Monthly Economic Report - A focus on Sinks

In the last post i looked at the summary inflows and outflows of isk, and then focused on the inflows (faucets).

In this post i want to look at the outflows of isk (sinks).

All the charts comes from my website, eveeconomy.com.  The charts in this post come from the Sinks Charts page

As a reminder, i am talking about how isk leaves the game.  A ship destroyed is not isk leaving the game, buying ammo is not isk leaving the game but paying accounting tax when selling an item is isk leaving the game.

In the prior post we could see that the overall outflow of isk remained towards the higher end of its historical range.

The main sources of sinks

I like to group the isk outflows (sinks) into 5 categories, as shown in the charts above:

• Merchant related - sales and broking taxes etc
• Industrial related - manufacturing fees etc
• Scientist related - research fees, buying BPOs from NPCs etc
• Player related - skill books bought from NPCs, parallel skill training etc
• Corporation related - war fees, infrastructure maintenance etc

I will go into each below and address the remaining other sinks.

But the main thing to note is that the economic related categories (Merchant, Industrial, Scientist) are in decline and that must surely reflect declining economic activity.  In other words, a recession.

Merchant sinks

Looking at the Merchant related sinks, which is the area i focus on at the moment to make isk, we can divide this into six individual areas:

Transaction Taxes (top left chart) is the largest (did not used to be), and you can see when the tax rate stepped up in the middle of 2019 though has been in decline since April 2020.  Perhaps seeing some sigh of stabilization now.  This decline more or less coincides with the changes in the Broker Listing fees and introduction of the new market re-list fee.  There is a disincentive to list bulk Sell Orders which therefore reduces the number of items for sale and so reduces overall market activity.

Broker Listing Fees (middle left chart) are the next largest (at times in the past they were the largest) and are back below historic levels.  Now, i don't have the data to know if part of this decline is due to more items being listed at Player stations or if this is otherwise due to less market activity.

Broker re-List Fees (bottom left chart) are the next largest though again also in decline.  I believe all re-List fees go to NPCs (i.e. non to players?) and therefore the decline we are seeing since the month it was fully introduced must surely represent declining market activity.

Hypernet Relay Taxes (top right chart) have held steady once they found a level after the launch of this facility.

Contract Brokers Fees and Contract Sales Taxes (middle and bottom right charts) are broadly flat but are quite small in the big scheme of things.

But, the decline in the Transaction Taxes and Broker Taxes clearly indicates falling market activity despite allowance for orders being placed in Player stations.

Industrial Sinks

Manufacturing Fees (top left chart) has been in decline since (perhaps coincidently) the broker tax changes were introduced though we have also seen changes to industry taxes.  It is tempting to suggest that this indicates declining activity and i suspect it does - the only cloud of uncertainty is the next chart which shows rising Industry Job Taxes.

The other taxes in Manufacturing are much smaller

Industry Job Tax (middle left chart) has been rising over the last few months.  That may indicate that players producing in expensive systems are not moving rather than a rise in activity.

Reprocessing Tax (bottom left chart) is very small.  It is much better to reprocess from a player owned structure.  So to comment on a trend is fraught with data issues - so lets not.

Planetary Interaction taxes (charts on the left) have all been in decline in part due to Player owned custom structures but mostly because of the declining activity and declining prices as this source of income becomes harder for players.

Scientist Sinks

Remains higher than Industrial Sinks overall but much lower than its glory days.

Buying Blueprints from NPCs (top left chart) remains the largest Scientist related sink though has been in decline since April 2020.  Again, i suspect this indicates falling economic activity.

Reaction Fees (middle left chart) remains steady

Researching Material Productivity, Researching Time Productivity and Copying Fees (the remaining charts) are all in decline.  Again, suggesting declining economic activity.

Player Sinks

Parallel Skill Running (top left chart) is where players purchase the ability for a second alt to train skills at the same time as the main alt. Had declined a but but remains popular.  I have not checked to see if a profit can still be made to buy the ability to train skills on a second alt for 30 days and then sell the skill points.

Skill Books purchased from NPCs (middle left chart) continues to decline.  I am a little surprised at that given other charts suggest player activity remains robust.  This may suggest that new players coming through is slowing.

The other charts Repair Bills (bottom left), Bounty Fees (top right), Jump Clone Activation (middle right) and Insurance Premiums (bottom right) are small or, in the case of the insurance premiums, not really worthy of saying much.

Corporate Sinks

These are really low numbers.

Infrastructure Hub Maintenance (top left chart) remains flat

War Fees (middle left chart) has been flat for a long time other than a blip in June 2020

Contract Broker Fee (bottom left chart) is flat.

Corporation Registration Fee (top right chart) is declining so perhaps just less corporations being created

Office Rental Fees (middle right chart) - interestingly increasing, not sure if that indicates relocation to more crowded stations or more corporations renting offices.

Other Sinks

Some items of note here.

Commodity Purchases from NPCs (top left chart) has remained flat

Structure Modules (middle left chart) a new sink for four months has risen strongly in December.  I believe this is the Quantum Cores which are required for all structures.  Existing structures require them in place by 12 January 2021.  So i suspect we are seeing the existing structures being updated in December and likely see some in January also.

Alliance Registration Fee (bottom left chart) has remained flat.

LP Store (top right chart) is arguably declining since the summer and is in the bottom half of its normal range

Asset Safety Recovery (middle right chart) is generally on a rising trend and presumably reflects the trend to move from NPC stations to Player stations or the rise in stations being destroyed (my understanding is that the fee is paid when the Asset Safety is triggered and comes at 0.5% of the assets if retrieved within 5 days or 15% if retrieved after 20 days.

Reprocessing Tax (bottom right chart) . . . . . . . .is double counted, it is already in the Industrial section

Security Processing Fee (top chart), Deployable Fees (middle chart) fell to nil and the remaining Other Sinks (bottom chart) are very small so nothing to say, here for completeness.

Discontinued Sinks

For completeness, i have included the charts on discontinued sinks which were all small numbers anyway:

Monthly Economic Report - A focus on Faucets

In my Eve Economy website i like to chart all the data as a time series to see what the trends are.

The Sinks and Faucets data is quite revealing recently.  In this post i will focus on the Faucets

Definition

When we talk Sinks and Faucets, we are talking about isk leaving and entering the game.  Not isk exchanged between players.

So, a bounty from completing a mission is isk "created" and so entering the game whereas selling Plex or Ore on the market and is merely isk transferring from one player to another even though the asset in these cases was "created".

Firstly, a look at the overall ISK flows

the chart below shows the components of isk entering and leaving the game.

Top left chart = monthly inflows (faucets) of isk from February 2016 to December 2020

Middle left chart = monthly outflows (sinks) of isk from February 2016 to December 2020

Bottom left chart = monthly net inflows (faucets less sinks) of isk

Top right chart = the 'active isk delta' from February 2016 to December 2020.  This is defined as (ISK on characters returning to EVE) - (ISK on characters leaving EVE) - (ISK removed from characters by CCP)

Middle right chart = the resulting net flows of isk for each month.

Bottom right chart = is the total isk in the game from February 2016 to December 2020.

The main observation here for this post is that the isk inflows for December are continuing a short term declining trend seen since but remain at reasonable levels.

Looking at the main sources of the inflows

This is where is gets interesting, the chart below shows the six main sources of inflows.

Watch the y-axis, each chart has its own scale.

The top left chart is the monthly inflows from Bounty Prizes which used to be the largest single inflow of isk whereas the middle left chart shows the monthly inflows from Commodity sales (loot sold to NPC buy orders) and the bottom left chart shows the monthly inflows from Incursions.

Bounty Prices have collapsed to below levels seen at times in 2019 whilst the ongoing rise of Commodity sales and Incursion flows have now put Commodities (loot sold to NPC buy orders) as the largest inflow with no sign of a slow down and Incursions as the close third.

Looking at the charts, there does seem to be a decent relationship between Incursion and Commodity flows.

The main observation here is that Bounty Prices have collapsed whilst Commodity and Incursion inflows continue their rise.

Insurance payments are up (top right chart), in part due to the large battles in December, but for me also demonstrates that activity in PVE / PVP is not declining but merely moving from Bounties to Incursions.

The middle and bottom charts on the right are the agent mission rewards and to me this looks inline with prior months over time and again indicates to me that PVE activity is holding up.

In summary, to me, the charts do not indicate a decline in PVE activity but merely a shift from one type to another.

Other sources of isk inflows

Other sources of inflows are below, they don't really touch the sides so hardly worth a direct comment.

Nice to see Project Discovery make a come back over the last few months.

Lets keep an eye on this new source of isk inflow - Structure Modules.  Four months old but not even a trillion yet.

Discontinued sources of isk

For completeness, i have included charts of prior sources of isk inflows that no longer exist.  Nothing more to say here

Booking a loss, Clearing the Books

As we approach the end of the month i come to the time when i "clear the books".

By that, i mean put almost all my Sell Orders to the lowest price in the market even if this means i will be making a loss.

Normally

Each day i update the prices of my Sell Orders to ensure they are the lowest on the market.  This only takes a few minutes.

But Sometimes . . . . .

Occasionally, i will see that competitors have posted items for sale at way below my price.  I then have three decisions to make - do i stick, or do i follow, or do i buy it out myself.

If following would put me in a loss position than physiologically this is hard.

Firstly, i very very rarely buy the item myself.  I don't want to build an inventory of such items.  For all i know, the Seller may have more to sell.

So, typically, i will look at the Jita price and the daily volumes of sales where i have the Sell Order on.  If the competitor's price is at or below Jita price then i leave it - someone will come and buy it.  if the daily volumes suggest that someone will buy this item in the near future then i also leave it.

However, sometimes i find that i am stuck with a Sell Order with a number of competitor Sell Orders at prices a long way below me and no sign that they will be bought out.

Booking the loss

At this point i then have to take the view that it is more important to release what isk i can from the Sell Order to reinvest in the market rather than leaving it tied up in a Sell Order that does not work.

Therefore, the Sell Order gets put to the lowest and the objective is just to get it sold.

Clearing the books

In the middle of the month and at the end of the month, i do this across all my Sell Orders that have competitor prices much lower, rather than just the odd one here and there.

I suspect this books losses of about 1 to 2bn isk in the process.

Painful, but therefore i start the new month with a clean book and all Sell Orders with a chance of being converted to isk.

The alternative is for part of the book of Sell Orders to actually have no chance of making a sale and so just sitting there taking up isk that could be deployed elsewhere on the market.

I am not an investor, i am a Merchant that Trades in this part of my business.  And i need to ensure i avoid building a stale book of business.

Eve Economy Website updated for December monthly data

The Eve Economy website has been updated for the December monthly economic data released by CCP.

Frustratingly, the data for the large battles at the end of December (took place in M2-XFE system) can only been seen in the daily data but not the regional data nor in the killdump data.

The pdf chartbook on the home page has 241 slides covering:

• Section 1: Daily data from 2012 onwards

• Section 2: Wealth in the Eve Economy

• Section 3: Top level Regional Data

• Section 4: Discrepancy charts - showing that the daily data is not reconciling with the monthly Regional data

• Section 5: Regional data for each region from 2016 onwards

• Section 6: Faucets and Sinks

• Section 7: Discontinued Sinks and Faucets

• Section 8: Economic Indices

• Section 9: Interesting observations

• Section 10: State of PVP

• Section 11: State of PVP by Region

The chart pack looks at each and every region, including regions that have been and gone.

i will look to make posts on each of the main features of what i see but the summary snap shot is that:

• Incursions are taking over as the main source of ISK coming into the game

• The economic recession continues judging by the falling ISK leaving the game for Merchants and Industrialists (less tax to me means less activity)

• High end and Low end mineral prices are rising fast

• Planetary Interaction prices are falling fast

Triglavians at the Perimeter Gate

A short post but something for Business players to be aware of.

Delone Wolf, the creator of the excellent weekly Eve Talk youtube show has just posted a 15 minute clip of the Triglavians at the Perimeter-Jita warp gate.

Aggressively attacking and destroying players, Delone Wolf only just managed to get away the first time.

Finds the wormhole which is due to last only a few days.

Month end update - December 2020

At the end of my fourth full month, my wealth is 27.9bn ISK after paying 1.4bn to upgrade Omega for another 30 days.  My wealth increased by 11.3bn in November.

A good month, i thought.  Helped by the Christmas holidays - i did good trading around that time.

Will be interesting to see if January can keep up with what has been a strong November and December which were boosted by holiday periods.

Review of the December aims

1) Plex the account - done, this is the number one aim

2) Increase sales in Dodixie - done

3) Increase sales in Amarr - done

4) Start a new venture - done, see below, will be Invention

Onwards to the next aim

This time in Eve, i don't want to purely focus on trading by having characters in each trading hub.  I want to experience as many of the isk making ventures in Eve that i reasonably can.

So, the aim with trading is to get to 10bn monthly income after buying the Plex to extend the Omega account.

That was achieved in December.  Not sure if it is sustainable but i will take it as a sign to advance onto another ventue.

Invention

More posts to come but i have decided to try my hand at invention.

It has a low click rate so, if i can make it work, it should be a low effort way to make isk.

Lets see how it goes.

Reminder of my Current Business.

I operate with one account with three alts.

The main alt is a seller in Dodixie and the other alt is a seller in Amarr, two of the main trade hubs in Eve Online.

The third alt sits in Jita and buys from Sell Orders, has these items couriered to the alts in Dodixie and Amarr who then put them onto these markets for sale.

I focus on slow moving but high margin items.

For this side of my business, lets call it Merchanting, i want to generate income of 10bn isk per month after paying to Plex my account.

Analysis of Trading Profits

Explaining the journey of sales of 78.3bn to the increase in wealth of 11.3bn . . . . . 

In all, i made sales of 78.3bn isk (vs 54.6bn in November) which created income of 13.4bn (1.4bn was used to buy Plex, 10.2bn invested back into the market and 0.7bn isk was spent on a cloaky ship) vs 10.8bn in October.

So, over 40% sales growth in both Dodixie and Amarr.  I suspect Dodixie will always be my best seller, Amarr is much more competitive.

Dodixie sales were 53.7bn (vs 38.0bn in November) whilst Amarr sales were 24.6bn (vs 16.6bn in November).

But good to see Dodixie back to growth after a flat November - that was one of the December aims.

Purchases of items from Jita cost 55.8bn isk (vs 37.0bn in November), so my item margin was 28.8% (78.3-55.8)/78.3 vs 32.2% in November.  Respectably above the 25% item margin target but down on the elevated 32.2% in November.

The reduction in item margin is due to two things.

Firstly, November was elevated by strong sales in Disintegrator Skill books which came at margins often over 100%.

Secondly, at the end of December i cleared down my book of business to reduce prices to lowest on the market, which meant reducing prices by 1.5bn isk in total which in effect meant reducing the value of my total orders by 5%.  I should always aim to keep my Sell Orders the most competitive, i had just let things drift over November and December.

In all, it still feels though that item margin is a little high and likely benefitting from the Christmas holidays where players just want to play rather than fly to Jita to buy an item cheaper.

Of course, i need to take a whole series of costs off before i get to my Business profits:

Courier Fees: i aim to pay 2% of sales value to the Courier = 2% x 78.3 = 1.6bn

Sales tax cost me 2.2bn ISk (=2.8% of sales), as expected given i am Level 4 Accounting Skill on both characters.

Broker Fees costs me 5.4bn (=6.9% of sales).  Now, i can break this down into the initial listing fee of 3.78% (because i am Level 4 Broker Relations on both characters) and therefore the rest is the cost of changing the price which is 1.14% a shot.

So, i know the listing fee = 3.78% x 78.3 = 3.0bn and therefore the price change fee is 3.0bn (5.4 - 2.2). This 3.0bn is 3.1% of sales.

This takes my 'Business Profits' to 13.4bn isk for December vs 10.8bn in November.  This is what 45 minutes a day in December gave me.

So, the post-tax margin is 28.8% - 2.0% - 2.8% - 3.8% - 3.1% = 17.1% (=13.4/78.3).

Fees and Taxes take 11.7% off my margins (2.0+2.8+3.8+3.1).  That is a big hit.  I can take action to reduce this which i may investigate in the medium term.

17.2% is respectable, i would normally aim to get a respectable 13 to 15%.  i can improve on it if i train Accounting and Broker Relations  / Advanced Broker Relations to level 5 . . . . . which is on the "to do" list . . . . .

And then from those 'Business Profits' i buy Plex for 1.4bn isk and this month i bought a cloaky ship for 700m isk which allows me to travel around low sec and null sec to buy those lowly priced Blueprints and other items.

Dodixie Seller character

This remains my main character and is the biggest seller.

The skills relevant to Trading that i have are (unchanged on last month):

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

Advanced Broker Relations: Level 5; 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 5 has brought this down to 0.94%.

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

Wholesale: Level 3; increases the number of items i can list by 16 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, level 5 Retail and level 3 wholesale, i am able to post 113 items for sale (5 + (5x4) + (5x8) + (3x16)).  With no Trading skills you can post up to 5 sell orders

It would take me 18 days to train Accounting and 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

As i write this i am using 99 sales slots up - a large increase on the last month of 55 orders at the time of writing my review.  

Items i am selling in Dodixie (and Amarr)

I sell blueprints, skill books and ship equipment.  There is still no change here.

For blueprints and skill books i focus on items that are not seeded in Dodixie (or Amarr for the Amarr seller).  If i can get a sales value of 100m or over then i am interested.  It is a nice source of sales, varying from 100m to a few billion on a really good day - players will pay up to avoid travelling to Jita to save isk to buy that blueprint or skillbook.

Ship equipment makes up the rest, typically it is the same items each time though i find i make a few sales then need to let that item rest and the price reset upwards before i revisit.

Rigidly sticking to the 25% margin target.  I have to given courier fees and taxes take a whopping 12% of that to leave me with 13%.

Similar story in Amarr, some items are the same but the main groups are all the same: blueprints, skill books and ship equipment

Amarr Seller character

Started in November and has grown very quickly.  I gave my initial views in a prior post.

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

Advanced Broker Relations: Level 4; means i can reduce the cost of changing the price of items i already have for sale.th no skill i would be charged 1.89% to change every price.  Level 4 has brought this down to 1.1%.

Trade: Level 4; 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

Wholesale: Level 2; increases the number of items i can list by 16 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 4 Trade, level 5 Retail and Wholesale Level 2, i am able to post 93 items for sale (5 + (4x4) + (5x8) + (2x16).

As of right now, i have 58 items up for sale.

Courier Contracts

Each night, i get home from work and determine what i need to sell in Dodixie and Amarr.  I tend to focus on one location per night unless i need to courier over 1bn isk of items to both locations.  So Dodixie one night, Amarr the next.  Keeps my time on Eve to a manageable 45 minutes once i have added in a bit of looking into Invention.

To look up prices in Eve I am using Eve Tycoon which seems to have more of the latest items in its market browser.  I used to use evemarketer but i just got used to Eve Tycoon.

Each night i courier about 2 to 5bn isk of items from Jita.  The total cargo volume is 100-250m3 per shipment.  So small but valuable items.  But this allows the couriers to use small, fast ships with much less chance of being ganked.  So there is always someone willing to pick up the contract quickly.

I pay a generous 1.5 to 2.0% of collateral as fees.  I am more interested in getting my items onto the market quickly than penny pinching on distribution costs.

Eve Economy Data Charts

Nothing, yet, todo with my Eve Business ventures but just noting that in December i set up a website site eveeconomy.com which takes the monthly economic data provided by CCP and visualises it in chart form.

Loads of charts and more i can add.

I need to work out how to render the charts faster - right now they are accessed from a google drive given that is the way i have worked out how to update multiple charts at once quickly.

Let me know what you think and what else i should add.

Looking forwards to the December data given the recent battle.

Outlook

January will have five aims to it.

1) Plex the account - aim number one all the time

2) Increase sales in Dodixie - this may be tough

3) Increase sales in Amarr

4) Expand further into Invention

5) Investigate reducing 'costs of sale'.

The daily sales in December averaged 2.61bn.

If i assume i need to make 10bn + 1.4bn income per month (=11.4bn) and i assume i can achieve 15.0% margin then i need to make monthly sales of 76bn and so daily sales of 2.5bn.

December was my first month of achieving this.

Current wealth is 27.9bn ISK made up from:

• items in hanger for sale 1.1bn ISK
• items for sale 31.3bn ISK

• less a 20% provision 6.3bn ISK*

• ISK in wallet 1.8bn 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 or are used to generate isk that can be readily resold back onto the market.  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.