A willingness to buy doesn’t equate to an actual purchase.
Lets consider 5 people. One person will pay 5 gold, another 4 gold, another 3, etc.
So we have 5 people and a price range from 1g to 5g.
What should the items be sold at?
3 gold.
Why?
If they sell it for 5g, only one person will buy it for that much and all they will get is 5g.
If they sell it for 1g, all 5 will buy it and they will only get 5g.
If they sell it for 3g, 3 people will buy it for a total of 9g.
So to maximize revenue they sell it for 3g. But what happens when they do this? The person only willing to pay 1g and the person only willing to pay 2g don’t buy it. They don’t buy it but their existence, their willingness to pay a price for it, contributes to the demand of it.
Now those who will not buy it no matter the price, they don’t have a willingness to buy and do not contribute to the demand of it.
Legendary gear is the BiS, with unique visuals, and automatically upgrades to match BiS if ANet ever decides to come out with a new teir above ascended. I can guarantee you there is a very high demand for them. Almost everyone would be willing to pay some amount of gold for one.
The problem with Legendary gear is the cost to make one. The cost to make one is high enough that it’s hardly profitable if at all. Now I’m talking economic cost and economic profit. For the time it takes to make one and sell it, if you spend that same time just playing a good way to make gold, you will make the same amount of gold in the end.
Why is it like this? Well, the cost to make one will set a floor. People won’t sell for less than this floor. If it sold for less than the cost to make one, people would stop making them to sell and supply would go down. Price would go up to match the cost. This creates a minimum price which most people are not will to pay. Most people simply can’t afford it.
Lets look back at the 5 person example above. What if the item has a cost of 3g to make? Now what price will it sell for?
Answer is 3g.
Why?
This may seem wrong at first. If it cost 3g to make and they sell for 3g, they are not making a profit. You would think that it should be 4g. After all they would sell 2 at that price and make a 2g profit. Well, if they sell one for 5g they will make the same profit. The difference is between an economic cost/profit vs an accounting cost/profit. Continuing to sell for 3g may not give them an economic profit but they still may be making an accounting profit.
Also, if it sold for an economic profit, more people would gravitate to it so they too can get their share of the profit. This increases supply and increases competition. So we go with the person selling an item that cost 3g to make at 5g. They only sell one and make 2g profit. Someone else comes along and sells theirs for 4g, undercutting the first guy. Well that guy that is willing to pay 5g will buy it for 4g instead (saving 1g) and the person only willing to spend 4g will buy it for that much. Now the 2g profit goes to this other person. So the first person drops and sells for 3g. They are not making an economic profit anymore but it was necessary to keep making an accounting profit. The second person won’t undercut back below 3g because the profit is less than the cost and they can make more of an accounting profit elsewhere. They can either match the price or drop out.
Price will move toward cost and the more competitive the market, the more this is true. Profit has more to do with the type of market. Monopoly vs oligopoly vs perfect competition. Markets that see the highest profit are monopolies while markets that see no profit is the perfectly competitive one. In GW2, no one has a monopoly. No one has control on any item. It would require sole control of a resource.
. But if you need anything let me know cuz I got stuff!
