Thursday, 11 April 2013

The Power of The Bid

After reading Wowprofitz latest post on The Art of Patience this morning I figured I'd talk a bit about a topic I was going to save for next week: The gold making / saving power of bidding.

This may seem unrelated to self control, but it takes a lot of patience to bid on an item and spend the time waiting for it to go through, or for you to be outbid. Hypothetically lets say there's a stack Ghost Iron Ore selling for 60g on the AH, that's fairly low on my server but not "jump right in and grab all you can carry" low. Now lets say that you notice of the twenty stacks posted, all of them have a bid price of 50g a stack, which makes it look very appealing. You now have two options:

Option A: BUY BUY BUY!

Option B: Bid...Bid...Bid...Bid....waiting

For twenty stacks, buying out would cost you 1200g, where as winning it via bid would reduce your costs to 1000g. Now if we say living steel is selling for 500g in our hypothetical market, your profit margin (excluding transmute procs) just went from 28% to 40%, not a bad increase huh?

So that's the main, and essentially only, pro of bidding over buying, but now we need to ask "What are the risks of bidding?" and "How can it be used to our advantage?".

The Risks
It may seem like no risk at all, either you get cheap items or you get your cash back, how could you possibly lose? But we must keep in mind that if you don't buy that item, your competition likely will, and can now possibly undercut you below your cost of materials. This problem is mainly present in the popular item markets such as ore, leather, enchant materials, cloth, etc. In these markets I'd only bid on the auctions that have a high buyout compared to the rest of the market, if the bid price is below your buying price just bid on it regardless of the buyou,t and if the buyout price is already below your buying price just snatch it up, it doesn't always pay to be cheap.

For items that are rarely purchased, such as vanilla crafting materials, you've usually got a much lower risk of having the item bought or being outbid before the auction runs out, unless you need the item immediately, or its price is low enough that it might be snatched up by others in the know, it's usually a good idea to just bid and wait to see what happens.

(For an example I got 20 Arcane Crystals for 2g a pop when the minimum buyout was closer to 15g)

Using Bids To An Advantage
Bidding can be used to minimize your risk and manipulate the market at the same time however this is much more situational. For instance lets say you're presented with a market that has low prices that you want to be even lower, and a low bidding price. The smart thing to do is is to buy out most of the item, but leave a few stacks at different tiers for people to undercut.

Say we have an item that you want to buy below 5g, and you see 10 each of the item at 2g, 3g, 4g, and 5g. If you buy all but 2 stacks at each given level, your average seller isn't willing to post a higher price and wait until prices come up again to get their monies worth, and thus will likely undercut the competition. In the mean time you've placed bids on all of the stacks that you let sit in the AH.

With this strategy we can accomplish two things, we keep the market price falling unless someone else decides to buy all the low cost items, and we grab most of the cheap stuff for ourself, which lowers the risk of your competition getting a good price.

And So..
Now that we understand the different ways to go about it, leave a comment on what your buying strategy is. Are you a bidder? Are you a buyer? Or do you mix the two?

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