One of the high earners if not the highest one in the WoW universe is the gems market. The reason behind all this is due to the fact that everyone from level 60-85 be it that they are leveling or raiding end game content or even PvPing will be getting gear that has sockets and needs gems, and this is where the term PROFIT shines at it's best.
If jewelcrafting is your choice of a weapon for making a killing on the AH, then there are a few things you need to know, before you get into the business and actually start making some serious profits. First thing you need to know is, that unlike other professions where the items you will be crafting can be bought with items you can farm, jewelcrafting works a bit different where in order to be able to cut a certain gem you need to have the pattern for that gem, and that is purchasable from the JC vendor. The currency is the daily token you get from doing the daily quest, and what that means the "older" your jewelcrafter is he will have access to more gems if you've did the daily quest.
So, what this exactly means is that if you want to be in the big game you will probably need to invest some time into doing those dailies, and not give up when you see how much time it will be needed before you get all the patterns available to you. Just to make it more vivid, for Cataclysm rare (blue) gems there are 53 patterns all worth 3 daily tokens which means that you will need 159 days to acquire all the rare gems, plus another 12 patterns for the meta gems which actually require 4 daily tokens which is another 48 days, so in total 207 days worth of doing dailies to have all the patterns available to you and unlock the full potential of the jewelcrafting profession.
So if you are still reading that means that you are ok with the fact that you will need to do some daily quests and are still willing to invest your time in it, well then read up on a few more pointers.
If you want to be a successful in the gem market then you need to start thinking like a big player, and what that means is that you don't simply scrape the earnings like any other jewelcrafter but instead you are dictating prices of gems and controlling the supply line and the how to do i will try and elaborate a bit on in the continuation of the post.
So like we said we need to be dictating prices rather then following them and how you do this is not really that complex but it will take some social skills and communicating with your competitors. Ok i'll stop with the chatter and get down to the bare facts.
First things first you need to define the prices you want to set, as a example i have my price ranges set xx - 195 (where xx is the lowest you would go to sell a gem, but i would rather i never have to get to that low point), and after you do that you need to get one thing straight because from 90% of the jewelcrafters out there don't seem to get, and that is the fact that when a guy/girl comes to the AH with the intention to get him/her gem it really doesn't matter what prices are there (well not if you overprice them to oblivion) but all they want is to fill up that empty socket because the sight of that new piece of epic gear just being empty like that is a painful sighting for them.
Second thing after you've set your mind on a given price is to make sure you talk to the most active jewelcrafters on the server and iron out a deal and ask them to put their upper prices to 195 as well just so they don't systematically undercut you if they've set their top price to 120 per gem.
And the third would be to make sure everyone gets accustomed to the gems worth being 195 rather then 20g or 30g. This last bit takes a bit of a finesse and some gold to back you up but once you get it to be in the zone you want it to be then everything gets into place and the profits start piling up. BUT and i do mean this as a big BUT, for everything to work out you will need to invest some time in the last phase because lets say people have been buying gems for 30g and now suddenly their price is 195g they will rebel a bit in the beginning and even undercut you, but just keep buying those cheap undercuts and in the long term you will see a increase in profits and when you buy those 30 gems for 20g don't look at it as "crap i've spent 600g for a bunch of gems" but rather something like "i invested 600g to get 4500g" (and this is even if your prices drop to 150g per gem).
One last thing before we continue on to the setup would be my advice to you, see if you can talk to the competition if they could recall their gems off the AH before you start the price resetting (meaning buying off the stock on the AH and posting them for your upper price) and don't be afraid to clue your competitors in on what is going on, because you will all profit in the long term, because remember if they are your competitors it doesn't mean they have to be your enemy so befriend them and profit together.
Ok since we've passed the few basic things you need to understand on how to approach the AH when you want to deal with the gem market lets get down to telling you the most effective and easy way to set up TSM for it. ( If you are new to the TSM addon check the explanation in my other post )
First of all make a new Category called Cata Gems (you can choose whatever you want for that matter) then make 7 new groups named respectively after the color of the gem plus one group for meta gems, that being as the following: Inferno Ruby, Amberjewel, Ocean Sapphire, Ember Topaz, Dream Emerald, Demonseye and Meta Gems. So after you have made these groups then cut at least one gem of every gem you can and respectively put it in the matching group.
After you've set all the gems in their groups get the prices set up as i said before where the top is 195g and the low point being the lowest you would actually go, setup the posting number to be 5 ( i've found that to be the golden middle for selling gems where it's not too high to be simply wasting the gold on posting ah cuts and not too low that there's not any of your gems up because they were sold out) and set the undercutting price as 1c.
Ok i sincerely hope this will clear up some of the unclear things people don't know about jewelcrafting as well as if it's worth it for them to get into it. So as always stay tooned in and i will make a few more posts about how to further control the market.