Undercutting Prices

[psandak]

Effectively working the market in this game takes, above all, patience. Couple that with a little critical thinking and you can get filthy rich in no time.

 

Amen.

 

...You have to view the GTN as a long term thing if you truly want to profit from it, if you have to re-list your item then where is the harm?

 

Amen again.

 

Yeah, the cartel thing was kind of a joke. It's actually extremely unethical and illegal in most places.

 

You have to remember, the guy undercutting by massive amounts is probably trying to drive the market down so he can buy out and flip the products.

 

If he pushes everyone down to 25% of market value, he's making 400% on the turn around.

 

I think you are overestimating most of those who massively undercut. Based on my analysis (for lack of a better word) most of the massive undercutters I find are doing so because they have made a bad choice; a lot of the time these individuals post at a specific value ALL THE TIME simply because the item sold at that price in the past... they do not even bother looking at current pricing.

 

These individuals lack the patience that Horacio, Transcendent, and I espouse.

 

The overwhelming majority of the rest also make a choice: trying to keep prices down to what they feel is "right." But all they do is provide "wholesale" products to those who (for lack of a better phrase) "know better":

1. we see their low price
   
2. we know what the item costs to make/acquire and that their pricing is slim to zero profit
   
3. we also know what the item will sell for (much higher than what they are charging)
   
4. so we buy up their cheap products and re-post them at higher value.
   

[AlrikFassbauer]

Undercutting balances the market a little bit more.

 

Becauise otherwise we had strong Monopolies or Oligarchies and Dictatorship of prices - driven by a selected few (which are already so rich - in terms of credits - that they can destroy almost anything, look at Microsoft for how it works [ DR-DOS as an example ] ).

 

Of course those who want to amass Money are greatly interested in establishing and defending their Monopolies ...

 

Besides : Guess who got this year's Nobel Prize for Economy ?

Edited October 26, 2014 by AlrikFassbauer

[psandak]

Undercutting balances the market a little bit more.

 

Becauise otherwise we had strong Monopolies or Oligarchies and Dictatorship of prices - driven by a selected few (which are already so rich - in terms of credits - that they can destroy almost anything, look at Microsoft for how it works [ DR-DOS as an example ] ).

 

Of course those who want to amass Money are greatly interested in establishing and defending their Monopolies ...

 

Besides : Guess who got this year's Nobel Prize for Economy ?

 

Jean Tirole

 

I take it your overall point rests in your first statement: "Undercutting balances the market a little bit more." Because Monopolies and Oligopolies are impossible in MMOs. Anyone who attempts to establish and/or defend a monopoly/oligopoly in an MMO is deluding themselves. The best anyone can hope for is to exert their "market power" to reset a given item's value at its already established high point. Someone in this position might try to establish a new high point, but that is up to buyers not sellers because there is NOTHING on the GTN that a given player absolutely needs and/or cannot get by other means; if buyers do not buy, the price is too high.

[Heat-Wave]

It completely depends on how you view things, but the 1 credit reduction, there really shouldn't be an issue there as they're NOT driving down prices by doing so. You have to view the GTN as a long term thing if you truly want to profit from it, if you have to re-list your item then where is the harm?

 

Yes, it does depend on how you view things...

 

You asked where is the harm if they undercut by 1 credit and you have to relist? How about, I am crafting more of the same item and so is the other seller, and if I keep relisting at the same price, he'll keep selling and I won't.

 

Of course, it is possible to craft more than the market wants, then lowering the price doesn't move units, but it does tend to work for most items.

[psandak]

Yes, it does depend on how you view things...

 

You asked where is the harm if they undercut by 1 credit and you have to relist? How about, I am crafting more of the same item and so is the other seller, and if I keep relisting at the same price, he'll keep selling and I won't.

 

Of course, it is possible to craft more than the market wants, then lowering the price doesn't move units, but it does tend to work for most items.

 

The answer is simple stop crafting what is not valued anymore. I go back to my Money Making Strategies guide:

 

- make credits not stuff - if the stuff you are crafting to make credits is not selling then why make it in the first place?

- diversity - if you make many different items then when one of them has a value crash, the rest will level that bump in the road. On every character, I have at least 4 different items that I can craft and sell regularly (some as many as 10), and that does not include GSH stuff or stuff I craft for friends and guildmates, or any excess materials I acquire. The point that...

 

• So what if Blue quality grade 28 deft mods are not selling at the moment? The Agile, Aptitude, Artful and Keen just sold out.
  
• Or so what if someone undercut my Advanced Might Augment 28s? I just sold half a dozen Redoubt.
  
• Or so what if my Primary Purple Dyes did not sell this time around? My Black/Blues sold out in 2 hours and at a higher than normal price.
  
• Or so what if stims are valued lower than the materials to craft them? I'll just sell the materials.
  

And the list goes on and on and on.

 

Do not get fixated on one item. And do not say you only have one item to craft. You are just not looking hard enough for a better market.

[Transcendent]

Yes, it does depend on how you view things...

 

You asked where is the harm if they undercut by 1 credit and you have to relist? How about, I am crafting more of the same item and so is the other seller, and if I keep relisting at the same price, he'll keep selling and I won't.

 

Of course, it is possible to craft more than the market wants, then lowering the price doesn't move units, but it does tend to work for most items.

 

So when you re-list an item, you always go with the same price? You need to have some leeway in your item pricing, there is nothing to stop you listing 1 credit lower yourself. Unless of course you are completely stubborn and don't realise most items have a price range. Know your lower limit, but have some flexibility on your actual profit.

 

As said though, it does help to be able to craft or sell more than one type of item and to know those markets before entering into them. If you've got an abundance of the same item, list a few, wait to be undercut, then list some more. Don't however list them all in one hit and then expect to be the only seller of an item, and try to limit the amount of time you're listing something for. 6-12 hours allows you to adapt to a changing market pricing much more effectively than listing for 2 days at a time.

[Yamchua]

When someone undercuts the price with less then 100 credits, I'll buy the more expensive one.

 

Easy as that. When it's notably cheaper, good for me!

[psandak]

When someone undercuts the price with less then 100 credits, I'll buy the more expensive one.

 

Easy as that. When it's notably cheaper, good for me!

 

honest question: what is the mentality behind this?

 

It is like seeing two supermarket circulars one has bananas for 59 cents/pound and the other has bananas for 60 cents/pound and going out of your way to buy the 60 cents/pound because the 59 cents/pound supermarket wants your business so you are not going to give it to them.

[eartharioch]

honest question: what is the mentality behind this?

 

It is like seeing two supermarket circulars one has bananas for 59 cents/pound and the other has bananas for 60 cents/pound and going out of your way to buy the 60 cents/pound because the 59 cents/pound supermarket wants your business so you are not going to give it to them.

 

I disagree with using an absolute number (e.g., CR 100), but in general, if I think that the price is essentially the same, I'll buy the item that has the "most natural looking" price (which is almost always the slightly higher one). I don't play the undercutting game when listing, and I don't support those who do.

 

If somebody wants my business, they can undercut the existing prices by a "noticeable" amount, not just by jumping in front of another seller.

[psandak]

I disagree with using an absolute number (e.g., CR 100), but in general, if I think that the price is essentially the same, I'll buy the item that has the "most natural looking" price (which is almost always the slightly higher one). I don't play the undercutting game when listing, and I don't support those who do.

 

If somebody wants my business, they can undercut the existing prices by a "noticeable" amount, not just by jumping in front of another seller.

 

OK. Begs the next question: What is "more natural" $20 or $19.99? In the real world it is most definitely $19.99.

[Elric_VIII]

honest question: what is the mentality behind this?

 

It is like seeing two supermarket circulars one has bananas for 59 cents/pound and the other has bananas for 60 cents/pound and going out of your way to buy the 60 cents/pound because the 59 cents/pound supermarket wants your business so you are not going to give it to them.

 

It's a moral victory. It's like sticking it to the guy that undercut you and cost you a sale, by proxy.

[eartharioch]

OK. Begs the next question: What is "more natural" $20 or $19.99? In the real world it is most definitely $19.99.

 

I put the term "most natural" in quotes to indicate that it was a subjective value. For me, "$20" is the "most natural". If somebody asks me (in the real world) how much something costs, and the price tag says "$19.99", I'm going to answer "$20". And when I do so, I expect that the person I'm answering understands that I mean "$20 +/- some trivial amount".

 

In the real world, there are differences in shipping costs and taxes, so the price tag price isn't necessarily the actual cost of the item (i.e., $0.59 bananas aren't necessarily cheaper than $0.60 ones). While the GTN "shipping and tax" cost is uniform, I rarely bother to calculate it exactly, so (just like in the real world), I ignore minor variations in list price and treat "similar" prices as the same, and then take non-price considerations (like how much I like the seller in general, etc.) into account.

 

Basically, if the seller annoys me by displaying an "ugly" price, I will only purchase that item if the total cost (list price plus overcoming my annoyance) is lower than the total cost (list price plus any annoyances) of other items.

 

On a related note, I often buy items that are more than the vendor price where the vendor price is more than the list price minus the 6% GTN transaction fee and immediately sell them to the vendor.

[MeNaCe-NZ]

I also pick the price that is higher if the undercut on an item is under 100-1000 credits depending what it is and how much it is.

 

e.g. someone has 20 individual items listed at 20k and someone else has come on and listed 3 or 4 for 19900 or worse 19999.

 

Reasoning is nothing more than the annoyance I face when I sell items and have that form of undercutting done to me, It's bloody annoying heh especially with the vast array of products I sell ( a LOT of CM items these days ) . Rationale also is the person selling by such a miniscule amount has no interest in offering the consumers a better deal, they just want their name on top.

 

What I do as a seller though is utterly sink their market if they piss me off too much doing it ( as long as I'm not making a loss ).

 

For example in some decorations I will check my listings to find on half a dozen or so one seller in particular has listed 1 credit below me so I will unlist those decorations and drop 5 , 10, 15K off them and continue doing this until they either give up or we end up back at cost. So for example I list something at 75000, they list at 74999, I relist at 55000 ( I am still making a nice profit here ). Had they listed at say 70000 or less and they were the only one under me I would probably leave my listing running or re-list similarly at maybe 65000.

 

I used to do this a lot in the saber crystal market when I bothered with it, keep driving the prices down more and more the more stupid the undercut was.

 

Not entirely sure why I do this really, somewhat punishment to people for wasting my time with 1 credit undercuts as it's less credits for them and yes less for me but I still make a profit so I kinda don't care.

 

Funniest times is when you do this to someone and sit just above profitability and they list into the realm of making a loss ( or materials would be worth more ) or try beat me at my own game and undercut that wee bit too far so I buy them out, relist and start all over again ... they tend to go find other markets at that point.

[psandak]

@MeNaCe-NZ,

 

If I am reading your post right, you see malice in undercutting by a handful of credits. You get annoyed by your competition and actively attempt to push them out of "your" markets.

 

/shrug...to each his own

 

OTOH, when I see someone undercut me by a handful of credits, I simply shrug it off. They are trying to make as many credits as possible... no different than me. Why should I begrudge them for that?

 

Furthermore, the simple fact that I KNOW my stuff WILL sell eventually at a profit I can live with (years of experience in many MMO economies have proven it time and time again), makes me a lot more accepting of the situation.

 

And why should I as a seller give buyers any sort of deal, by undercutting by a significant percentage? What incentive is there in doing that? 100% of buyers and I will never cross paths (at least not that I am aware of; it is not like I annotate every buyers' character's name in game in the hopes of getting repeat business). That being said, I give all my friends and guildmates stuff I can craft easily for free and they know it.

 

Again, what bothers me more is the severe undercutting and always undercutting the lowest because I see it as so much WASTED potential.

[Daxy]

I post my items after checking the prices

Some things I will try to get the lowest price (especially if I am clearing inventory) other times I will price higher than lowest price hoping buyers go through those lower listed prices and, ultimately, get mine

Other times I will buy all the items below what I wish to sell

And I will sometimes match the price

Different circumstances and reasons for all of it

 

I price to sell yet I try to maximize profits therefore I rarely if ever take down auctions and if people undercut me I don't fret or, more accurately, I never notice it- my items either sell or I get them returned like every one else.

I don't try to corner markets either since I can't sit at the gtn to continuously monitor the market all day

This seems to be where I could be most upset if people undercut

[MeNaCe-NZ]

If I am reading your post right, you see malice in undercutting by a handful of credits. You get annoyed by your competition and actively attempt to push them out of "your" markets.

 

/shrug...to each his own

 

OTOH, when I see someone undercut me by a handful of credits, I simply shrug it off. They are trying to make as many credits as possible... no different than me. Why should I begrudge them for that?

 

Furthermore, the simple fact that I KNOW my stuff WILL sell eventually at a profit I can live with (years of experience in many MMO economies have proven it time and time again), makes me a lot more accepting of the situation.

 

And why should I as a seller give buyers any sort of deal, by undercutting by a significant percentage? What incentive is there in doing that? 100% of buyers and I will never cross paths (at least not that I am aware of; it is not like I annotate every buyers' character's name in game in the hopes of getting repeat business). That being said, I give all my friends and guildmates stuff I can craft easily for free and they know it.

 

Again, what bothers me more is the severe undercutting and always undercutting the lowest because I see it as so much WASTED potential.

 

Not sure I would call it malice per se as that would imply intent to annoy me which I'm sure there isn't, just people trying to make the maximum profit they can and ensuring their item has the best chance of sellnig next I guess.

 

Just for me personally I find this incredibly annoying, more so than if I were undercut by a reasonable amount. I can view that as them trying to actually draw in consumers attention with better pricing as opposed to just listing by 1 credit less to be top of the list.

 

So yes I try detract from the practice by making the markets this occurs in less attractive in that I will undercut by a decent amount. If it's a rare thing then I usually just whip off my 10-20% but if it's a common practice by someone then I will drop the prices significantly.

 

Also I find things won't always sell, nothing is worse than the amount of time having to be spent relisting expired auctions as I almost always have 100 items on 2 toons on the go ( 200 auctions basically ). It also probably differs which area you are selling in. My primary area lately is CM items as I try clear through my inventory ( just to buy more lol, kind of addictive and ya gotta use your creds for something ) bolstered by crated items when the prices hit good ranges. The crafted items I generally monitor and relist actively though the CM items I tend to let run the full 2 days.

 

So in a way a decent undercut can force a sell that I might not have got had I relisted slightly less or the same I had before and that in turn saves me time with relisting things that expire.

 

All in all I guess people could choose to sell at the same price as me if they aren't actually trying to be competitive ( 1 credit is not competitive, its just a means to get your name on top ) and wait for my stock to sell before there's sell and if it's a reasonable market this will happen though there will always be the people who do undercut by 1 credit who will ruin this and thus I need my methods to sell and also drive them out.

 

To be fair though if I enter a market I've used before and have a rough idea of the pricing lets say Black Blue Hawkeye crystals and see a bunch listed at 30K i'll put mine on at 30K also as I know that's a good price and as I'm new ( well reentering the market ) it seems fair and I wouldn't want to drop the market to say 25K - it never last though as someone then listed at 29999 and then 29998 etc. I've crashed the crystals market many times before GSH launched and I found other more profitable means to make credits with less competition too so not quite as much of the annoying low undercuts.

[g_land]

Lol, there is a person on shadowlands posting artifact reflex 28 armoring for 17k, just selling one beryllius on shadowlands nets 15k. Even if they crit on every one, they aren't making what they could if they just sold the mats.

[Skullbash]

So then just take it down and relist it for significantly less than what it was.

 

Good luck on that whole changing human nature thing.

[psandak]

Not sure I would call it malice per se as that would imply intent to annoy me which I'm sure there isn't, just people trying to make the maximum profit they can and ensuring their item has the best chance of sellnig next I guess.

 

Just for me personally I find this incredibly annoying, more so than if I were undercut by a reasonable amount. I can view that as them trying to actually draw in consumers attention with better pricing as opposed to just listing by 1 credit less to be top of the list.

 

So yes I try detract from the practice by making the markets this occurs in less attractive in that I will undercut by a decent amount. If it's a rare thing then I usually just whip off my 10-20% but if it's a common practice by someone then I will drop the prices significantly.

 

Yes, but are those who significantly undercutting actually drawing in consumer attention? I would argue, that regardless of whether one undercuts by one credit or 1000 credits, the overwhelming majority of buyers at the moment in time when he/she/they are looking to buy does not care as much about what the price of the item in question is and/or how much of a deal he/she/they can get. Yes, there are those who look for deals. I'll admit I am one of them. But my sense of a "deal" is when supply of an item is very high and therefore the overall value is depressed; I could care less if one person is selling Mytag crystals at 4999 and the next is selling at 5000 because the average value is around 8000, I'm gonna buy both of those 4999 and 5000 and probably a LOT more.

 

My point is that by undercutting by (what you call) "a reasonable amount" the seller is most likely losing out on the difference between his price and the next; that's credits out the window. That is what bothers me; again the money making potential is reduced.

 

Also I find things won't always sell, nothing is worse than the amount of time having to be spent relisting expired auctions as I almost always have 100 items on 2 toons on the go ( 200 auctions basically ). It also probably differs which area you are selling in. My primary area lately is CM items as I try clear through my inventory ( just to buy more lol, kind of addictive and ya gotta use your creds for something ) bolstered by crated items when the prices hit good ranges. The crafted items I generally monitor and relist actively though the CM items I tend to let run the full 2 days.

 

So in a way a decent undercut can force a sell that I might not have got had I relisted slightly less or the same I had before and that in turn saves me time with relisting things that expire.

 

I do the CM stuff too. I buy a hypercrate, open all the packs, use what I want, and sell the rest. And yes it can take several relists to get everything I do not want to sell, but I do one thing differently than you: I do not try to sell everything at once. I post 10-15 items at a time, and when they all sell, I post 10-15 new items.

 

I guess the difference between you and me is that you want to sell stuff faster than I; I honestly do not care when my stuff sells. I know it will sell eventually.

 

All in all I guess people could choose to sell at the same price as me if they aren't actually trying to be competitive ( 1 credit is not competitive, its just a means to get your name on top ) and wait for my stock to sell before there's sell and if it's a reasonable market this will happen though there will always be the people who do undercut by 1 credit who will ruin this and thus I need my methods to sell and also drive them out.

 

To be fair though if I enter a market I've used before and have a rough idea of the pricing lets say Black Blue Hawkeye crystals and see a bunch listed at 30K i'll put mine on at 30K also as I know that's a good price and as I'm new ( well reentering the market ) it seems fair and I wouldn't want to drop the market to say 25K - it never last though as someone then listed at 29999 and then 29998 etc. I've crashed the crystals market many times before GSH launched and I found other more profitable means to make credits with less competition too so not quite as much of the annoying low undercuts.

 

why isn't a 1 credit undercut being competitive? They are trying to beat you to a sale. Sounds like competition to me. This is not college football where how you beat someone is as important as if you beat them

Edited October 29, 2014 by psandak

[chosonman]

I'm thinking of a new strategy. I'm going to list only 1 item for a ridiculously low price and the rest at my normal selling price. That way the lowballers get sold out quickly and while their profits get nerfed. While I still sell my stuff after his inventory gets wiped clean by the bargain shoppers.

[eartharioch]

...I could care less if one person is selling Mytag crystals at 4999 and the next is selling at 5000 because the average value is around 8000, I'm gonna buy both of those 4999 and 5000 and probably a LOT more.

 

My point is that by undercutting by (what you call) "a reasonable amount" the seller is most likely losing out on the difference between his price and the next; that's credits out the window. That is what bothers me; again the money making potential is reduced.

...

why isn't a 1 credit undercut being competitive? They are trying to beat you to a sale. Sounds like competition to me. This is not college football where how you beat someone is as important as if you beat them

 

Since I used the term "competitive" also, and what you said gets to the heart of what I mean, I'll answer this as well.

 

IMO, your "college football" analogy is wrong. In the GTN, *how* you beat somebody (i.e., by how much) is all that is important. The GTN is unlike pro football, where simply scoring (making a sale) is all that matters. When you sell an item, how much you make is your score, not the number of sales you make. So when you sell an item at a lower price than you could have, you are forfeiting points that you could be scoring. If your general strategy ends up making less points than other people's strategies, I would call your general strategy "not competitive". It may be successful as measured against your personal goals of how much you want to make in a given time period, so your strategy may be personally satisfying, but when people are discussing general strategies, they are (by definition) not discussing specific cases.

 

In general, I see undercutting by a single credit (or a relatively small number of credits) as not being competitive because it leads to making less money than not undercutting.

 

Let's look at a case of two items for sale, one at X credits, and one at X-n credits (n >=1; this generalizes to any number of items, but it's easier to just deal with two). One of three things can happen -- neither sell, both sell, or just one sells. If neither sells, than neither the original lister nor the undercutter make any money, so undercutting didn't help. If both sell (as in the Mytag example), than the undercutter made less money. Only when the lower priced item sells but the higher priced one doesn't can undercutting make money (i.e., be competitive).

 

Since there are very few cases where I see one item selling and another not selling when the price difference is just one credit, I consider such undercutting to be noncompetitive.

 

By buying the undercut item (instead of the undercutting item), I increase the likelihood of the undercutter making no sale, while at most losing the same amount the undercutter does if he makes a sale.

[Heat-Wave]

I'm thinking of a new strategy. I'm going to list only 1 item for a ridiculously low price and the rest at my normal selling price. That way the lowballers get sold out quickly and while their profits get nerfed. While I still sell my stuff after his inventory gets wiped clean by the bargain shoppers.

 

The flaw in that idea is that I'll buy your cheap item and relist for just under your price.

 

If those cheap items do get posted, I'll buy them all and relist them all.

 

I make a good income from buying underpriced items and relisting higher.

[chosonman]

Here's what under cutting does.

 

Short term effects:

The immediate affect is that You (If you are undercutting someone else) is going to make a quicker sale and You will have more more credits in the short term.

 

Long Term Affects:

If You continue to undercut other sellers other sellers are going to have to lower their prices by a significant amount to make up for excess inventory. The inventory has to go somewhere it's not going to just vanish unless the other player quits the game.

In the long term other sellers who stay in the market will realize the only way to compete is to set their price lower and lower until the bar is set low enough they don't have to keep recycling their inventory every day because it didn't sell the day before.

In the long term prices will be lowered and You as the under cutter will make less credits.

 

I'm constantly being lowballed by one or two sellers who log on several times a day to check my prices and beat me by a few credits. My response is to drop my price so low that my inventory sells at a rate I'm comfortable with where I can still make a decent profit. If these undercutters would wait their turn like everyone else we could all make money. Now if they continue to undercut me at my lower prices I will have to drive the market so low they lose credits or they cant collect enough resources to keep up. I have 14 alts all crafting so I have the benefit of volume to help sustain me.

Edited October 29, 2014 by chosonman

[chosonman]

The flaw in that idea is that I'll buy your cheap item and relist for just under your price.

 

If those cheap items do get posted, I'll buy them all and relist them all.

 

I make a good income from buying underpriced items and relisting higher.

 

That's fine as long as I'm making credits.

[psandak]

IMO, your "college football" analogy is wrong. In the GTN, *how* you beat somebody (i.e., by how much) is all that is important. The GTN is unlike pro football, where simply scoring (making a sale) is all that matters. When you sell an item, how much you make is your score, not the number of sales you make. So when you sell an item at a lower price than you could have, you are forfeiting points that you could be scoring. If your general strategy ends up making less points than other people's strategies, I would call your general strategy "not competitive". It may be successful as measured against your personal goals of how much you want to make in a given time period, so your strategy may be personally satisfying, but when people are discussing general strategies, they are (by definition) not discussing specific cases.

 

In general, I see undercutting by a single credit (or a relatively small number of credits) as not being competitive because it leads to making less money than not undercutting.

 

You and I are viewing the scenario and my analogy from different points of view:

 

- you are seeing the amount of credits acquired as a score. And I completely agree - the more credits one can get through a sale the better

- I am seeing the difference between the amounts of credits as how much the undercutter beats the undercuttee by.

 

From the perspective I am in...continuing the analogy:

undercutting by a handful of credits is like winning a football game 21-20.

undercutting by a lot of credits is like winning a football 42-10

 

In pro football the 21-20 win is no different than the 42-10 win; a win is a win is a win. What matters most is the number of wins at the end of the season. Translation to SWTOR: what matters most is the number of sales per time period.

 

In college football when a top 25 team scrapes out a win over an unranked team ala 21-20 that ranked team is highly scrutinized and will probably fall in the polls because the quality of the victory was not good enough. This does not happen in SWTOR; no one cares by how much you beat your competition so long as you get the sale before they do. it is about being first.

 

But, when it comes to the GTN, at least in my mind, both points are appropriate and should be utilized:

- I want as many "wins" as possible, and I do not care about the margin of victory

- I also want as high a score as possible per victory, but this also means that (again continuing the analogy) I want my opponents to score as high as possible too.

 

small undercuts give me the best chance at both: lots of sales AND as many credits as possible.