Saturday, 4 May 2013

Capital Utilization and Niche Markets

One of the simplest ways to increase your revenues is to add to the amount of items you're selling.  If you have TradeSkillMaster (And if you don't go download it. Yes, right now.) it will display a current total value of the buyout price of all your auctions.  As a rule of thumb, until you hit gold cap the first time I'd try to keep your total auction value (TAV) at around 30-40% of your total liquid gold, unless you're only in markets with a high turnover rate and don't carry very much inventory.

My method for gold making, without getting into the specifics, is to find a new market, toss a bit of money its way to explore its profitability and then work on fully developing it if it shows promise.  For instance let's take one of my favourite niche markets, the White Bandit Mask.  For reasons I can't remember I was looking for a good item to disenchant for Vision Dust and decided to check the comments on Wowhead, there I saw the mask suggested and conveniently already had the pattern on my tailor.  After buying half a stack of mageweave cloth and getting almost a stack of dust from the 4 masks it produced I got thinking that this could be a nice revenue stream if demand was high enough.  To test the market I tossed a mask on the AH for 150g and made another 50 for disenchant, all of this costing maybe 200g.  Though the materials didn't exactly fly off the shelf they did sell fairly quickly for a good price and the rough results were: 200 dust for 2.5g ea, about 15 lesser nether essence for 10-15g each and the 4 small radiant shards which I turned into a Fiery enchant and sold for 250g.

Total investment: 160g~ after additional materials
Total revenue: Give or take 800g after AH cut
Total profit: 640g

In the grand scheme of things this is mere pennies in both costs and sales, however three things stood out for me.  Firstly I had essentially no competition, secondly all the materials were readily available and processing didn't take much time, and thirdly a 400% profit.  A week later I'd added mageweave cloth to my regular materials searches, and it's been a nice revenue source ever since.

Now I'm not saying we shouldn't pay close attention to the main markets such as flasks, inscription, gems, armour, uber blues, etc. However it's always a good idea to try and find ways you can expand your inventory.  Try looking for markets that are unfilled on your server.  Markets with medium to high demand, or with items that are absolutely necessary when leveling a profession.  After finding one of these markets try to see if there's a way that you can easily obtain or produce these items with minimal effort on your side.

Generally the lower competition will mean you can let TSM do all your selling work for you on the side while you focus on keeping a stranglehold on the bigger markets. Though these little markets may seem like they're not worth the time, with the minimal maintenance required to sell in them, you can add as many as you like to your posting / cancelling scans, and eventually all those little revenue streams will add up to a river of gold (niche markets like these make up about 15-20% of my sales).

In summary my point is this: Put as much of your gold to work as you're comfortable with, and then toss another 20% in on top of that. Money that isn't working for you is just sitting there doing nothing, and so long as there's a reasonable chance it will sell, even flipping bulk materials for a measly 5-10% profit is better than nothing.  Now of course this all comes down to the amount of time you're willing to put in, but I'd say the best way is to maximize your profit is to make cash wherever possible rather than focusing on squeezing every last copper out of what you have. If I can take the same materials and make and item that'll make 1000% profit and sell once a week or make a different item that only nets 400% profit but that I can sell 5 times a week I'm not going to save my materials for the higher return, I'm going to produce as many of both as I can sell.

To close with keep this in mind, letting things stagnate is never a good idea and you should always be on the look out for new opportunities, and there's an old economics rule: Keep producing until Marginal Revenue = Marginal Cost, so long as you aren't losing money, you're making money.

-Thairus

No comments:

Post a Comment