There seems to be a bad habit in the gold making community where many players seem to confuse what an item costs and what it’s value or worth is. Unfortunately this isn’t just contained in the digital world, many people get confused by this in the real world as well, so throughout this post I’ll be touching on some real world parallels as well.
Here’s the issue: Just because it cost you x amount to buy an item that does not mean you can realistically value it at that price now, or likely ever. As I was doing some inventory this week at my father’s office (thank God it’s only a one week gig, it’s already completely erased my previous association of blue boxes with time travel, aliens, and attractive young ladies with British accents) and while I was looking at some of the items I was counting I was pondering the value of some of the items (each item had a cost listed). Obviously it cost the company that much when it was purchased, but can you really value those items the same way now? I mean some of these items were like 6-7 years old, and even then I don’t think they were cutting edge (when was the last time someone produce a 2.5 gigabyte hard drive?)
Case in point: one item was a 230MB optical drive. Oh boy, I sure bet they’re glad they still have that, in another 70 years it could be an antique! If it was missing though it would have been reported and counted as the full purchase price was lost, but realistically wasn’t it lost over a much longer period of time? I’m sure there’s all kinds of accounting issues with that though so I’ll leave that be, lets move on to a more relate-able example.
Cars. As soon as you drive that car off the lot it’s value plummets; You can turn around 5 minutes later in regret but it’s never going to go up in price (is anyone really expecting that these mostly plastic cars will be collectibles 50 years down the road?) Whenever you buy an item in World of Warcraft while it might not lose value immediately, you frankly don’t know what’s going to happen. Let’s look at Jim Younkin’s post on item duplication again (my response and Faid’s response for reference) and his example of item values dropping due to duplication. Again while I understand his problem with duping even without duping these items were no guarantee (why would you even want to stockpile Queen’s Garnet? I digress…). Just because you buy an item, doesn’t mean it will stay that price or go up, in fact chances are it will decrease in value.
One last real world parallel to segue into the rest of the more WoW related post.
Real estate. I love how real estate agents will say stuff like “Your house is worth x but right now you can only get y.” Umm, no. I’m pretty sure that by definition if no one wants it at that price, it’s not worth that price. Sure, it may be worth more in the future, but there’s no guarantee that it will be worth that. I realize you may want to hold off selling for various reasons, but my point is it’s not actually worth x amount.
And that is something to keep in mind for World of Warcraft as well, just because an item was worth x gold at one point, doesn’t mean it’s worth that now, or will be again, or will even stay at it’s current value.
So how do we value our items then? Lets start with linear production lines where you take x materials and produce y results every single time. With this you have two options, you either value the items for what the market is, or you can value it at what it cost to produce. Both of these are fairly easy to determine with linear production, where it gets tricky is non linear production.
Non linear production is where you don’t get guaranteed results, like the shuffling process in general. You take x amount of ore and you can get nearly any amount of rare gems, uncommon gems, cut gems, dust, essence, shards, blue items and enchants. Here you’ve got less of a clear definition of worth. Can you determine how much the results can sell for? Easily. But what if you’re determining “cost”? A lot of players assign hard values to certain items on which they’re guaranteed to get sales at a certain price and then price the remaining items more loosely as they know it’s pure profit (or “gravy” as they say, yea I don’t get it either).
Lets look into the hidden costs. While most players only worry about the base mats there’s a lot more that goes into the process that can cost us gold. Mailing and most vendor mats is usually negligible (some items excluded of course) but what about the AH cuts? Your time? Lost deposit fees? Yea, I bet you forgot about those deposits didn’t you?
And what about investments? Your storage space and leveling your profession all cost you gold. Mind you the more you make use of them the less the investment costs each individual item, but if it cost you 10,000 gold to level a profession, but the time you’ve made 100 items it adds 100g to each item cost, even at 1000 items made it’s still an extra 10g.
Unfortunately there’s not much in the way of a reliable way to track some of these expenditures (future TSM feature maybe?) but some of these there are no excuse. For example you should not be ignoring the auction house cut, at 5% that can be significant. You also shouldn’t be ignoring vendor items like flasks or parchment, it may seem small but they may add up, so account for them?
Stringing it all together you really should put some thought into how you value your items and materials, it could make a significant difference in your gold making.
I’m interested in hearing what everyone else thinks about valuing items, don’t be afraid to leave a comment, I love reading comments!