At the end of my eleventh full month, my wealth is 87.0bn ISK after paying 1.3bn to upgrade Omega for another 30 days. My wealth decreased by 2.3bn in June.
I took the decision at the end of the month to start to move out of a line of items (structure modifications) where competition had become very fierce. I would update my orders and within 30 minutes the competitor would come in and update theirs. This happened at all times of the day - so i took all the lines of this item down to Jita prices in Amarr and Dodixie which meant i took a 8bn hit to profits. Needless to say, literally within 5 minutes the competitor had come in and done the same.
Now, given the competitor had slowly built up their orders over 2 months i don't think this is loot from a gank. I think this is a new competitor coming into this line of items and i also think they are either at their computer 24/7 or more than one person has access to the account . . . . . . . the orders are updated too quickly. I don't have a view as to what their strategy is and i don't even know if they realised i have just pulled the prices down to Jita levels.
My next step will be to slowly take one or two items down by another 25%, if the competitor follows i will buy the item and ship both (mine and the one just bought) to Jita and sell at a discount there.
So, looking at July another way, my wealth would have increased by (only) 5.7bn before the 8bn stock write-down.
Therefore, this is still a poor month where sales were only 1.5bn per day vs the 2.5bn i need to achieve.
I was not active at all, only coming on once a day to update Sell orders and replace items sold but the poor last 3 months where profits have not achieved the 10bn target tells me i need to adjust my strategy.
The goal for 1bn profits per day which will need c7.5bn sales per day looks quite far off.
Worth saying, this is a game and so very enjoyable to have a competitor that is making me rethink what to do and change direction aggressively. This is what it is all about.
1) Plex the account - aim number one all the time - done
2) Increase sales in Dodixie - missed
3) Increase sales in Amarr - done (surprisingly)
4) Review the Trading character in Rens to determine what best to sell - ongoing
5) Review the Trading character in Hek to determine what best to sell - ongoing
Reminder of my Current Business.
I operate with one omega account (paid for with plex) with three alts and now another (alpha) account with two alts. This latter account with two alts is doing not much right now.
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 or inter-regional trading, i want to generate income of 10bn isk per month after paying to Plex my account.
My business model evolves over time. As my wealth increases i focus on higher value items.
Now, this is under review: currently, i only buy items in Jita for over 100m isk. In time that will move up. I don't want to be buying items from Jita for 30m and selling in Dodixie for 45m - that may be great margins but does not move the dials anymore. I may go back to buying for 30m!
End of Scarcity
I will talk about this in a coming post but it is clear to me that mineral values will fall and therefore anything manufactured from minerals will also fall in price.
Therefore, i need to be very careful what i try and sell that can be manufactured from minerals today. I run the risk of cheaper items being manufactured and undercutting me.
Change in tax rates - temporary and permanent
Another item i will talk about in a coming post but for now i am not changing my strategy of seeking to make 25% margins on the Purchase cost in Jita. I don't sell items that are price sensitive, if someone wants to buy an item i sell they will likely pay the price i am offering rather than fly over to Jita to get a cheaper price.
Analysis of Trading Profits
In total i made 57.2bn of sales in July which made me item profits of 12.7bn isk.
Overall, sales declined 12% in July having declined 24% in June, 7% in May and 16% in April. This is a poor run and sales peaked at 91bn in March it seems.
In the line of items where a new competitor has come in, I had 42bn of stock on the market, now written down to 34bn. So, in effect, there was 42bn of stock out of a total 100bn on the market that was not making any sales for me. Looking at it that way, perhaps i should be less surprised at the tougher times i am facing . . . . but even back in the day when i effectively only had 60bn items for sale, my profits were still better.
Big lesson to self here: I was clearly highly exposed to these line of items and i now am trying to get out at Jita prices. Big drag on profits.
Dodixie sales were down 35% to 11bn in July vs June and Amarr sales were actually up 1% to 36bn.
Amarr is clearly now my main income generator but i think i can reclaim the glories of Dodixie by going back to the old items i used to sell. Lets see.
From these sales i made item profits of 12.7bn.
When i say "item profit" i mean the pure profits of buying from Sell Orders in Jita and putting up for Sale in Dodixie and Amarr. So before all fees / taxes etc.
The character in Rens made small sales of 0.6bn, down from the 2.0bn in June. The characters in Rens and Hek are on hold for now whilst i sort out Amarr and Dodixie.
This therefore was an item margin of 26.9% (12.7/47.2) vs my target of 25%. So, at least my margins are on track. This is obviously calculated before the 8bn stock write-downs. I am trying to gauge the underlying business here.
Since September 2020 the item margin range had been 28% to 32% with one low outlier of 26.6% in October 2020 but i have now had three months of c26% in a row. It is still good news, i am comfortably beating the 25% i really need to make this all work (see below).
From this I then 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 47.2 = 0.9bn
Sales tax cost me 0.9bn ISk (=1.9% of sales) - both main characters are level 5 in Accounting, the Rens character is an alpha account so may start to dilute the sales tax rate upwards if its sales rise. The new temporary reduction in Sales Tax is starting to help.
Broker Fees costs me 3.8bn (=8.1% of sales). Now, i can break this down into the initial listing fee of 3.50% (because i am Level 5 Broker Relations on both main characters) and therefore the rest is the cost of changing the price which is 1.14% a shot. . . . . . . this will all start to change with the new Tax system though.
So, i know the listing fee = 3.50% x 47.2 = 1.7bn and therefore the price change fee is 2.1bn (3.8 - 1.7). This 2.1bn is 4.6% of sales which reflects a steep increase in competition in Amarr and also Dodixie for the items i sell. i.e. i had to change the price on my Amarr / Dodixie items more often to keep them priced competitively. These are the items i am now trying to sell at Jita prices to leave the market.
This takes my 'Business Profits' to 7.0bn isk for July vs 6.6bn in June. This is what 20-30 minutes a day in July gave me. Still, some comfort of a profit increase before i stepped in to make the aggressive stock write-downs.
So, the post-tax margin is 26.9% - 2.0% - 1.9% - 3.5% - 4.6% = 14.9% (=7.0/47.2 = business profits / sales).
Fees and Taxes take 12.0% off my margins (2.0+1.9+3.5+4.6). That is a big hit. I can take action to reduce this which i may investigate in the medium term.
14.9% is ok, i would normally aim to get a respectable 13 to 15%.
And then from those 'Business Profits' i buy Plex for 1.3bn isk to extend the Omega by 30 days and the 8bn stock write-down.
That, therefore, is the roadmap from making 47.2bn of sales and seeing my wealth decrease by 2.3bn as a result.
Items i am selling in Dodixie and Amarr
I sell blueprints, skill books, implants, ship equipment and structure modifications.
Blueprints are on hold - i don't think i have sold a blueprint in many a week. At the level i am now focusing on, the c1bn isk level, there to appear to be a dedicated few players doing the same thing. The the market is exceptionally slow moving, even for my liking.
Implants are doing ok - i am expanding into more types and moving up the isk value curve. I now only focus on implants to sell for at least 150m isk. This is a slow but nice market for me.
Ship Equipment has slowed down recently, supply has really dried up in Jita. Something to re-examine but until i am more certain as to why supply has dried up and therefore why prices in Jita are up so much i intend to tread carefully.
Structure modifications is what i am pulling out of.
For now, Amarr is doing much better than Dodixie. I am not sure if the Dodixie is getting slower or if i am merely focusing on the wrong items.
Rigidly sticking to the 25% margin target. Courier fees and taxes can take a whopping 12% of that to leave me with 13%. This is the one line i can't really cross. If i took the margin down to 20% then after costs i am looking at 8% profits which leaves no room to change prices too often!
Dodixie Seller character (Tax rates quoted below not adjusted for recent changes)
This remains my main character and was my biggest seller - Amarr just over took Dodixie this month.
I have now trained all the relevant skills to Level 5.
The skills relevant to Trading that i have are:
Accounting: Level 5; means i am charged 2.25% of the sales price on completed sale vs the normal 5%
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 5 (increased by two levels in January); increases the number of items i can list by 16 per level
Marketing: Level 3 (increased by one level in January); this allows me to set up Sell Orders in stations other than the one i am in; it also allowed me to look to increase my Contracting skills which i will need to sell my BPO copies from invention
Given the level 5 Trade, level 5 Retail and level 5 wholesale, i am able to post 145 items for sale (5 + (5x4) + (5x8) + (5x16)). With no Trading skills you can post up to 5 sell orders
I may have to train Tycoon which will give me an additional 32 slots per level.
Amarr Seller character (Tax rates quoted below not adjusted for recent changes)
I have now trained all the relevant skills to Level 5.
The skills relevant to Trading that i have are:
Accounting: Level 5; means i am charged 2.25% of the sales price on completed sale vs the normal 5%
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 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).
This market is much more competitive so it is harder to find items to make a good sale - but is still very profitable.
Rens and Hek characters
I want to see if i can take into some sales in these trade hubs. I don't want to target much but if i could get to post plex profits of say 3bn isk per month for minimal work then that would be ideal.
I have restarted these two characters. My wild ideas of what would sell in Rens and Hek have proved to be just that. Wild.
So i now need to relook at what works and go from there.
I only have 2.6bn items for sale in those two areas and that, realistically, should be zero.
I will sort our Dodixie and Amarr first before revisiting Hek and Rens.
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 1.5bn isk of items to both locations. So Dodixie one night, Amarr the next. Keeps my time on Eve to a manageable 45 minutes which includes looking for potential new items to sell.
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 8bn isk of items from Jita. The total cargo volume is 10-250m3 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.
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.
Outlook
August will have seven aims:
1) Plex the account - aim number one all the time
2) Move out of Structure Modifications market
3) Revisit the Sales strategy
4) Increase sales in Dodixie
5) Increase sales in Amarr
6) Review the Trading character in Rens to determine what best to sell
7) Review the Trading character in Hekto determine what best to sell
The daily sales in July averaged 1.5bn.
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.
So far i have achieved this in December, January, March and April.
Current wealth is 87.0bn ISK made up from:
- items in hanger for sale 3.0bn ISK
- Buy orders on the market 0.0bn ISK
- items for sale 101.6bn ISK
- less a 20% provision 20.3bn 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 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.
