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Professor Jinmei
Posted - 2009.04.02 03:51:00 - [91]
 

I chose one from the below two, depending on the situation and other stuff:

Assuming sell orders are higher than buy orders, (and they generally are)

1)
The raw materials lowest sell order in the system where I want to sell my product is the ceiling limit of what I could have gained by selling the minerals

2)
The raw materials highest buy order placed in the system where I want to sell my product is the bottom limit of what I could have gained by immediate selling the minerals


Drizzt Zoloff
Posted - 2009.04.02 16:23:00 - [92]
 

Edited by: Drizzt Zoloff on 02/04/2009 16:25:41
I usually just look for what seems to be the median buy-order(that's what I would sell it at) and value my minerals at that. Any other module/ship item etc, I put in a sell order, but since minerals are dealt with in such large quantities I usually don't try to put those up in a sell order because the time it would take.

Needs NOK
Caldari
Make or Break
Posted - 2009.04.02 17:10:00 - [93]
 

People are dumb, and people like Passing is dumber than most, cos they think they are smart.

The easiest example to illustrate why mined mats has a value is this:

You have 1 million Trit. You have 2 options when it comes to selling it.

A) selling the trit.
B) Manufacture something

Let's say u do the easiest and sell the trit. With today's prices you would get approx 4.1m.

If u manufacture something using that 1m trit and nothing else you need to sell it for more than 4.1m to make it the best solution. THE END. If u can sell the minerals on market for more than u can sell the manufactured item for, Dont manufacture!

This ends the kid's corner, this next paragraph will have some grown up words.
Who cares about the cost of your time, it's impossible to estimate and can even be 0 if you're a complete loser or love playing EVE so much that you dont want to do anything else. Look at the alternative cost of your mats. And if you dont want to do the math, you'll probably make more Isk by selling the mats without manufacturing.

rant over.

Ms Delerium
Posted - 2009.04.24 15:21:00 - [94]
 

Edited by: Ms Delerium on 24/04/2009 15:22:57
But they are free!!!!!!!! I didnt pay anything for them!!!!11 Laughing just kidding

I decided to value them like this:


- Highest buy order in nearest trade hub (usualy its not worth to add sell orders for minerals)

- Plus manufacturing costs (installation and so)

- Then +5% for the work factor. I spent some of my time hauling the stuff and bringing this service. I deserve this 5% or more...

- +1% to cover the additional broker fee (when manufactured items, I will use sell order) usually will be lower, depending on standings, but just in case.

- Finally another cost, in my case I set it +3%, for market risks and time factor. Im not getting my money inmediately, but it will take a time and there will be some competitors undercutting.




And guess what, most of times the final conclusion is that a legion of morons always sell below costs, so its not worth.

At least its not in empire and when talking about most common items and ships that everyone and his dog likes to produce.

So we can say, manufacturing is nice if:

- You are producing capital ships or stuff that not every peep can do
- You operating in lowsec/0.0
- You do it for fun even considering you are losing some iskies


Ms Delerium
Posted - 2009.04.24 15:45:00 - [95]
 

To Passing:

http://en.wikipedia.org/wiki/Opportunity_cost



Now lets say tritanium is being sold at 2400isk/unit and you need 10millions trit to manufacture this ship. You will sell the ship at 40millions.

- Passing: HAHA i mined my own tritanium and im making 40millions profit. I rock!

- Intelligent player: Manufacturing this ship is stupid as morons are selling for 40millions, while just selling the tritanium will bring me 2,400 x 10,000,000 = 24billions.


Moral: you could have done 24billions and just did 0.04billions. Congrats you just have jetcanned 23.96billions

Tau Cabalander
Posted - 2009.04.24 16:53:00 - [96]
 

Edited by: Tau Cabalander on 24/04/2009 20:52:23

Originally by: PassingThrough
I prefer:

Profit = [Sell Price ] - [Cost of Materials] - [Production Fees] - [Taxes].

I don't care about what the minerals are valued at by someone else. I only care about what I spent to get them.
You forgot to factor in Opportunity Cost. While mining you are passing up the opportunity to do something else like ratting that generates ISK. Even if you AFK mine, you are passing up the opportunity to make ISK by selling the minerals by manufacturing with them.

Elite Qin
Caldari
The Graduates
Morsus Mihi
Posted - 2009.04.25 04:24:00 - [97]
 

Originally by: PassingThrough
I'm glad someone in here gets it.

Originally by: Beth Korai
Edited by: Beth Korai on 29/03/2009 01:17:51
Originally by: brinelan
You would rather take 10m worth of mined minerals, make something that sells for 5 m and be happy? Why not just sell the minerals for the 10m? ugh


Your example is a bit silly.

You: mine 10 million in minerals, and sell for 10 million, making 10 million profit
Non-miner: buy 10 million in minerals, make something, sell for 15 million, making 5 million profit
Me: mine 10 million in minerals, make something, sell it for 15 million, making 15 million in profit

You guys really need to stop equating value with cost; they're not the same thing. I would love for someone to explain how something that cost me zero isk suddenly cost me 10 million isk ifI use it to build something. Just because I CAN sell it for 10 million does NOT mean it has a 10 million isk cost on it suddenly.

Edit: and in answer to the original poster, I value the minerals much as others have: essentially an average between buy and sell wherever the manufactured/mined item will be sold.



pfft, you obviously don't get it. The point is that you're mining 10 mil worth of minerals, then you're turning it into something worth 5 mil. You don't keep those mins, btw, they turn into that thing worth 5 mil. You're basically cutting yourself 5 mil short of what you SHOULD be getting. The value of your minerals sometimes is more than the value of whatever you're producing.

Gekkoh
Caldari
Caldari Provisions
Posted - 2009.04.25 05:53:00 - [98]
 

Originally by: Elite Qin


Your example is a bit silly.

You: mine 10 million in minerals, and sell for 10 million, making 10 million profit
Non-miner: buy 10 million in minerals, make something, sell for 15 million, making 5 million profit
Me: mine 10 million in minerals, make something, sell it for 15 million, making 15 million in profit

You guys really need to stop equating value with cost; they're not the same thing. I would love for someone to explain how something that cost me zero isk suddenly cost me 10 million isk ifI use it to build something. Just because I CAN sell it for 10 million does NOT mean it has a 10 million isk cost on it suddenly.

Edit: and in answer to the original poster, I value the minerals much as others have: essentially an average between buy and sell wherever the manufactured/mined item will be sold.



pfft, you obviously don't get it. The point is that you're mining 10 mil worth of minerals, then you're turning it into something worth 5 mil. You don't keep those mins, btw, they turn into that thing worth 5 mil. You're basically cutting yourself 5 mil short of what you SHOULD be getting. The value of your minerals sometimes is more than the value of whatever you're producing.


That's not the example he used. He sold the finished product for 15M, not 5M. So he's making a 5M profit.

However, this isn't rocket science. Whether or not someone wants to put a value on the minerals, they have a value. If you choose to value them at less than you can sell them for, then you are throwing out that potential profit.

In this specific example, the profit breaks down as follows:

10M - From mining
5M - From producing
--
15M Total Profit

If you bought the minerals, you'd have:

0M - From mining
5M - From producing
--
5M total profit

However, you also didn't spent the time it took to mine the 10M in minerals. In either case, the actual profit from production was 5M. The source of the minerals has no bearing on the production profit. <-- That's the key to all of this.


The real problem with this point of view is the following situation:

"Mined minerals are free":
0M - Value of minerals (what you can sell them for)
9M - Sale price of finished good
--
9M Total Profit

-vs-

Mined minerals can be sold:
10M - Value of minerals (what you can sell them for)
9M - Sale price of finished good
--
-1M LOSS!!!

In that light, why on earth wouldn't you value your minerals at the current market price? If you're not doing that, then you're potentially throwing away ISK by producing things and selling them for less than you could have made just by selling the minerals!

jandelaar
Posted - 2009.04.25 06:32:00 - [99]
 

Originally by: Estel Arador
Aren't the minerals you mine free? Wink


shsh.....arlready to many people think so, you want the industry go kaboom hahahaLaughing

thebarry
SRS Industries
SRS.
Posted - 2009.04.25 13:05:00 - [100]
 

/me facepalms

Dr Silkworth
Posted - 2009.04.25 21:17:00 - [101]
 

Edited by: Dr Silkworth on 25/04/2009 21:19:46

I actually value them about 20% higher than the market values them because to me they are worth what I can get from the finished product. if I can take 2 trit and make a space widget that I can sell for 10, my trit is worth 5.

Another area this argument repeatedly breaks down is that no one ever brings in the factor of whether or not someone is a single person corp producer or an actual corporation that is paying people to mine. A single person can valuate his ore as in the above example and they can undercut other corps all day while they acquire capital to get better ships and prints. It doesn't even hurt them because they have a finite ability to consume the product. I roughly consume the same amount I mine single handedly. I have trouble selling that much high profit product though in the area I mine and produce if I don't match sales with production

If others mine for me, I must pay them. Suddenly, my whole formula gets transformed into one where I must value my trit/mins at market rates because I pay a bit higher than market rates to corp mates. Now I have more than I can sell locally so I must additionaly pay for couriers also, unless I can get them free :).

My ability to consume is still limited to some geographical areas demand and the number of mfg slots so I must search for products that will roughly consume the same amount of materials I can sell in the form of products. I must price my products with some relation to the markets mineral prices. If slots are the limit the items must be larger or take less time to produce to try to balance mining capacity and mfg capacity. If I overproduce ore or products they or the mins sit and dilute the value I placed on them in the first paragraph because at best they would have to be valued at market reprocess, highest buy prices minus reprocessing losses. If it dilutes the value below the mineral sell prices i might as well lay off miners cause they aren't making me any money unless I speculate that the mins will rise in value soon.

Materials and goods in storage also have a cost associated with them. Corporate hangers cost money every day and if you are in a hi vol system, they are not cheap enough to ignore. In short, an efficient operation can value minerals at a higher price than an inefficient organization and even an inefficient corporation values them higher than the one person operation.




Somsri Gamegon
Posted - 2009.04.26 01:44:00 - [102]
 

Edited by: Somsri Gamegon on 26/04/2009 01:45:53
To reply to the topic question - and in near-utter ignorance of any sophisticated economic theory or principle - I'm a miner.

In my mining ops, I use: an Osprey with two Miner II lasers, two standard missile turrets, a cargo expander, a mining upgrade and a shield recharger; A Badger with a 150 mm hybrid turret and a cargo expander; and two (soon to be four) Giant Secure Containers. I don't recall as I sit here the precise cost to me of those items, but on the close order of 8.5 mIsk - I know, pennies to all the high-fliers out there.

I usually mine about three hours a day, four to five days a week and fill four GSC loads of velspar or scordite. I mine in .7 space since I'm not well-enough armed or partnered to go much lower yet. I usually go to the same 'roid belt and set up my GSC's in a line, anchor them, then bring in the Osprey and fill them up. When I had two GSC's, my goal was to fill each twice; with four I'll fill each once. Not laziness, but competition from other miners, some of whom use barges. I'm not complaining; that's life in EVE.

Now to get to the value part. I'd like to realize my mid-range goal before I get too much older (in real life) and that is to have a mining set-up to mine ice and sell it to player corps for their stations. Maybe not realistic, but I'll figure that out as I get closer. So, I refine the ore at my NPC corp station in the system where I mine it at 90.5% with 4.xx% tax (not a secret; I just don't remember as I sit here what tax is.) When I'm done, I sell it using the "advanced" tab on the market button for the regional average price in my region. Why? Because I have found that by setting it at that price, it's all gone the next (real world) day when I come back. So far anyway. As of last night, that was roughly 4.15 ISK per unit of trit and 3.something per pyrites; sometimes, I have a lot of scordite, you know?

For me, pricing and valuation isn't about maximizing profit; it's about advancing toward my goals .. or at least, toward the financial where-with-all to reach the next one (that mining barge and associated gear; about 12 mISK) in a steady and enjoyable way. I take time to role play, shoot the occasional Guristas who fires on me, think about where I'm going in EVE and if I want to go there, think about routes through Empie space to lower-sec systems with 'roids and ice and whether I ought to turn 3 Sisters Mining, Proprietary into 3 Sisters Mining, Inc. and train up two alts for trade and maybe manufacturing; find a suitably low-sec system and build a POS and mine and refine and ... ah, the dream of a cozy little house and a white picket fence, eh! Wink

But that's how I value my ore and minerals and why. Believe it or not, not one spreadsheet is used in my operation of Three Sisters Mining. What I mine and refine is a means to the end of ... to my goals in EVE, which change in large and small ways every time I learn something new about EVE. Rather frequently, I must confess! Embarassed But, fellow pilots, miners and capsuleers (sound like a union organizer, eh?) that is how I value my minerals.

Donner Blue
Posted - 2009.05.04 20:56:00 - [103]
 

Wow - you guys are so smart - you can explain economics and theories and hard math and stuff.

Why aren't you smart enough to see you are being trolled????? How many ISK have you lost being indignant and responding to this thread instead of mining free minerals?

Sidrat Flush
Caldari
Eve Industrial Corp
Posted - 2009.05.05 00:07:00 - [104]
 

Originally by: Donner Blue
Wow - you guys are so smart - you can explain economics and theories and hard math and stuff.

Why aren't you smart enough to see you are being trolled????? How many ISK have you lost being indignant and responding to this thread instead of mining free minerals?



I guess you're right, OR people are putting up buy orders and doing level 4 missions instead of mining? Or they could be pretending to work on industrial spreadsheet updates of course

Syndori
Posted - 2009.05.05 01:56:00 - [105]
 

Originally by: Somsri Gamegon
Edited by: Somsri Gamegon on 26/04/2009 01:45:53
To reply to the topic question - and in near-utter ignorance of any sophisticated economic theory or principle - I'm a miner.

In my mining ops, I use: an Osprey with two Miner II lasers, two standard missile turrets, a cargo expander, a mining upgrade and a shield recharger; A Badger with a 150 mm hybrid turret and a cargo expander; and two (soon to be four) Giant Secure Containers. I don't recall as I sit here the precise cost to me of those items, but on the close order of 8.5 mIsk - I know, pennies to all the high-fliers out there.

I usually mine about three hours a day, four to five days a week and fill four GSC loads of velspar or scordite. I mine in .7 space since I'm not well-enough armed or partnered to go much lower yet. I usually go to the same 'roid belt and set up my GSC's in a line, anchor them, then bring in the Osprey and fill them up. When I had two GSC's, my goal was to fill each twice; with four I'll fill each once. Not laziness, but competition from other miners, some of whom use barges. I'm not complaining; that's life in EVE.

Now to get to the value part. I'd like to realize my mid-range goal before I get too much older (in real life) and that is to have a mining set-up to mine ice and sell it to player corps for their stations. Maybe not realistic, but I'll figure that out as I get closer. So, I refine the ore at my NPC corp station in the system where I mine it at 90.5% with 4.xx% tax (not a secret; I just don't remember as I sit here what tax is.) When I'm done, I sell it using the "advanced" tab on the market button for the regional average price in my region. Why? Because I have found that by setting it at that price, it's all gone the next (real world) day when I come back. So far anyway. As of last night, that was roughly 4.15 ISK per unit of trit and 3.something per pyrites; sometimes, I have a lot of scordite, you know?

For me, pricing and valuation isn't about maximizing profit; it's about advancing toward my goals .. or at least, toward the financial where-with-all to reach the next one (that mining barge and associated gear; about 12 mISK) in a steady and enjoyable way. I take time to role play, shoot the occasional Guristas who fires on me, think about where I'm going in EVE and if I want to go there, think about routes through Empie space to lower-sec systems with 'roids and ice and whether I ought to turn 3 Sisters Mining, Proprietary into 3 Sisters Mining, Inc. and train up two alts for trade and maybe manufacturing; find a suitably low-sec system and build a POS and mine and refine and ... ah, the dream of a cozy little house and a white picket fence, eh! Wink

(snip...)


My setup is basically the same as yours, except I jetcan mine with a Retriever. The price that I sell at changes depending on how much ore I have. If I only have 200k units of trit, I'll sell to the highest buy order. However, if I have a few million units, I'll usually sell it at 2% below regional average. Granted, I'm too impatient most of the time and sell my ore as soon as I can get back to the station with a load, so my goal of a hulk and a nice w-space or 0.0 POS is looking pretty impossible right now ugh.

However, if I end up taking a Frigate out to 0.0 to see what I can get away with, I end up replacing the ship and mining lasers on it by mining and building the ship myself. It's horribly inefficient, but I figure ~10 minutes worth of mining and a difference of 500k to replace a ship isn't too bad of a tradeoff.

Sir Substance
Minmatar
Suddenly Ninjas
Tear Extraction And Reclamation Service
Posted - 2009.05.05 04:09:00 - [106]
 

Originally by: Lord Fitz
Edited by: Lord Fitz on 01/04/2009 15:05:51
Originally by: Sir Substance
when valuing minerals, i follow this guide:

trit: 2.3
pyerite: 3.2
mex: 23
isogen: 66
nox: 112
zydrine: 2400
mega: 4200

thats close enough for jazz, and i havent changed it much in two years.


I will buy multiple billions of isk worth of trit/pyerite/mex at those prices if you have it. ;)


im sure you would. the trit, pyerite and mex prices are largely based on instant buy order prices. im not patient enough to put up proper sell orders and get my proper isk's worth. use a locator agent to find out where i am, then place a station only order, and you might well eventually get multiple billions at that price. Smile

Marcus Xavier
Minmatar
Xavier Institute for Higher Learning
Posted - 2009.05.05 04:11:00 - [107]
 

Edited by: Marcus Xavier on 05/05/2009 04:12:45
I use the market value of the minerals from the major trade hub nearest to the system where I intend to sell the manufactured item (minus the transaction cost). In most cases, I'm comfortable calculating the weighted average of the top 4 mineral buy orders, since this value generally represents the amount of minerals that I would sell immediately if manufacturing was not profitable. Using the sell order complicates the matter since it adds a time element into your costs.

I chose the major trade hub to reduce price variability both in the daily buy orders and over time. Ideally, I'd probably want to use a moving average, but I'm OK using price snapshots of a weighted average to simplify calculating material costs.

Zezzix
Posted - 2009.05.05 05:51:00 - [108]
 

gods i hate it when people bring opportunity cost into it. none of you seem to know what it really is. for the person who posted teh wiki link, read the second sentence: "Opportunity cost analysis is an important part of a company's decision-making processes but is not treated as an actual cost in any financial statement."

PassingThrough
Posted - 2009.05.05 12:05:00 - [109]
 

Wow, I can't believe that this thread is still going. Laughing

Well, for one thing I would never sell the raw minerals on the market. That's the stupidest thing that you can do. If I could sell the minerals on the market for more isk than the item that I'm producing then I stop producing that item and start producing something that brings in more profit.

Whether you value your mined minerals in Eve is still just a personal choice. There really isn't a right or wrong way of doing it no matter what the first year college/university students think. This is a game and not real-life. The main force in real-life that drives all the theories that people are quoting is how to reduce the amount of taxes that you have to pay when you sell something. We don't have a complicated tax law in Eve to worry about so stop pretending that we do.

The really dumb people are the ones that can't grasp that Eve is a game. Razz

Originally by: Needs NOK
People are dumb, and people like Passing is dumber than most, cos they think they are smart.

The easiest example to illustrate why mined mats has a value is this:

You have 1 million Trit. You have 2 options when it comes to selling it.

A) selling the trit.
B) Manufacture something

Let's say u do the easiest and sell the trit. With today's prices you would get approx 4.1m.

If u manufacture something using that 1m trit and nothing else you need to sell it for more than 4.1m to make it the best solution. THE END. If u can sell the minerals on market for more than u can sell the manufactured item for, Dont manufacture!

This ends the kid's corner, this next paragraph will have some grown up words.
Who cares about the cost of your time, it's impossible to estimate and can even be 0 if you're a complete loser or love playing EVE so much that you dont want to do anything else. Look at the alternative cost of your mats. And if you dont want to do the math, you'll probably make more Isk by selling the mats without manufacturing.

rant over.

Umbriele
Gallente
Natural Inventions
Solyaris Chtonium
Posted - 2009.05.05 13:18:00 - [110]
 

Originally by: PassingThrough
Edited by: PassingThrough on 29/03/2009 06:06:37

But if I value my minerals at zero isk then I have no capital value to add to the production costs. Razz

You may value my minerals at 10 million isk, but if I don't value them at that on my books then it really doesn't matter what you think they are worth. On my books the capital value of the minerals that I mined is zero isk.

The value of those minerals will eventually get on my books in the form of net profit.

In the end either accounting practice works out to the same amount of isk in your wallet.

Using your way, if you use 10 million of your capital and sell something for 15 million you made 5 million in net profit and have 15 million in your wallet.

Using my way, if I use 0.0 in capital and sell something for 15 million I've made 15 million in net profit and also have 15 million in my wallet.

It all works out the same in the end since Eve doesn't tax you based on the net profit. If Eve would let me do a tax return and allow me to write off the production costs and give me a nice tax refund then I'd definately switch to your method of accounting to reduce my tax liability. But until then I like my accounting method better.




But in eve, the RL time has a cost. You cannot mine and apply your theory for more than 24 h / day, i.e. the income you can make has a limit based on your skills/ships/accounts/belt dimension. On the other hand, whoever consider the mined mineral a cost, and thus buy them from them market instead of mining them, dont have the time restriction, but only the restrictions of the market, location, etc..wich are not comparable with the time limit cap. If you are in Jita for example, the limit of the isk you can make from trading tends to be equal to your capital limit.


Yarinor
Capital Construction Research
Pioneer Alliance
Posted - 2009.05.05 20:50:00 - [111]
 

Originally by: PassingThrough
Wow, I can't believe that this thread is still going. Laughing

Well, for one thing I would never sell the raw minerals on the market. That's the stupidest thing that you can do. If I could sell the minerals on the market for more isk than the item that I'm producing then I stop producing that item and start producing something that brings in more profit.

Whether you value your mined minerals in Eve is still just a personal choice. There really isn't a right or wrong way of doing it no matter what the first year college/university students think. This is a game and not real-life. The main force in real-life that drives all the theories that people are quoting is how to reduce the amount of taxes that you have to pay when you sell something. We don't have a complicated tax law in Eve to worry about so stop pretending that we do.

The really dumb people are the ones that can't grasp that Eve is a game. Razz


Well sorry to say, but i was getting really ****ed at you because it really sounded like you said that it doesn't matter if you lose money from producing an item over selling the minerals because they were "free".

Also please note that, a few years ago, a college course on applied management used WoW guilds as a hands on example through the entire course, i heard an interview with the proffessor and she saying the college was thinking about making an economy course using eve as a hands on example.

Srvin Taisorgky
Posted - 2009.05.05 21:00:00 - [112]
 

I value them @ the purchase price (I usually set certain buy orders and wait for my price) and I use LIFO. Keeps it simple for me; if I hit an historic mineral low pointand purchae a lot I often keep that price, or re-mark to market rembering that my margin is actually greater than indicated.


Maerc Atreides
Caldari
Posted - 2009.05.05 23:06:00 - [113]
 

lets take item A :needs 900 Trit to build

Cost to build:
Install cost:1000
manufactureing fee:500
broker fee:540

Market value: 9000
Now player A mines his own minerals, cost in ISK: 0 ( unless he gets ganked)
Player B buyes his minerals, Cost in ISK: 3600

Who make more profit?

Marcus Xavier
Minmatar
Xavier Institute for Higher Learning
Posted - 2009.05.06 01:06:00 - [114]
 

Originally by: Maerc Atreides
lets take item A :needs 900 Trit to build

Cost to build:
Install cost:1000
manufacturing fee:500
broker fee:540

Market value: 9000
Now player A mines his own minerals, cost in ISK: 0 ( unless he gets ganked)
Player B buys his minerals, Cost in ISK: 3600 and runs a few missions to earn 3600 while player A mines his own minerals.

Who make more profit?


Fixed it for you.

Maerc Atreides
Caldari
Posted - 2009.05.06 02:18:00 - [115]
 

When I mine I have rats.....lot of rat.....I love rat...rat meat yum yum.
Rats also mean salvage, and loot to either sell or reprocess for..........more minerals. And when a rat goes for at least 11k ISK that is even more profit.

MIssions are more profitable per hour, but mining is more for long term results. Not for everyone, but for meCool

Ares Goldstein
Posted - 2009.05.06 02:50:00 - [116]
 

Originally by: Maerc Atreides
When I mine I have rats.....lot of rat.....I love rat...rat meat yum yum.
Rats also mean salvage, and loot to either sell or reprocess for..........more minerals. And when a rat goes for at least 11k ISK that is even more profit.

MIssions are more profitable per hour, but mining is more for long term results. Not for everyone, but for meCool


whats all this about "rat meat yum yum"? I'm not feeling it Wink

Josef Huffenpuff
Caldari
Posted - 2009.05.06 04:12:00 - [117]
 

Originally by: PassingThrough
Wow, I can't believe that this thread is still going. Laughing

Well, for one thing I would never sell the raw minerals on the market. That's the stupidest thing that you can do. If I could sell the minerals on the market for more isk than the item that I'm producing then I stop producing that item and start producing something that brings in more profit.

Whether you value your mined minerals in Eve is still just a personal choice. There really isn't a right or wrong way of doing it no matter what the first year college/university students think. This is a game and not real-life. The main force in real-life that drives all the theories that people are quoting is how to reduce the amount of taxes that you have to pay when you sell something. We don't have a complicated tax law in Eve to worry about so stop pretending that we do.

The really dumb people are the ones that can't grasp that Eve is a game. Razz



Out of this whole thread this is the post that made me smile most. Finally you admit that you DO actually sell your manufactured items for more than the component mineral costs because doing otherwise would be stupid.

This is what everyone has been trying to tell you for 4 pages. Do we really need to explain it to you AGAIN why you should assign a "value" to the minerals that you mined for free? It appears that you have actually been doing it all along without realizing it.

Tiny Tom
Posted - 2009.05.07 01:08:00 - [118]
 

Originally by: PassingThrough
I prefer:

Profit = [Sell Price ] - [Cost of Materials] - [Production Fees] - [Taxes].

I don't care about what the minerals are valued at by someone else. I only care about what I spent to get them.


The preferred definition of "cost" for accounting is "lesser of market or book value". The data in the game pretty much shuts down the idea that the minerals have a market value of zero.

This would leave you to argue that the book value on those minerals should be zero. I don't think you'd be able to convince an accountant of that. Frankly, by valuing them at zero, you'd argue that trashing the minerals you mined would have no impact on your ability to generate revenue and profit. But that's not true, is it?

Quote:
I'm not saying that your accounting practice is wrong. I'm just saying that it's not the accounting practice that I use in a video game where most of the reasons for those real life accounting practices don't apply.


The purpose of accounting is to reliably measure financial performance. If you care about financial performance--imaginary or otherwise--you do it right.

There's nothing wrong with not caring...but it is either ignorant or dishonest to apply accounting terms to numbers arrived at in blatant disregard to the rules of accounting.

Quote:
You play the game the way you want to and I'll play it how I want to.

At the end of the day I'll be happy about making lots of profit and you'll be upset that someone has undercut you and you are now loosing isk.

Sounds like I win. Razz


You only win over those too dumb or ignorant to see through your lie or ignorance. (I don't know which applies in your case, but to be honest it doesn't much matter.) In the event you are ignorant, learning how to apply accounting principles properly will help you generate more, not less money.

To the point of the posts original question:

Your method for valuing minerals will probably depend on how you run your business. I'm smaller, so I tend to work from the spot market. That means I buy (or sell) what I need as I need it. As a result, my value of minerals would be set based on what price I could get (either directions) and meet my desired quantity within the number of jumps and warps I'm willing to make.

If I were working on long term market (putting up persistent buy or sell orders), I would value my minerals, I would do so based on the price that sold what I needed to sell or buy what I needed to buy to continue my business.

northwesten
Amarr
Trinity Corporate Services
Terran United Federation
Posted - 2009.05.07 02:01:00 - [119]
 

For me I value them for public sales! is by Average cost. For allies or friends I value them by 5% below the buy orders. Made goods or minerals.


Mara Rinn
Posted - 2009.05.07 02:09:00 - [120]
 

I value minerals by the cost of the cheapest thing on the market that can be refined to produce the same minerals I just mined.

There are plenty of people out there who don't understand opportunity cost, they build things to sell at less than the embedded mineral worth. Don't try educating them, just buy up their underpriced embedded minerals, reprocess them, and post the minerals on the market for a quick, easy profit!

Your purchase encourages them to keep providing the market with cheap minerals. They get to feel good about undercutting the rest of the market for item X with their "free" minerals. It's a win-win situation.



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