Guild Wars 2

Preface: Rather than type it out over and over again, I’ll be using the abbreviation FMV for Fair Market Value. For those who missed Econ 101, Fair Market Value is the price a willing buyer and willing seller would accept for a given item, free of external pressures. It is not intrinsic value, which is what either side believes an item is worth in their own eyes. To simplify it further, negotiations between a Pawn Broker and a Seller eventually establish a FMV for an item. The initial asking prices given by a Pawn Broker or the Seller would be the intrinsic value of the item. With that said…

Problem: The Trading Post has a serious problem with allowing players to undervalue items in the marketplace, particularly when it comes to craftable items in the upper tiers (20 slot bags, Orichalcum Jewelry, Level 80 Meals, etc). A particularly stark case in point are the new Passiflora Orichalcum Jewelry, which cost roughly 8.5 to 9G to make, depending on market prices of the materials. The purchase offers for them, however, are only in the 5G range. The result is that if someone wants to offload a Passiflora Orichalcum Earring quickly, they take a huge loss; considering the quick sell option is what the TP defaults to, I’m assuming this is how the majority of sales are made. When you factor in the TP taxes, the crafter of said earring only takes home roughly 35 to 40% of the cost of the original item itself, for a loss of 60 to 65%. In an ideal world, the crafter would be able to make a profit on roughly 20% of the recipes in their list, and break even on the rest with regards to TP transactions, leading to a FMV of said Passiflora gear to about 10G; just enough to take home some silver in profit after taxes. Instead, the buyer’s intrinsic value is taking precedence, which is killing the market for craftable gear.

The problem is particularly nasty with raw materials in high demand, such as Ores, Logs, Leathers, etc. The custom offer system lets players place a custom offer below vendor pricing, even though the same system prevents players from selling these materials below vendor pricing. Again, when you factor in the taxes from the TP, selling materials on the TP actually costs you money compared to vendoring them outright. Unlike gear and items where the problem is persistent, this particular problem comes and goes in waves – new patches or content exacerbate the issue, while periods of lull allow it to return to a normal, semi-profitable state.

So, how can the TP be fixed? For one, I’d like to see a shift of the tax burden. If you’re creating a custom sale offer, the tax burden should be on you. Likewise, if you’re creating a custom buy offer, you should be responsible for all taxes on the item when you place the offer on the TP, regardless of whether or not your order is ever filled. This partially shifts the tax burden away from the seller, giving them a better chance to profit from transactions (however small it may be), while discouraging buyers from creating an unrealistic purchase price through the use of non-refundable listing fees and taxes. Going a step further, I’d like to see custom purchase offers below vendor pricing blocked outright, since it seems like a glaring oversight to block us from selling below vendor prices, but letting players place orders below that same threshold. Case in point, the current TP shows ~130000 orders below vendor pricing for Iron Ore alone, orders that will never be fulfilled. If ANet enabled this same block for custom buyers as it does on sellers, it’d both clear up confusion with buyers new to the TP who place these orders, as well as clear up large swathes of the TP Databases, since these are listings that can never, ever be fulfilled.

That said, I’m curious to hear from other crafters and TP sellers on their views on the matter. Do you make money on the TP consistently? When you’re forced to purchase materials for something (Globs of Ectoplasm, for instance), are you still able to make a profit? What immediate changes could ANet make to mitigate these problems?

If someone is willing to sell at the custom buy price, because they are too impatient to wait 15 seconds to 24 hours, depending on the item in question, before receiving their money, that’s their prerogative.

The market paired a buyer and a seller at a price point agreeable to both.

Would you rather the person willing to sell “below market value”, deprived of the buy order option, undercutting the market price to ensure a quick sale? That would drive down the market value for everyone!

The GW2 Trading Post many things right. The most recent listing at an established price point sees their offerings sold first. This may seem unfair to some, but it’s in place to discourage cascading undercutting of prices. (People not understanding that the market is “Latest in, soonest out” still do some undercutting, but it would be much worse with out this approach). Buy Orders provide an outlet for those willing to sell significantly lower than market pricing, in order to gain an instant sale, with out undercutting the standard pricing. The TP cut is high enough to put some limits on speculation driven buying and selling, with out being too onerous on players.

The TP is very well designed and managed, with an eye towards supporting a viable economy.

The nearly global nature of the economy is what drives some of the current peculiarities of pricing. Actually, apparent peculiarities. The pricing actually accurately reflects supply/demand, so isn’t really peculiar, but compared to MMO player expectations, some of the pricing levels relative to other tiers of items may seem odd.

Over time, the market will settle into a pattern that reflects a character level distribution that is heavy near the top, rather than the middle.

The current market will tend to shake out crafters who were hoping for a casual, easy road to profit. Fewer active crafters selling to areas of the market where supply/demand produce a reasonable profit margin will result in the ability of some people to make money crafting. The shake out needs to occur, as it should be obvious that the higher percentage of people actively crafting, the greater the supply and the lower the demand.

(Accessibility to crafted gear equivalents from normal game play also play an important role in the supply/demand equation. Few games go all in on a player driven, crafting provided economy. There are many alternatives to crafted gear in GW2 and that is always going to be the case).

InflatableStego.7650:

Preface: Rather than type it out over and over again, I’ll be using the abbreviation FMV for Fair Market Value. For those who missed Econ 101, Fair Market Value is the price a willing buyer and willing seller would accept for a given item, free of external pressures. It is not intrinsic value, which is what either side believes an item is worth in their own eyes. To simplify it further, negotiations between a Pawn Broker and a Seller eventually establish a FMV for an item. The initial asking prices given by a Pawn Broker or the Seller would be the intrinsic value of the item. With that said…

Not quite; items don’t have any intrinsic value. Maybe you meant to use another term, but “intrinsic” implies a third objective value that is the “real” true value of the item.

InflatableStego.7650:

The problem is particularly nasty with raw materials in high demand, such as Ores, Logs, Leathers, etc. The custom offer system lets players place a custom offer below vendor pricing…

Not quite accurate. At one point in time, players were able to, but they are no longer able to place buy orders below vendor price. Any bids that exist below vendor price are legacy bids from before that was changed, and ANet has yet to purge these bids from the system.

InflatableStego.7650:

That said, I’m curious to hear from other crafters and TP sellers on their views on the matter. Do you make money on the TP consistently? When you’re forced to purchase materials for something (Globs of Ectoplasm, for instance), are you still able to make a profit? What immediate changes could ANet make to mitigate these problems?

I do, but from careful market research of what to trade and craft. I don’t toss money at something blindly and hope to make a profit just because my skill is at 400. You’re right that most prices on the market do not offer a sizeable enough return for the investment someone makes to raise their crafting high enough and convert materials into end products, but I don’t necessarily see that as a bad thing, given the other advantages that the crafting system offers in the game.

That doesn’t mean I would mind an attempt to change it, though. I’ve adapted to make a profit in this market, and I’ll adapt to any other sort.

I agree with adding a cost to the custom buy orders. I think that this will put an end to the market manipulation that we currently see.

That being said, I do not agree that you should put the minimum price too high. Plenty of people cannot afford 9g for one item. And if the seller, who may have researched that item and got alot of points of them or who happend to have materiuals laying around, wants to sell it at 5g, that’s his right too.

In the pawnbroker scenario you put forward it is an agreement between a buyer and a seller.

But in the BLTC it’s thousands of buyers and thousands of sellers competing for their deals. The very fact an item is available for X price, or the fact a buy order for Y price is getting filled at all is because someone, somewhere decides that to them it is a fair trade. Taxing buyers is a terrible idea; the buy order system is essentially a bidding system, imagine an auction-house where the bidders were taxed every time they put in a bid… it just wouldn’t work. Almost nobody’d place bids if there was any risk they’d be out-bid and have to make a higher bid.

If you want to finger a REAL problem, it’s not the fair market price or anything; but rather inflation and it’s time-lag effect on item pricing.

Take for example 3 weeks ago there were several hundred amulets for sale at what worked out at around 15% markup on current material prices. Today the market has inflated considerably, by more than 15% – items that are still listed at the original price are now technically selling for below crafting cost. As long as that backlog exists, then new sales cannot be made at a more reasonable price.

This is the real flaw in the system; but besides finding a means to invigorate the economy so people actually buy that backlog I’m not sure what can be done besides playing smart and branching out instead of putting all your cards into a single business strategy.

Having just levelled one of my craft skills to 400, I have found it easy to make a profit with a little bit of research.

I don’t think anything needs to change with custom buy orders. Taxing buy orders would be a mistake (IMO), as it would lead to people being less likely to up their bid price if they get overbid for an item, so it would probably keep the buy prices lower than they would otherwise be.

The entire premise of the OP’s long explanation is that “fair market value” can only be determined if sellers are allowed to express what they are willing to sell at buy buyers are not allowed to express what they are willing to buy at. The entire premise is absurd.

This may seem to make sense to someone who’s entire exposure to market economics is at the retail level – after all, Target, Wallmart, and other retailers all compete as sellers of goods but we never see their buyers expressing what they are willing to buy at. But to anyone with exposure to economics above that level, we all know that it is -extremely- common for the market to account for both what people are willing to sell at AND what people are interested in buying at.

Note, btw, that sophisticated retailers take this into account anyway. You just don’t see it.

If you think it’s unfair that someone is able to express a desire to buy at a certain price, and that the people need to be protected from this information only so that you can sell at your price, that’s … well, one opinion, I guess. Buy if you think “fair market value” in the marketplace is arrived at only amongst sellers, in the real world or otherwise, you need to do some introductory reading in the subject. That’s just at odds with reality.

I think one major problem with the price of crafted items is that people mix up “real world experience” and MMO crafting mechanics.
In the “real world”, crafting needs
- raw materials that usually has to be bought for money what needs nearly no time,
- transportation of the material,
- tools and their maintenance because without the worker can’t do anything,
- skilled workers and a motivation (salary) for them to spend a lot of their time for crafting instead of doing other things.
The price need to pay off for all of those costs, and material may easily be the cheapest. But people have to pay it (maybe grudging) because they have no other way to get the things they need.

In the typical MMO (GW2 included),
- raw material can be found anywhere in the world and therefore don’t need to be bought,
- transportation is for free,
- tools are cheap and have no maintainance costs,
- crafting needs more or less no time,
- and the worker becomes skilled by crafting, so he will even work without salary.

Thus, there is no need to pay for material (because payment is done in terms of the time to farm them), no need to pay for transportation and no need to pay a salary. What remains is the price for the tools and those raw materials that can only be bought, not farmed. And that’s not very much.
Second… everyone else can usually hope for a good drop as well (either getting it themself or “exchanging” it via the Trading Post) that comes in virtually no time and without special effort (under the assumption that they would have killed the loot-giver anyway). As long as your crafted items are only as well as drops, they have a handicap in the effort they need for crafting.

It’s no wonder that crafting under these circumstances will not pay off. Because the only one interested in your skill… that’s yourself, because it’s rewarding to see the own skill increasing. Now have a guess: who will probably pay for you to become skilled? It’s your “apprentice’s due” what you pay, and the time of other people to gather things if you buy them. The “fair market value” is the price you have to pay as the crafter, because the benefit are mainly yours.