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Identifying Profit

Discussion in 'Diablo 3 Market & Economy Discussion Forum' started by Unstable, Sep 27, 2011. | Replies: 6 | Views: 812

  1. Unstable

    Unstable IncGamers Member

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    Identifying Profit

    Hello, world!

    Having read some of the other threads that are available on this forum; it does seem that most have centered in on producing ideas that primarily seek to produce a profit to the player by methods that seek to manipulate the market in various forms favorable to the initiator.

    But it would be equally interesting to have some minds being put to the task of identifying what items will be the most sought-by as the game matures. I'd like to hear more thoughts on what areas that primarily might both profitable at the very start of DIII, and ideas on what areas might possibly be overlooked - but which might yield a profit once the game and market has matured some.

    I'm guessing that as the game starts the profit to be gained from selling even perfect low-mid level items might not be as high as it might eventually become, as there might not be enough people wanting to invest in gear that might become useless after only a couple of hours of gameplay, for there to be a demand on high priced, though perfect items.

    But that doesn't mean it won't eventually be a market. If it becomes possible to identify a trend that people will want to play and deck out lv.20 twinks with as good lv.20 gear as is possible then clearly the price of such items will be accordingly adjusted as the need for such items increases - meaning that the cleverest will already have built up a supply to meet that demand once it arises.

    Ie. rather than selling your better than average Master War Staff for whatever price other items of the same quality seem to fetch at the current moment, keeping it in your inventory and selling it at a later date when the market has matured might be the more profitable play.

    Thoughts?
  2. TheOatman

    TheOatman IncGamers Member

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    Re: Identifying Profit

    Keeping an inventory won't work if prices creep steadily downward. It's a matter of how effective the gold sinks are in the long term. If prices are steady or increasing, then I would totally agree with you.
  3. viledevil

    viledevil IncGamers Member

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    Re: Identifying Profit

    i think he's more talking about demand increasing over time for certain types of items, which should increase their price, as opposed to some sort of general item-value decrease as supply increases.

    given that line of thinking the answer is yes, one can identify trends and stock up until the masses learn that certain things are good. the 2 problems i see with it are that you could be wrong (or it could be patched) and you're tying up assets rather than churning your inventory.
  4. FizzyBubbly

    FizzyBubbly IncGamers Member

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    Re: Identifying Profit

    Short Answer: Yes like in any market there will be trends, how long identified trends will last is unpredictable without data.

    Long Answer:

    Lets look at why Mining and skinning in WOW were considered gold making professions.
    -One of the main reasons is because these professions produced "product" that had a large demand b/c of their uses in a broad range of professions. leather and ore acted as a base commodity.

    MARKET IDENTIFIED = Commodities - the items used to manufacture or create desired effects

    What will effected the price or perceived value of the commodity items in DIII?

    -Patches-

    simulated increase in demand; the reason i say simulated is that with millions of players the demand for these materials across the range will hit a saturation point and remain constant with slight increases and decreases day to day or month to month. However, If a patch comes and it has a recipe for an item everyone wants then the value of the materials used to make that item may increase because of everyone's demand condensed into a small time frame.

    -Supply-

    the competition of sellers will increase or decrease the price of materials, it should also be known that there will be levels where price becomes too high even though there may be great demand if an item reaches this saturation price buyers will opt to spend time farming the items in stead of purchasing the items which will create a lower volume of successful transactions and the eventual decline in price.

    -Demand-
    Demand is a funny topic in the world of DIII. Every player has the ability to meet their demand potentially, however in the real world everyone that demands to have a Maserati can't meet the procurement of that demand.
    ^THIS IS THE MAJOR DIFFERENCE BETWEEN DEMAND IN THE REAL WORLD AND IN THE VIRTUAL WORLD^

    For example if Diablo only had 5 items, one for each class then the demand for each item would be infinite based on growth of players until that growth has stopped and each player has acquired the item for their class; Then demand would drop to Zero.
    So for Demand I assume it is constant for the better items in the game and an exponential decline to the "worst items" so the demand will only change if there is a change in the "Ranking" of these "best items"

    Lets try and identify other markets:

    Along the idea of "Twink" items there will be something similar in DIII. These items will be based on their "rank"(how good they are) for a specific mode or act in the game. Since players will look to outfit their new or progressing heroes with the best items for the specific act or mode they are playing we will see some items become Staple Items.

    MARKET IDENTIFIED = STAPLE ITEMS FOR NEW/PROGRESSING CHARACTERS

    For example we may see Rod of Kittens sell for more then Rod#2 even though Rod#2 is higher lvl and has better stats. WHY?

    Because Rod of Kittens may be the best Rod for the entirety of Act 1 that new players can buy for their characters, yet Rod#2 may be a normal rod drop from the beginning of Act 2 and is not an item you could use through most of Act 2. Therefore creating more demand for Rod of Kittens then for Rod#2

    Identifying what these items may be early on may net you a greater % of profit but this information would be better used for deciding what items to cube and what items should go on the AH.

    I hope this answer is along the lines you were looking for.

    Additional Note: Prices will not begin to decline day 1, in the beginning the market price will be extremely volatile as Supply and Demand struggle to meet each other on Price. This may take Months and is also dependent on how fast the majority of players progress through the game. Obviously patches and expansions will have major impacts.
    Last edited: Sep 27, 2011
  5. Naviaras

    Naviaras IncGamers Member

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    Re: Identifying Profit

    An example from DII.

    Andarial was a heavy Poison damage boss. Everyone would have to face her. Items like Death's Gloves which gave great protection to Poison damage would have a high value for Characters who where low on resistance. So there will always be a market for those glove as long as people are making new characters.

    A better example is Melph. If you didn't have a decent Lightning Resist Melph could give you trouble. So high Lightning Resist items, usually Rings and Amulet, would a spike in value as people learn about that boss.

    Both of these examples are choke points in the game that every player will hit at low level so if there are similar choke points in DIII there will be market opportunity for sellers that have items that might the choke point easier.
  6. Concupisco Quaestus

    Concupisco Quaestus IncGamers Member

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    Re: Identifying Profit

    The first step in identifying where the profit is hiding will require people to "modernize" their preconceived notions in regards to business and economics.

    With RMT your stable profit generators will not come in finding the highest value piece of loot and trying to sell them because there is no way for you to produce items reliably and even if you tried to corner the market with resell tactics something could still happen to devalue that item and you could stand to lose considerable profit, the stuff the average person is going to see as being "worthless" is actually where you will make steady revenue, it won't give you the biggest margin but it will be as stable an offering as this economy has to offer provided you know how to play a micro-transaction market.

    Profit isn't just about finding the most expensive item to sell or finding something with a huge markup on it, it's about thinking in terms other people won't, as Azzure has pointed out things like items that can be "smashed" for crafting materials that are worth more than the item was selling for are good ideas but the second something like that is uncovered and made publicly available you will have about 2 or 3 days tops before it stops working because there's just too many people doing it, instead of being able to get 10 items a day to smash and sell you're only going to see one a week due to the constant search hammering from 50,000 other people trying to do the same thing you are... Profit is going to come to those who can move on something the fastest and aren't afraid to do a complete 180 at the drop of a hat and jump on to something else.

    With the heightened aggression in modern economics your profit isn't so much about margin any more, it's about competition. Reduce your competition and sales volume increases, when sales volume increases items with a 5% markup can easily net more profit than items with a 50% markup solely due to your having less competition in a market where you can sell more.

    In another thread I mentioned what I called "rape economics", one of the ways a person can essentially destroy a market is to take an existing high markup market and turn it into a micro-transaction market, provided you know what you are doing you yourself will make 10x more money by killing off competition that isn't prepared or "geared" for operating within a micro-transaction economy... To most people this shouldn't be new, the Eastern industrial complex has been doing it to the world for 20 years. These are the kind of tactics that destroy economies in their practice though, playing "natural" micro-transaction markets is healthy for the overall economy, making artificial micro-transaction markets is where economies begin to falter and fail.

    People who still think in 1950's economic terms need to take a crash course in how much those philosophies have changed, by comparison that style economy is like comparing preschool to college when put up against the backdrop of the modern era. This is where people like Azzure and this website are going to be extremely important to the people who are still in that economic preschool mindset and people best be VEEERRRRRY appreciative of him and his efforts... He and others could just keep it all to themselves as is usually the case in finance.

    If people are reading this site thinking it will be full of "sell this item" type advice, sure that sort of thing will be around but keep in mind that someone telling you to "sell this item" are manipulating the market whether they realize it or not, sure there will be some "rare" items with really nice values tied to them and some universal "tricks" that people can use but rest assured that once posted on this site or any other site the method in question is going to be flooded with people all trying to do the exact same thing.

    Obviously people need to start somewhere and even when engaging in a market with very heavy competition people are still going to profit, I mean its not like it's costing you money to manufacture these items so any money is technically profit once you've paid off the purchase price of the game but the "real" money is going to be able to identify markets that the masses just do not want to engage in or do not understand.
  7. FizzyBubbly

    FizzyBubbly IncGamers Member

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    Re: Identifying Profit

    I think that the information from this site will come in multiple forms and ability levels, for me personally I'm not looking to turn my game time into a job, but i do like learning about how its done.

    My belief is i want to play the game and be savvy enough to obtain the items i want in a reasonable amount of time, maybe make a buck or two on the side for kicks. The AH and RMAH helps me facilitate this goal. With this being my mindset I'm not looking to make "real" money with the game.

    As CQ has stated in several posts, to make real/substantial profits or income it will take a considerable amount of knowledge and understanding of advanced strategies.

    all the admins and members are doing an awesome job with the content available so far and it is much appreciated to see a community of this sort developing. Maybe we can get an economy vent channel going or something.

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