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Friday 6 January 2023

Is it worth taking the Omega / Plex discounts on offer if you are in the business of making isk - YES & NO

As at the time of writing there has been a long time offer to discount Omega times.  For example, you can buy 3 month Omega for 1200 Plex vs the normal cost of 1500 Plex, so a discount of 20%.

The question is - should we go for it.

The summary of the below is the 3 and 6 months look good.  The 12 and 24 months less so.  In fact the 24 month deal is very poor.

It is all a question of what is the return your business makes.

What are the discounts on offer?

The table below summarises them all and adds some analysis.

It is a busy table but lets focus on the 6 month Omega to explain what is going on.  The cost of Plex does not alter any of the outcomes.

So, looking at the 6 month line:

The normal cost is 13.8bn (=500 plex x 6 months x 4.6m per plex = 3000 Plex x 4.6m)

CCP gives a 30% discount meaning instead of costing 3000 Plex it costs 2100 Plex.  Therefore, the actual cost is 9.7bn isk and so saving 4.1bn isk.  Over 6 months therefore this saving is 0.7bn isk per month.

The return technically made is 4.1 / 9.7 = 43%.

By Buying this 6 month deal you effectively save on 1.8 months (you pay the full price for 4.2 months and get 6 months).

So far, this all looks really appealing.

But we need to think of the alternative

Sticking to the 6 months, the alternative is that we take the 9.7bn isk and instead of buying the 6 month Omega we invest it in our business and pay the normal monthly Omega.

The question there is what monthly return must our business make to justify this course of action rather than taking the deal.

In other words, for the 6 month calculation, we take the 9.7bn isk we would have used to buy the deal but instead invest it into the business, reduce it by 2.3bn to buy a 1 month Omega, invest the rest for a month making a return of X%.  Then reduce that enlarged amount by another 2.3bn to buy the next months Omega and invest what's left to make that return of X% and so on for 6 months.

As it happens for this 6 month period, and it does not matter what the market price of Plex is (assuming it does not change), to make it more attractive to buy the Omega each month then your monthly return (i.e. X%) must be at least 17.0%.

If you can't make 17.0% then buying the 6 month Omega deal is better.

And that is what the final column on the table shows.

It shows the monthly return required to do better than buying the deal.

The longer time deals are poor

The 3 month deal is the best.  You would need to make a monthly return of 27.5% to mean that buying the 1 month Omega each time is a better idea.

The 24 month deal is the worst - you only need to make a monthly return of 6.1% to mean that investing the 30.4bn isk into your business and paying each month for a 1 month Omega is a better idea.

What does it mean for me?

I currently make a monthly return of 10-11% on my business (i.e. for every 100bn invested i make 10-11bn).

Therefore, assuming i knew i was going to play Eve for the next 6 months then i should buy the 6 month Omega deal rather than pay each month for the monthly Omega.

Example of the 6 month calculation

The below table shows how i worked out the required 17.0% return:

Start at time 0 and invest 9.7bn isk.  buy a 1 month omega for 2.3bn leaves 7.4bn, make the 17.0% return increases that to 8.6bn.  start of the second month reduce it by 2.3bn to 6.3bn for the 1 month Omega, increase that 6.3bn by 17.0% to 7.4bn and so on.  By the start of the month 6 you are left with 2.3bn to buy that final months Omega.

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