations so that i can reduce the cost of changing the price of items i already have for sale

Given the level 4 Trade and Retail, i am able to post 53 items for sale (5 + (4x4) + (4x8)).  With no Trading skills you can post up to 5 sell orders

I can see myself being busy learning the Trade Skills for at least 2 more months.

I can see myself taking 4 to 6 months in total getting the Dodixie seller up to a steady state before i start to move into other forms of Eve Online business.

The new Broker Fee system (new to me at least)

I will put a post up in the near future discussing my current thinking on how i am dealing with this additional cost of being taxed every time i change a Sales price on the market.

However, what it does mean is that i have to hold some isk back to finance the Broker Fees to change prices and therefore i have to invest less into the market than i would have hoped.

Outlook

September will be my first full month, so lets see how it goes.

Aims for September:

1) Continue to expand the Dodixie trader sell orders and reduce trading costs
2) Plex the account

Current wealth is 366m ISK made up from:

• items for sale 409m ISK

• less a 20% provision 82m ISK*

• ISK in wallet 39m ISK

When i add up my wealth, I don't count assets I use in the course of my business such as ships, fittings etc nor do I add back any expenses such as skills purchased etc.  The wealth I disclose is made up of items that are ISK or are in the process of being converted to ISK.  Any ships or skills or fittings etc i buy are counted as expenses in that month.

* I take a 20% provision against the items I am selling.  Eve calculates wealth by adding up the value of the sell orders hence it is possible to increase your wealth by buying an item for 100m ISK and putting a sell order for 120m ISK (in this case your wealth would increase by 20m ISK).  For me, I want my wealth to be calculated at cost.  I know that the value of my sell orders will likely fall over time as I update my orders downwards as competition reduces their prices before my items are sold.  Hence the 20% provision is my best guess as to what the maximum reduction I would need to make to my sell orders as a whole before they are sold.  In an ideal world I would value my sell orders at the value which I bought the items for.