Scrap selling 25% Fee

[viledevil]

I was planning to do a post later with changes in the beta but this one is tasty so here it is asap.

when selling scraps there is now a 15% posting fee based upon the final value and a 10% transaction fee, and the duration is 48h.

boowah, yuck, 25%!

screen shot and more info to follow.

[Concupisco Quaestus]

Is this applying to both the GAH and the RMAH?

[Azzure]

I was planning to do a post later with changes in the beta but this one is tasty so here it is asap.

when selling scraps there is now a 15% posting fee based upon the final value and a 10% transaction fee, and the duration is 48h.

boowah, yuck, 25%!

screen shot and more info to follow.

Screenshot: http://diablo3markets.incgamers.com/wp-content/uploads/2011/11/Screenshot006.jpg

Article: http://diablo3markets.incgamers.com/blog/comments/new-ah-screenshots


Is this applying to both the GAH and the RMAH?

Unknown.

However it might even be the case that Blizzard doesn't allow you to sell Crafting mats for Real money, forcing you to buy gold and use gold for those types of transactions, and leaving RM transactions for bigger items.

[viledevil]

the rmah fees are unknown but still purported to be a flat listing/transaction fee + a potential % fee on cash out to paypal + paypal fees.

ty azzure for the pic.

[viledevil]

plus its still buggy as hell; i listed 10 scraps for 100 gold each and the best deal i can find on 10 scraps on the ah is like 425 per.

other bugs with item buying are also there. seems like they're having a hell of a time getting this thing sorted.

[Concupisco Quaestus]

Hmmmm, well on the bright side at least with limited free RMAH transactions and 25% fee's hopefully we won't see as many people flooding the AH's with singles and the listings will be of a more "professional" nature... Or something...

[Azzure]

The RMAH will very likely have its own totally different fee structure, based around static fees rather than %'s. At least that's what they said the plan was.

A few weeks ago I made a guess that they will very likely have different fees for different item types in the RMAH. For example, equipment might be $0.50 listing fee, while selling scraps would be $0.15.

[Hubriss]

This move is actually quite brilliant... I had not thought of this, but the main reason they'd put such a large tax on GAH trades is not to make the RMAH more appealing like I thought before with just the 15% tax, but it's to level out the game's difficulty and run-through speed between players who use either AH and those who don't.

A toon with easy access to an AH would make good gear drastically easier to acquire compared to a toon without access to such a huge cheap market in which it can trade the useless junk he would undoubtedly find for good useful gear he could use.

The reason for such a large 25% tax is not to create a gold sink, but to reduce the trade volume and increase the scarcity of items. A 15% tax would probably be more effective of a sink (or at least only slightly worse) than 25% simply because there would be a lot more trading going on.

Of course, this will massively incentivize the RMAH to the point that almost no high end items will be listed on the GAH. Instead people will resort to the old-school method of trade chat channels where players will advertise their wares and then meet up with each other in-game to trade TAX FREE! Blizzard just has to provide the chat channels.

However, this could be risky. The disparity between the GAH and RMAH is undoubtedly going to piss a lot of players off. Also, if Blizzard keeps the flat fee for the RMAH, they won't make nearly as much money off of it as they could with a % fee simply because it won't be as large and as accessible of a market. But if they do make RMAH % based (which would be a huge improvement for both Blizzard and the players), it would make the disparity between the two AHs much more glaring.

[sgeos]

if Blizzard keeps the flat fee for the RMAH, they won't make nearly as much money off of it as they could with a % fee simply because it won't be as large and as accessible of a market.
This is a design choice that will cut down on the number of $0.05 auctions. I agree that there is going to be more money in long tail transaction fees than premium transaction fees.

If they wanted to try to maximize accessibility, they would do something like this:
A) Transaction fee is 25% of final sale price.
B) Minimum transaction fee is $0.01.
C) Maximum transaction fee is $1.00.

With the above numbers:
i) Sales for less than $0.04 have an inflated fee (33% ~ 100%).
ii) Sales from $0.04 to $4.00 have a 25% fee.
iii) Sales above $4.00 have a flat fee (almost 0% to almost 25%).

Small fees are better for buyers and the market. Below a certain level, it is not worth messing around with. Above a certain point, people do not want to pay a percentage. For example, 10% of a $359.70 item is $35.97. A given actor may value ~$36 more than security and resort to a "black market" channel to avoid paying the tax. A dollar is a dollar.

Where any given actor draws a particular line in the sand is a personal choice. There are people out there who will try black market to save on fees no matter how small they are. Some people will mess around for a penny. Some people will take a 25% hit for security regardless of the closing price. The list goes on.

[AngleWyrm]

Is this applying to both the GAH and the RMAH?
The last time Blizzard said something on this was in one of the Blizzcon Q&As; they said they were going with a flat transaction fee for the RMAH. They added the reason was that it would avoid the temptation to modify items to promote high-dollar sales.

It's a sound business decision as well. Getting too greedy can easily destroy actual income. Trying to sell lunch for $20/plate would likely close the doors of most restaurants, but loud and overbearing people are rarely gifted with the understanding that 10x$5 is better than 1x$20.

[Wayne]

To get that out of the way:

There are two fee structures at paypal. The first one is the one you guys already know about which is 30cent plus some percentage and the other one, that blizzard will probably use, is 10cent plus a bit higher percentage. Its not impossible that blizzard will get something custom but it wont get anywhere near 1cent per transaction. Not happening.

And thats just paypal. After that blizzard has to stack its own fee on top to turn a profit.


The reason for such big fees on the gold auction house is that nobody can turn a profit by doing arbitrage/market making/any kind of high frequency trading. Poker sites have to deal with all kinds of **** from money laundering to sophisticated bot networks. If you create a stock market like marketplace and let people get rich playing it, youll have the SEC knocking at your door.



Now ill do some mathcraft to derive how big a spread youd have to work to turn a profit on the proposed fee structure:

We have a 15% listing fee that gets applied to the final prize and a 10% transaction fee that in my opinion you cant add because they happen after each other. So in my opinion, the total fee is .15*+.85*.1 which is 23.5%.


Now, for simplicity, lets say that the market trades around 100g per piece, with a spread of 2x. Meaning that the bid is at 100-x and the ask is at 100+x.

Market makers get their name from providing liquidity to the market. They cant take a position and always have to post a bid and an ask. Lets say we do that with a spread of 2y and y<x. By undercutting the actual spread, we draw business.

Our Bid is thus 100-y and our ask is 100+y.

An ideal situation is when we get hit for the entire bid and ask at the same time, so that we dont have to hedge. We will assume that for the time being. We also have to trade a fixed size of at least z shares on both sides. Let that z be 100 for illustration purposes.

So we post our orders of Buy 100 at 100-y, Sell 100 at 100+y. The question is: How large must y be, taking fees into account, for us to turn a profit?

The difference between the prices, 2y, is our profit. A question that hasnt been answered yet is who has to pay the fees? Is it just seller, just buyer or both? Ill calculate the worst case which is that both pay the fees (unlikely, but a factor that reduces the error we make by assuming perfect trading conditions).

So we make 2y*z, that was easy. The fees we pay are:

z*.235*(100-y+100+y)=200*z*.235=47z

Our profit must be greater than that: 2y*z>47z

=> y>24

Thats a big spread for a very liquid market. In my opinion, the normal spread wont be anywhere close to that, maybe in the 2-4 range. (The spread is still 2y, which makes it 48. Thats pretty close to the max spread real market making firms are allowed to offer).

And thats just for a market at 100g. If it was at 10000, wed need a spread of 4700.

Markets with a spread this big are usually very illiquid and post 2007, everyone who has positions in those is just awaiting bankruptcy because they cant get rid of their ****.

So we have market making as a business model pretty much ruled out for the d3 commodities market. What we havent ruled out is buying a couple thousand stock with real money and learn a **** ton playing the market. All you have to do is adjust your excel file for the fees you incur so that you see whether you were theoretically profitable. Real market makers dont pay fees, we collect them.



And btw. Who called this thing an auction house? Its a stock exchange. Entering relatively unique items doesnt change that fact. It resembles an electronic exchange more than anything else. Blizzard should realize that its the perfect training ground for aspiring traders and sell subscriptions to that so that we dont have to deal with fee bs.

[Grayson Carlyle]

We have a 15% listing fee that gets applied to the final prize and a 10% transaction fee that in my opinion you cant add because they happen after each other. So in my opinion, the total fee is .15*+.85*.1 which is 23.5%.
When you list a 100g auction, you have to pay 15g to list it. When it sells, you only get 90g from the sale. Total expenses were 15g, revenue was 90g. Net revenue was 75g. Total fees incurred on the 100g was 25g; 25%.

[Azzure]

Also don't forget, this is for GAH only. RMAH will have static fees.

Though I think the static fees will vary on item-type. They hint to this a bit by the method in which they separate the AH categories. As seen in this screenshot below:
http://diablo3markets.incgamers.com/wp-content/uploads/2011/11/AHlist.jpg

Each category very likely has its own fee structure.
The next few lines are purely speculation:
Gems are probably based on its base value. For example, disregarding what they sell for, each gem type (perfect, radiant etc) will have a static fee listing, ranging from 5c to $1 for Radiant Star.
Crafting and Dyes: Same as Gems, except cheaper, perhaps 0.5c to 20c per unit. (they probably want players to not use the RMAH for these, and instead use the GAH, except for the rarer materials)
Items
Equipment: Static 50c fees. So you don't list crap that's not worth listing.

[viledevil]

the drop of listing fee for items is probably more bliz collecting data on per person listings based upon the fee so that they can optimize the rates than a suggestion one will be able to list equipment for no fee on launch. it wouldn't surprise me to see all those #s change in a future patch to further optimize the gah %. unfortunately given the state of the ah i'm not sure how useful the data would be :(

also imo the dbl fee structure for scraps is just testing the functionality of having two types of fees in preparation for adding the 2nd currency to the beta ah.

tldr; we shouldn't read too much into the fee structure in the ah right now

@ Azzure

Re: Scrap selling 25% Fee
Also don't forget, this is for GAH only. RMAH will have static fees.

Though I think the static fees will vary on item-type.

Each category very likely has its own fee structure.

The next few lines are purely speculation:
Gems are probably based on its base value. For example, disregarding what they sell for, each gem type (perfect, radiant etc) will have a static fee listing, ranging from 5c to $1 for Radiant Star.


i think its more likely the gah will have a static %fee structure across all item types. why do you think they would add complexity to the system or more specifically what do they gain by having it vary?

wrt variable pricing based upon type and quality in the rmah i highly doubt it as it would incentivize blizz to provide more items of a specific type/quality to increase rmah revenue (i'm not saying they would do this but they have gone to great lengths to show that they will not put out even an appearance that they could game the rmah to increase profits. the best examples are when they discuss the flat vs % fees in the rmah)

its possible that they'll have one of the 2 flat fees scale with either the listing or final selling price, but for the same reasons as the gah the fee structure will probably be uniform across the whole rmah. and again making expensive items generate higher fees will also goes back into their incentives to create certain drops as well.

simple is best, why do you think they would add complexity, what do they gain by making dozens of fee structures? how is that 'better' for them or the user?


For example, charging a 50c listing fee for an Axe, and then also charging a 50c fee for a Scrap is just silly.

why? a 'high' fee just means that people wont be inclined to list scraps in low quantities. this is good as it fulfills their goal of minimizing low value item spam. players will just sell their scraps in a meaningful quantities to spread the pain of the fee. now how they reconcile the selling fees if a whole stack doesn't sell i do not know.



Listing Chipped Amethyst may cost you 1c
they dont want ppl listing cheap crap like this

[galzohar]

With a 25% fee you can rest assured many will avoid selling anything truly valuable on the GAH... 25% is huge! In WoW the fees are much lower, and even then people sometimes try to avoid the AH and spam trade channel to try get a sale off, especially if the item is an expensive one.