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LHA Tarawa
Posted - 2009.11.18 19:20:00 - [31]
 

Based on the OP, are these the... I guess you'd call them counter arguments.

1) Use BPO and don't include the price of a BPC run into the price.
2) Ensure you are using well researched BPO to cut down and waste.

3)
a) Be sure to buy your minerals for below Jita average sell order price.
or
b) Be sure you will be able to sell for above the Jita average buy order price.
or even better...
c) both a and b.



And above all else,
4) be sure to consider the minerals as free or discounted if you got them from mining or reprocessing loot.


Okay, 4 is just to see if you are paying attention.

ddooxx
Posted - 2009.11.18 19:46:00 - [32]
 

Originally by: Dr BattleSmith
Originally by: Estel Arador
Note it's currently profitable to build T1 battleships, insure them, and self-destruct.

It's the best thing that could happen, you don't have to wait for people to buy your stuff!


A glaring example of just how fake and over-supported the Eve market is.

You know I can go down to the Toyota dealer, buy a car, drive it around to the wreckers, sell it for scrap metal for more then I paid.
lol right....


http://en.wikipedia.org/wiki/Chop_shop
An illegal chop shop can disassemble your Toyota into component parts that sell for more than you paid for it.

Dr BattleSmith
PAX Interstellar Services
Posted - 2009.11.21 00:37:00 - [33]
 

Originally by: ddooxx

http://en.wikipedia.org/wiki/Chop_shop
An illegal chop shop can disassemble your Toyota into component parts that sell for more than you paid for it.


What about the legal chop shop?
Not so profitable when you have to pay for the car?

Jesnens LoveSlave
Koichi Scientific
Posted - 2009.11.21 06:48:00 - [34]
 

Edited by: Jesnens LoveSlave on 21/11/2009 06:52:39
Originally by: Darcon Kylote
Edited by: Darcon Kylote on 18/11/2009 14:08:03
Edited by: Darcon Kylote on 18/11/2009 13:54:10
Originally by: Borun Tal
Always keep in mind that you will rarely know what someone else's costs are. Just because it isn't profitable to you don't stupidly assume that the other guys is a "minerals are free" type; he/she may just know more and have access that you don't.


No. Even it they aren't considered free, it's still the same error in judgement. Here's an example.

I used to live in NPC 0.0 and there was trit on the local markets at around 1 to 1.5 when it was selling in empire for over 4. This happens because of hauler spawns dropping 100mil trit several times a week in some constellations. On most jump freighter runs I was going back empty anyway, so I'd load up on trit and jump it back.

So now I got a massive load of trit in empire that I paid 1.5 for. I could sell it locally for about 4.0, or I could build a battleship and sell that battleship for market value or just under to move it fast. Let's disregard hauling and say I can sell either the BS or the trit equally quickly in my local highsec.

So, what's my cost of trit on that battleship hull? Is it the 1.5 I paid or the 4.0 I could have gotten? There's no question in my mind, it's the 4.0 I could have gotten. No matter how smart I am or how much access I have to a good deal, my cost is always 4.0 because that's the opportunity cost of my minerals.

It's the guys that think their cost is 1.5 that keep prices low. Not that I'm complaining, I'll take their money.


Except, since you were coming back empty anyways you are making a profit as your opportunity costs are zero. You would have taken that JF to 0.0 anyways, so the opportunity costs involved are those related to the jump freighter trip, not hauling the trit back. When you resell the trit in empire you get 4isk pu, whether it is in the form of a battleship or as raw mins makes no difference, you still make a profit you would not have made otherwise.

edit, You ever think that maybe the ships in empire are the result of people getting mins for dirt cheap in 0.0, then building them into ships for the favorable volume so that can be shipped to empire and resold easily and quickly?

Lord Fitz
Project Amargosa
Posted - 2009.11.21 11:06:00 - [35]
 

Edited by: Lord Fitz on 21/11/2009 11:07:03
Originally by: Breaker77
Originally by: Zifrian
Originally by: Vaerah Vahrokha
I am making up to 100% profit on some T1 items and about 200% on few T2 (108 sold today). Don't see this so bad income tbh.


You factor in your datacore costs on T2? My guess is no.


Profits that are are very possible on T2 if you know where to buy and sell at.


Alternately you can just buy and sell and not actually do any of the building bit and still make most / all of the profit.

Quote:
Thanks - we are debating in alliance about whether it's just cheaper to buy @ Jita than do the work ourselves, and the BPOs are always a question. I'd love to buy an old char that owns a couple of T2 ship BPOs...


BPOs only have any effect at all on invention profitability, if the market for the item is less than what can be produced by all BPOs, in which case, the BPO itself is unlikely to be profitable (and many T2 BPOs simply aren't). Prices are determined by the lowest price people are willing to invent for, and in many cases, that's an on-paper loss.

With the amount T2 BPOs have been devaluing of late (due to reduced material and invention costs), it's likely that if you sold a T2 BPO a year ago, and spent the year inventing you would be far better off than if you held onto it and spent the year building from it. Basically, they're great big money pits whose value is determined not by their very small profits (compared to profits from other similar sized investments) but by their rarity (and there are over 10,000 of them).

Most importantly, if something is not profitable, don't whinge about it, just don't do it. The reason it's unprofitable is because there are 500 people out there who are still doing it and undercutting each other despite there being no profit.

Yarinor
Capital Construction Research
Pioneer Alliance
Posted - 2009.11.21 11:18:00 - [36]
 

Originally by: Lord Fitz
BPOs only have any effect at all on invention profitability, if the market for the item is less than what can be produced by all BPOs, in which case, the BPO itself is unlikely to be profitable (and many T2 BPOs simply aren't). Prices are determined by the lowest price people are willing to invent for, and in many cases, that's an on-paper loss.

With the amount T2 BPOs have been devaluing of late (due to reduced material and invention costs), it's likely that if you sold a T2 BPO a year ago, and spent the year inventing you would be far better off than if you held onto it and spent the year building from it. Basically, they're great big money pits whose value is determined not by their very small profits (compared to profits from other similar sized investments) but by their rarity (and there are over 10,000 of them).

Most importantly, if something is not profitable, don't whinge about it, just don't do it. The reason it's unprofitable is because there are 500 people out there who are still doing it and undercutting each other despite there being no profit.


The problem I see with the eve economy atm is there is at least SOME "My minerals/datacores are cheap cuz I got them from buy orders" perhaps even some "my lab slots are free cuz I used a corp lab".

This puts basicly everything below the profitable to build margin.
Then add on top of that the fact that many people are too lazy to put up their own buy orders which gives traders items for cheap, and why would a trader care if the T2 mod he just bought for ˝ the build cost sells for 60% of buildcost? He still made a profit. Obviously this puts manufacturers/inventors at a disadvantage, but there's nothing really to do about it.

The only way to fix it, as I see it, is to blow more stuff up so more stuff needs to be produced. We haven't seen any major wars recently, which also explains why mineral prices are at the insurance fraud level. (However, IT seems to be messing a bit around with PL atm, so maybe that can evolve a bit.

Jon Rackham
Posted - 2009.11.21 19:58:00 - [37]
 

Well, I can't speak specifically about anyone else's experience, but I've been operating as a T1 Battleship dealer in Jita for the last several months, and I've made a pretty decent profit.
I buy minerals at the Jita buy order price, haul them 1 jump away, and manufacture using BPCs (always buy the lowest price BPCs you can so long as the ML is at least 10). Then I haul the ships back and sell them for Jita sell order price. My profit margins are narrow (only 5%-10%) but they're consistent.
And before you ask, yes, I've checked to see if I could make more by selling the minerals directly, and I couldn't. I'm sure I could make ISK faster some other way, but the game's about having fun not just getting rich.

Nahkep Narmelion
Gallente
CALIMA COLLABORATIVE
Atrox Urbanis Respublique Abundatia
Posted - 2009.11.24 04:55:00 - [38]
 

Quote:
Don't factor in BPO costs. They are sunk costs and you can recoup any BPO cost by selling it on the market or on contracts if you "went out of business" so to speak.


Yes and no. No, BPO's are not sunk costs. You can recover the isk you spent by reselling the BPO at any time. As such, this makes BPO's a fixed cost. However, the poster above is correct in that neither fixed costs or sunk costs are used in setting the price--only variable costs.

Kolatha
Posted - 2009.11.24 09:07:00 - [39]
 

Originally by: Borun Tal
Always keep in mind that you will rarely know what someone else's costs are. Just because it isn't profitable to you don't stupidly assume that the other guys is a "minerals are free" type; he/she may just know more and have access that you don't.

You will also find that in a lot of those "below cost" sales the seller is more interested in a quick sell and quick return rather than high profit margins.

Also, a lot of people just don't care if they aren't selling at the maximum achievable profit, they are happy if they start the day with 20 million isk and end the day with 30 million isk. It plain and simply just does not matter to them that they could have ended the day with 35 million isk instead if they had followed the market trends. They are happy with the profit made and don't care to put the extra effort in to sc**** out a few extra isk.

To these people profit is profit and it doesn't matter them that the profit could have been larger.

Andron Blaxcor
Posted - 2009.11.24 11:20:00 - [40]
 

Originally by: Dr BattleSmith
Originally by: Estel Arador
Note it's currently profitable to build T1 battleships, insure them, and self-destruct.

It's the best thing that could happen, you don't have to wait for people to buy your stuff!


A glaring example of just how fake and over-supported the Eve market is.

You know I can go down to the Toyota dealer, buy a car, drive it around to the wreckers, sell it for scrap metal for more then I paid.
lol right....



Yep, we can't have a fake and over-supported market in a game full of spaceships shooting lasers at each other now could we? This is a game and the lower cap on mineral costs from insurance stops markets collapsing to zero price and destroying the game. This isn't the real world, different rules apply, get over it.

Nahkep Narmelion
Gallente
CALIMA COLLABORATIVE
Atrox Urbanis Respublique Abundatia
Posted - 2009.11.24 14:47:00 - [41]
 

Edited by: Nahkep Narmelion on 24/11/2009 14:54:59
Quote:
Yep, we can't have a fake and over-supported market in a game full of spaceships shooting lasers at each other now could we? This is a game and the lower cap on mineral costs from insurance stops markets collapsing to zero price and destroying the game. This isn't the real world, different rules apply, get over it.


Quite correct. The BS insurance provides a soft price floor for minerals. It insures that there is at least some isk to be made by mining. This in turns keeps the market going. If it were removed then the lower bound price on minerals would be zero.

Contrary to some posts I've seen on these forums the major problem with the Eve economy is not inflation, but exactly the opposite--deflation. Prices generally trend down over time, not up. Look at each new ship as it is introduced. I make T2 items and the price there has also been trending down.

Quote:
Except, since you were coming back empty anyways you are making a profit as your opportunity costs are zero. You would have taken that JF to 0.0 anyways, so the opportunity costs involved are those related to the jump freighter trip, not hauling the trit back.


No. The opportunity cost is the next best option he has for the trit. So if he builds BSs then the next best option is to sell it directly for 4.0/unit. If he sells it, it is using in module/ship construction. The jump freighter costs are sunk costs and totally irrelevant since he cannot recover the cost (the fuel is used and gone--hence unrecoverable).

Seriously, sunk costs are just that sunk...gone. Ignore them. Simple example, you plan a vacation and the hotel has a $100 non-refundable deposit. The day you are to leave you feel sick and really just want to stay home. Now do you still go because you'll lose that $100 or stay home? You stay home because the depost was lost to begin with, it is non-refundable and hence sunk.

GrandPa Throttlebottom
Posted - 2009.11.25 22:24:00 - [42]
 

Originally by: Darcon Kylote
Edited by: Darcon Kylote on 18/11/2009 14:08:03
Edited by: Darcon Kylote on 18/11/2009 13:54:10
Originally by: Borun Tal
Always keep in mind that you will rarely know what someone else's costs are. Just because it isn't profitable to you don't stupidly assume that the other guys is a "minerals are free" type; he/she may just know more and have access that you don't.


No. Even it they aren't considered free, it's still the same error in judgement. Here's an example.

I used to live in NPC 0.0 and there was trit on the local markets at around 1 to 1.5 when it was selling in empire for over 4. This happens because of hauler spawns dropping 100mil trit several times a week in some constellations. On most jump freighter runs I was going back empty anyway, so I'd load up on trit and jump it back.

So now I got a massive load of trit in empire that I paid 1.5 for. I could sell it locally for about 4.0, or I could build a battleship and sell that battleship for market value or just under to move it fast. Let's disregard hauling and say I can sell either the BS or the trit equally quickly in my local highsec.

So, what's my cost of trit on that battleship hull? Is it the 1.5 I paid or the 4.0 I could have gotten? There's no question in my mind, it's the 4.0 I could have gotten. No matter how smart I am or how much access I have to a good deal, my cost is always 4.0 because that's the opportunity cost of my minerals.

It's the guys that think their cost is 1.5 that keep prices low. Not that I'm complaining, I'll take their money.


Almost, while you have opportunity costs accounted for (heh I crack myself up) you need to pay some more attention to the next chapter in your microeconomic textbook, price elasticity. You say, “…I can sell either the trit or the BS equally quickly in my local Highsec.” You can’t.

The purpose of manufacturing an item for isk is to swap the velocity of sales for the velocity of production where, and only where, the velocity of production is much faster than the velocity of sales of the underlying materials. A BS priced at its mineral sales value will sell instantly, while the minerals themselves will need days…weeks… months to sell.

MightyRhinox
Minmatar
Rhinox Heavy Industries
Twilight Military Industrial Complex Alliance
Posted - 2009.11.26 05:42:00 - [43]
 

Edited by: MightyRhinox on 26/11/2009 05:42:58
Originally by: Nahkep Narmelion


Yes and no. No, BPO's are not sunk costs. You can recover the isk you spent by reselling the BPO at any time. As such, this makes BPO's a fixed cost. However, the poster above is correct in that neither fixed costs or sunk costs are used in setting the price--only variable costs.


Yeah, you need to go learn what a sunk cost and fixed cost before you open your mouth again.

Arron S
Gallente
Soviet Directorate of Eve
Posted - 2009.11.26 09:22:00 - [44]
 

T2 Production is still profitable even from buying BPC's off the market on some items. Some times your better off trading that item.

Vaerah Vahrokha
Minmatar
Vahrokh Consulting
Posted - 2009.11.26 09:36:00 - [45]
 

Quote:

I guess I wasn't paying attention to my profits but I guess I make 100% more often than not, sometimes I make more but I don't think I have anything you can make 200% off of. I'd love to see an example but since people don't like to share that information here (not that I blame you) I'll take your word for it.



Oh, it's an easy list: take the T2 items that sell for high number per day and check their graph.

Periodically (economics 101) they rise and form speculative bubbles. Have the stuff made for the bubble peak (or have a varied inventory) and pronto you get your 200% margins.
Ie an item usually selling for 850k sometimes goes up to 1.8M, and that's when I sell it.

Athamai
Posted - 2009.11.27 18:14:00 - [46]
 

First, congratulations on the correct way to calculate profit.

Second, you can find profitable t1(and t2) things to produce... You might be looking somewhere with a very efficient market so try going somewhere else. There are plenty of places where a variety of items simply are not available and plenty of places where you can sell them for a reasonable profit.

T2 takes a TON more research, and has many additional risks so I focused on T1.

Originally by: Commander Pan
So I'm new at manufacturing. I downloaded an Excel profit sheet. After plugging in different numbers (and assuming all LVL 5 and a reasonably high ME / PE), it seems that NOTHING manufactured (T1 or T2) is profitable if all raw materials and blueprints are purchased at market value?

Is that true? Or is the spread sheet wrong?

I must be missing something, because otherwise, it is more profitable to mine and sell raw materials.


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