Guild Wars 2

The recently discussed anomaly in the price of soft wood made me take an overall look at the economy of basic crafting materials. The profit to level curve in GW2 is relatively linear and flat compared to the MMO norm of exponential growth. This is generally good for the economy. However, in such a setting even slight irregularities in the supply/demand process cause noticeable side effects.

To see these effects, I compared the values of different basic materials, ordered by tier. The following table excludes jewelcrafting metals copper, silver, gold and platinum. The values listed are buy values of refined materials in silver on Sep 23, 2013.

 
In a perfect situation all values would increase as a function of tier, roughly in step with the profit to level curve. Significant deviations from this behavior are an indicator of a structural supply/demand problem.

As already mentioned, the price of soft (T2) wood is irregularly high. One factor to this is the requirement of using 4 logs for one plank instead of the usual 3, but even if this were corrected the value would still be quite high at 4.86 silver. However, the forces caused by the recent addition of T7 crafting have not yet been completely relaxed. Thus, one could suspect that in the long run the value of soft wood will drop around the same level as hard (T4), provided that the number of required logs is indeed reduced to 3.

When ignoring the soft wood anomaly and tier 6 for a moment, the table shows a peculiar trend. The price increases from kitten T3 as expected, but after that it drops! Overall, T5 is the cheapest material of the five, instead of the most valuable.

There are several factors to this behavior. One that can’t be controlled is that the active player population is tilted toward the upper end of character level, thus producing more higher tier materials than lower ones. The thing that could be controlled is that T5 is currently a waste product of T6 acquisition. All the basic methods of producing the desirable T6 materials are guaranteed to also produce much larger quantities of the undesirable T5 materials, flooding the supply side.

The recently introduced T7 recipes tried to address this basic problem by consuming different amounts of materials per transmutation, 20/10/20/50 for tier 2 to 5, respectively. Looking at the results and comparing the ones affected by this force to the one that isn’t (cloth), one sees that the measure is not sufficient. T3 is still anomalously high, and T5 anomalously low.

However, there is a very simple solution that can correct the situation. If players can downgrade materials, either by salvaging or transmutating, then the price structure will naturally adjust itself. It is possible to achieve the “correct” structure by using right process cost and yield parameters for the process T_X + Catalyst -> N * T_X-1

While this is not very realistic in the physical sense, neither is flinging fireballs from your fingertips.

Yes I wouldn’t mind if we could downgrade mats too, in the mystic toilet.

tmakinen.1048:

The recently discussed anomaly in the price of soft wood made me take an overall look at the economy of basic crafting materials. The profit to level curve in GW2 is relatively linear and flat compared to the MMO norm of exponential growth. This is generally good for the economy. However, in such a setting even slight irregularities in the supply/demand process cause noticeable side effects.

To see these effects, I compared the values of different basic materials, ordered by tier. The following table excludes jewelcrafting metals copper, silver, gold and platinum. The values listed are buy values of refined materials in silver on Sep 23, 2013.

T	Wood	Metal	Leather	Cloth
1	1.85	0.69	0.07	0.31
2	6.48	3.21	0.20	0.79
3	4.50	3.65	0.71	2.44
4	3.12	3.09	0.47	0.75
5	1.65	0.57	0.09	0.16
6	22.30	10.09	2.05	7.39

 
In a perfect situation all values would increase as a function of tier, roughly in step with the profit to level curve. Significant deviations from this behavior are an indicator of a structural supply/demand problem.

As already mentioned, the price of soft (T2) wood is irregularly high. One factor to this is the requirement of using 4 logs for one plank instead of the usual 3, but even if this were corrected the value would still be quite high at 4.86 silver. However, the forces caused by the recent addition of T7 crafting have not yet been completely relaxed. Thus, one could suspect that in the long run the value of soft wood will drop around the same level as hard (T4), provided that the number of required logs is indeed reduced to 3.

When ignoring the soft wood anomaly and tier 6 for a moment, the table shows a peculiar trend. The price increases from kitten T3 as expected, but after that it drops! Overall, T5 is the cheapest material of the five, instead of the most valuable.

There are several factors to this behavior. One that can’t be controlled is that the active player population is tilted toward the upper end of character level, thus producing more higher tier materials than lower ones. The thing that could be controlled is that T5 is currently a waste product of T6 acquisition. All the basic methods of producing the desirable T6 materials are guaranteed to also produce much larger quantities of the undesirable T5 materials, flooding the supply side.

The recently introduced T7 recipes tried to address this basic problem by consuming different amounts of materials per transmutation, 20/10/20/50 for tier 2 to 5, respectively. Looking at the results and comparing the ones affected by this force to the one that isn’t (cloth), one sees that the measure is not sufficient. T3 is still anomalously high, and T5 anomalously low.

However, there is a very simple solution that can correct the situation. If players can downgrade materials, either by salvaging or transmutating, then the price structure will naturally adjust itself. It is possible to achieve the “correct” structure by using right process cost and yield parameters for the process T_X + Catalyst -> N * T_X-1

While this is not very realistic in the physical sense, neither is flinging fireballs from your fingertips.

+1, great post.

I fling fireballs from my fingertips all day long, though.

the only potential problem with converting one tier to another is the exchange rate. current upgrading gives 17 TX+1 from 250 TX materials (or 90 if less than T6), then add the set 65s cost of doing this and you get something that’s not even profitable at the current price skews.
5 1.65 0.57 0.09 0.16
6 22.30 10.09 2.05 7.39
1.65 × 250 + 65 + 22.3 = 500 to make 17, which would otherwise cost 22.3 × 17 = 380.
converting is not used if it’s not profitable, and it’s almost never profitable at this exchange rate.
looking at mist essences, 5 vials = 1 glob, while 1 glob = 3 vials.
extrapolating: 1 ancient wood plank would give 24.5 elder wood plank. assuming 5 dust is also needed, that’s 87s to make 40.4s worth of wood.
elder to hard would probably be profitable, but I have low confidence it would be profitable enough to even out the trend you idealize.

Mystic.5934:

the only potential problem with converting one tier to another is the exchange rate. current upgrading gives 17 TX+1 from 250 TX materials (or 90 if less than T6), then add the set 65s cost of doing this and you get something that’s not even profitable at the current price skews.

An upgrading mechanism, like the one that currently exists, only places a hard upper limit to the inter-tier price difference. The current upgrade paths are indeed not profitable, but they simply can’t be when the price difference is negative! Even then, the upgrade path allows differences that are significantly larger than the profit to level curve. Based on the numbers you quote, between lower tiers the allowed maximal difference is about a factor of three, and between tiers 5 and 6 a factor of 15.

However, the problem is not that the prices would be near the curve of maximal increase, where the upgrading path would become profitable. The problem is that the prices decrease as a function of tier, which is a sign of a catastrophic imbalance in the supply/demand structure. A downgrading path directly accesses this by setting a lower limit to the inter-tier price difference, in the same way an upgrade path provides an upper limit.

As discussed elsewhere, right now this is mostly an academic issue, but it will become acutely important once ascended armor crafting is implemented. Unlike lower tier wood and metal, lower tier leather and cloth are not readily gatherable by high level characters because of the level adjustment of drops. Without a downgrading path or some equivalent process the situation will quickly become infeasible.

Judging by the TP prices, there are fewer players exploring mid-tier zones (compared to starter and lvl 80 zones) therefore fewer people gathering mid-tier materials, leading to lower supply and higher prices on the TP. The new ascended recipes have made it even more apparent because of the sudden demand.

Mid-tier materials having a seemingly disproportionate value compared to higher tier materials is not an issue unique to GW, and I don’t necessarily see it as a problem. On the other hand, it’s definitely a ‘problem’ for people who want cheap crafting without gathering anything themselves.

So, perhaps people who are looking for cheaper crafting and/or profits on the TP will actually go out into mid-tier zones and gather. Imagine that.

I do agree that the discrepancy with needing 4 logs for a soft wood plank is no longer necessary and ANet should consider reverting it.

I do not agree that we need a material up/downgrading system.

tmakinen.1048:

Unlike lower tier wood and metal, lower tier leather and cloth are not readily gatherable by high level characters because of the level adjustment of drops. Without a downgrading path or some equivalent process the situation will quickly become infeasible.

Except that is not really true unless you completely ignore salvage items. They are not guaranteed drops but there are a lot more creatures than there are tree or ore nodes.

From my own experiences and behavior I would say the problem with the t2 materials is the complete lack of daily events in the lv15-25 zones.

Don’t forget that it is also a good method to earn money for people that don’t like to run Champ-Zergs or do Speed-Runs. Personally i’m very happy that i can make good money with running around harvesting wood and iron in lower zones