Wednesday, April 10, 2013

My Rant: Undercutting and Knowing Your Market

I hate to just rant but I have my own blog now and whats the point if I can't get up on my soapbox once and a while and speak my mind. So here it is.

People need to learn how to undercut. They need to learn the value of the items they sell. Just tonight I realized I was the only one who still had Living Steel Belt Buckles up for sale. They were at around 550g. I took the opportunity to reset the market. I bumped them up over 1000g. Now I did this because I figured they would drop relatively quick. I didn't think they would drop this quick.

First I got undercut to an even 1000g. This is fine with me. I posed at 999g and I was sitting as the low price for a couple of hours. In that time I sold 3 Belt Buckles. Not too bad.


Then someone undercut all the way down to 650g and then another person to 550g.  Now. WTF! Seriously? Come on people. Now Considering there are 3 up at 650g and 1 at 550g I am not going to buy them out to reset. I did choose to just undercut the one at 650g and hope no one else decided to undercut the cheaper one before it sells.



So end rant and begin lesson. When undercutting do so by a small amount such as 1 copper, 1 silver, or even 1 gold. This may seem like a messed up move but it is what your competitor would like you to do. Why? Cause it maintains the market  price. Keeping prices up helps all those selling including you. So you undercut them, they undercut you and so on and so forth. You go back and forth 20 times and the price has only dropped 20 copper. This is a good thing. They  buyers will still come, especially with an item like belt buckles. This is an item everyone needs.

No there are times where someone way way over prices. You don't want to undercut a linen cloth by 1 copper if someone is posting it at 10,000g. But you need to understand you buyers, the market and what people are willing to pay.

One thing that helps with quick posting and easy undercutting if you are new to gold making is addons. Now most gold makers love Tradeskill Master (TSM) but it has a high learning curve and can be intimidating. So another addon I suggest is Auctionator. This will add some new tabs to your AH window. Simply click on the "Sell" tab. Then drag and drop the item you wish to sell in the top half of the window (See below image for auctionator window).


When you drop the item in it will quickly show you other auctions of the same item and the current prices they are selling at. If you click the options button on the top right you can set a standard amount to undercut by (I like 1 copper). Then you simply click the auction you wish to undercut, set the number of stacks, and stack size you wish to sell on the left and click "Create Auction". Done. You have just listed your auction for a quick undercut and kept the market price maintained. Its that easy.

Try this out. You will find that it does not matter if you undercut by 1 copper or 100g. If your auction appears on top when a buyer searches for an item, they will buy it. You will not get a faster sale by undercutting more unless you price the item so low that the mats are worth more then the item itself. If this happens another gold maker will probably scoop it up and relist it at a more profitable price.

Good luck and thanks for listening to my rant.

-Erogroth.

8 comments:

  1. I had the same thing happen to me last night with gems. Prices had fallen on a few gems to my threshold so I decided to buy out all of them up to my average sale price. I only bought out what would refill my stock high limit. Most of these I was able to reset to 250g, others were reset to about 150g. The immediate undercuts hit me at 117g for the 250g ones and at 60g for the 117g ones. After some TUJ research I found that these undercutters rarely post on the AH.

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  2. To add to that, it just occured to me that I should research those that deep undercut my resets. If they rarely post in that market, I may take the risk of continuing to buy them out so long as the price remains at or below my average sale price. Can't wait to get home and play with some of my markets with this research.

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  3. I would suggest you see if the person you are buying out is the same person who is undercutting you. Sometimes by buying out a market to reset you encourage the people so post more at that price.

    For me, I didn't have to buy out anything last night. I was the only one selling them so I canceled and posted at my fallback. At least I sold a couple for 1000g before the price dropped back to 550g.

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  4. I completely agree with the fact that these people are annoying, but people who are doing this are not only just stupid people.

    I've noticed that people that are doing this are either:

    -Stupid, like you mentioned
    -White Knights that feel that the prices are too damn high (could be considered as stupid)
    -People who have farmed their own materials, so everything is profit (could be considered as stupid)
    -And finally: People who do this with a plan

    When someone undercuts you with a large amount you have a few option:
    - Talk with them, which might work on a small realm, but on bigger realms this is really a waste of time with so many people entering and leaving markets each month. But you also show people that you are getting pissed off, a sign that their plan is working
    - Bite the bullet and undercut them
    - Buy them out, which allowed them to make some quick and easy profit. If you are unlucky they have more stock and undercut you down again.
    - Decide that prices are in the craphole and call it quits for the day

    A tactical undercutter is really in for option 3 and 4, in which case they get easy sales without having to bother with competition. So large undercuts do actually help when you use them at the right moments.

    My advice is to just set a minimum margin and while the undercuts stay above that you should just bite the bullet as you are still making a profit, if they drop under that just save your stock and effort and come back when the prices are up, this should be no big deal if you are properly diversified, if you aren't start leveling more toons and professions!

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  5. Ya. I have a set margin limit. As long as I am making enough profit I will undercut. Sometimes is worth just holding and waiting for prices to raise so you can get more profit. But as long as I am making money its all good. I just get greedy.

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  6. I wish I could sent this article to a few people on my realm.

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  7. Well....it looks like your market wants to be at 550g so despite your desire to raise prices.....the market doesnt agree. You can complain about undercutting but I would say you are just overpricing your goods. Many goods have a price relationship to other goods. Why would I list my goods at 999gold lets say when the raw mats to make this gold may cost 500gold. What is the typical premium on the server for taking raw to finished. On my server the premium is from 30g to 150g. Thats it. Sales rarely happen beyond that range. Price the goods based on what you can sell them at...not based on what someone else is pricing the goods at.

    The other point here is why are you complaining. If they have priced it so low...then you should be just buying them out. The fact that you dont want to buy them out is just indicating that you think your price is too high.

    The amount of the udnercut is irrelevant. It is just a mechanism to sell your goods and at times...annoy your competitors.

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  8. I can't be bothered going back and forth with someone all day long exchanging pathetic 1c undercuts. Especially when you know damn well the item(s) will likely sit there all day at the inflated price. I don't want my competition to undercut me by 1c. I want them to give up.

    What I love to do is a deeply undercut several items, piss someone off so they try to buy me out and repost it all at the gouge price like you suggest. Then I post a few more of the items at the same deep undercut. That usually frustrates them out of the market after a few times and I no longer have the competition apart from occasional random posters.

    Sometimes if the price is already low and I have many more of the given item than they do, I'll match their price exactly so their addon doesn't alert them to an undercut and I still have the market flooded.

    What you need to do is write an article about the morons who post items for less than vendor price.

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