Friday, April 19, 2013
Determining Market Value
So, there you are in the AH and you have all this stuff to sell. But how much should you sell it for? You don't want to under price it and lose out on potential gold but you don't want to over price it and have it just sit there and not sell. What to do?
Determining the value of your item can be one of the trickiest parts of the auction house game. Luckily there are many tools to help along with some common sense.
Tools of the Trade
First, of course there are addons. Auctioneer and Tradeskill Master (TSM) both have a scan feature that will scan the AH for you and build a database of prices. The more often these scans are run the more accurate your data becomes. I prefer TSM for this as they now have an application which runs on your computer and automatically scans the AH every hour and loads the information to the addon for you. This happens regardless of if you are playing WoW or not. As long as you leave the application running you will get a scan every hour 24 hours a day. This allows you to get very updated pricing easily.
Also you have websites such as The Undermine Journal and Wowuction which both scan the AH the same way and will give you pricing. The nice thing with these sites is they scan all realms and factions so you get a broad view of pricing. If there is a more rare item that hasn't been on your AH much you can still get a relatively accurate price. The Undermine Journal also offers an in-game addon, TUJ GE, which will work with your tooltips, TSM, and Actionator to give you global pricing. You can even setup TSM to price items based on a percentage of the TUJ GE prices.
Having these tools will allow you to determine if an item is being underpirced or overpriced and you can decide if you want to undercut, or price higher. In some cases you may want to buyout your competition and reset the market. These tools should be used as a guideline but you can also determine prices on your own.
How to determine prices on your own.
There are two main ways to determining prices. First is the cost of the materials. This is another area where TSM can be useful. Setting up TSM crafting will tell you the material cost of the item being crafted and how much profit you will make based on AH value. You do have to set this up as well as you do with anything in TSM and I will point you to Faid's videos on clockworkriot.com to do so, but this is a very effective way of doing things. Of course you could look at the cost of the mats in the AH and bust out your trusty calculator and figure it out that way as well.
Now, you may be saying "Well I farm my mats so it doesn't cost me anything". Wrong. Time is the most valuable commodity there is. What is your time worth to you? If your answer is "not much" that's fine but lets look at some other factors. Lets say you are going to craft a piece of plate armor that takes 10 ghost iron bars. You say "well I have all the mats from farming so it didn't cost me anything. I will sell it for 90g." This may have just cost you money. Take a look at what ghost iron bars are selling for. If they are selling for more then 9g per bar you could have sold the mats for a better profit. The point here is that it doesn't matter how you came across your mats, their value in the AH still determine the price you should sell your end product for, or rather what you shouldn't sell your end product for. So what do you sell it for?
This brings us to our second way to determine value. The market. Now above we talked about how addons can calculate market price for us but what is "the market"? "The market" is the economy around the products being sold. Supply and demand! Remember that term from high school? Basically the main two factors that determine the price of an item or the supply of that item and the demand of the buyers for it. So the big answer to the question of "what is an item worth?" is, it is worth whatever someone is willing to pay for it.
If there are 20 of any given item on the AH, chances are it is not selling well and people are dropping the price. The market has become "flooded". If there are few or better yet none of the item you want to sell, you get to set the price. In this case I would say start high. How high? Well consult the addons and get a "market price" and then go a bit higher. In the case of our plate piece that took 10 Ghost Iron bars, lets say the "market price" is 650g. Post your auction at 900g. If its the only one and someone wants it bad enough they will buy it. If someone else has one up for 950g and its the only one, undercut them by 1 copper. Keep the price high. Don't drop it to 900g or lower. Selling it for 700g isn't going to make it sell any faster then if you had it for 949g 99s 99c. Someone is just going to buy the one that is the lowest price as long as the prices are not ridiculously high (3000g).
Put it to practice
There is always a breaking point when an item becomes "over priced" but unless its obviously way over let the buyers decide what that point is. Play with your prices. Start high and lower them 25g at a time till you find a good spot. Also, ever wonder why when you go to the store something is priced at $499 instead of $500? Because it looks more appealing. Try pricing your items 1 copper below a round number and see if it sells. Take your time and learn your markets. As appealing as a "quick sale" sounds, underpricing your items is not always to your benefit. You could be getting the same sales at a higher price point.
Good luck and keep the gold flowing!