Here i am back with one of my rants. Today i am going to try and cover one of the most important things that i have noticed that people do that are basically robbing themselves out of profit. The thing i am referring to is under pricing, or inadequate pricing.
To try and explain this phenomena i will use two examples. The first one is how the real life economy disparity between countries is. For instance lets say that a person living in country A has pay check of 2000$, another person living in country B has a pay check of 1000$ and a third person living in a country C has a pay check of 300$.
Now what all these people have in common is the need to buy a TV. Lets say that a nice new TV on the market would be 500$, now that would be an OK price for person A, an affordable for person B and damn expensive for the person C.
One of the things i have been actually doing for quite a long time in WoW is asking all the people that i ever traded a single question, and that question is "How much gold do you have?" The reason behind this is not because i wanted to sell it for higher if they could afford it, but i wanted to get a general idea of what's the most common gold circulation among the normal/causal WoW player. The answers i got actually did give me a fairly good idea because i came down with numbers that implied that about 60% of the player base are all under 20k gold mark, then you have some 30ish percent that are 20-100k another 5% with 100-500K and about that same number with people over 500k. For similar numbers you might check some blogs or forums, but the problem with those is that the audit is pretty much from people that are on that site exactly for that reason, to make gold, and in return those are the people that fall into the last 10%.
Well this same example can be seen in WoW as well. The way this happens in WoW is not with a TV but pretty much everything else you are selling. For instance i have seen on way too many instances where a person that has a certain item that he wants to sell it, ends up selling it for a fraction of it's worth and loosing out on the profits that he could have been making. The most common example with this is how people price their crafted items and to a certain degree the transmogrification market.
The way people usually price their commodities is by the group of gold owners they are in (lets say you have 20K). Just put yourself in their shoes, you have an item that could be worth 10k to a person that is in a higher gold owner class then you , but you deem it too expensive because you doubt anyone would pay 50% of your total gold stash and you price it for 4k which seems like a 20% increase of your gold sum.
Now here comes another buyer that has a bit more gold in the sack, and takes your 4k item on the AH and re list it back for 10k. A few days pass but he eventually sells it to someone and makes a 6k profit over doing nothing but buying your item and re listing it back, and there you are happy with 4k profit while you should be pissed for missing out on the extra 6k you should have netted in.
But let us take a look at a more direct market with a more direct approach to prices. Let us take a look at the PvP gear and how people usually price their commodities and how they should be pricing it.
The way this usually plays out is almost always the same. The person that is making the gear deems it a great deal if he spends 100g on the materials to sell it for 200g as in reality that is 100% profit margin, but the problem arises when you take that same item and sell it for 1000g. Then what happens is your 100% profit margin you made is basically still a 100% profit but at the same time a 900% loss as well.
This same thing can be seen the most with the Transmogrification market. Yes, granted some people sell their items for 5,10,15 gold that you buy and flip, but those are not the people missing out, those are the misinformed, the actual people that are missing out on the profits are the people that are re listing the auctions. A perfect example of those would be a forum post i saw where a guy was asking the same question "am i cheating myself out of my profits" and he explains that he prices the items in 3 tiers a 200g, 400g and 600g and the reason? Well he is probably in the first gold owner class where his total gold sum is lower then 20k and a 600g is a good profit for him, and if you tell him that he could have flipped that for 10k he would laugh, or cry if you show him a printscreen of the actual sale.
Anyways not to make this post any longer than it has to be i will leave you with a few last words. If you happen to be selling gear, or pretty much anything on the auction house never limit yourself with setting a low price. For instance like i said with the PvP gear, if the materials are worth 100g then set your high price at 1000g and your lowest price at 200g, that way if no one else is nuking your sales you will end up making a 100% in your worst case scenario, and up to 1000% profit in your best case scenario. Just remember there is no going price, the worth of anything is as high as a buyer is willing to pay for it. So one last time, don't be afraid to set high prices for the things you are selling and i am sure you will find your profits to be much higher then you are accustomed to.
So, like always, keep an eye out for good opportunities out there.