Today I will be discussing how you want to value your items. Specifically I will focus on what you should consider when you’re setting your normal prices in TSM.
An item is worth what someone will pay for it
The heading above should be quite obvious. The key is of course to figure out what players are willing to pay for an item. This will typically vary quite a bit as some players care more about mounts, some care only about end-game progression and some care about battle pets.
Often there will be many posts of the same item on the auction house at the time. In those cases you will typically just undercut the cheapest one by as little as possible as long as that guarantees you a decent profit.
But what happens if the AH is empty?
The TSM normal price
The TSM Normal price is used if there are no other auctions up of the item you are trying to sell. There are some considerations both in terms of what the value sources represent as well as what you can typically expect to get in terms of profit margin that play into setting this.
Some of you will probably wonder about how you come up with specific ideas for what an item is worth, as your normal price will represent what you think an item is worth.
Sale rate and profit margin
There is often a trade-off between sale rate and profit margin. Higher prices and higher margins typically mean that your sale rate is lower.
In general this means you want normal prices to be at a stable level where the item is not overpriced, while still bringing in a higher profit margin than if you had competition.
This will be much easier to illustrate with examples, so let’s look at some markets.
Low sale rate or high competition crafted markets
I find that these two markets have similar logic for the normal price. In low sale rate markets you want a decent profit margin, but you want to keep prices attractive. Example markets include the MoP PvP gear and other crafted transmog.
For these I typically set my normal price to about 2 times crafting cost. This is also with a normal minimum price of 120% crafting. This doesn’t work for all of them however as the tailoring pieces have a ridiculously low crafting cost compared to the others (50-70g per piece that typically sells for 1k+). So I added a max() function that will pick 1.5 times the region market average if that is higher than a multiple of crafting.
High competition markets will typically get undercut down to about 20-30% profit margin quickly so there is little point in trying to get exorbitant profits so I set my reset level at 2*crafting.
High-sale rate crafted markets with less competition
For me this is typically just the market for crafted BfA gear. On my realm there is limited competition so I am very often posting a couple of the variations by myself. The items are highly useful at max level which means players are more willing to pay more.
Another dynamic is the fact that certain stat combinations are significantly more in demand than others. For these reasons i set a much higher margin in my normal prices, with my basic being 5 times crafting cost. If the market is unsaturated for these then they will have to pay a significant premium to get their desired stat variation. This also represents the “difficulty” of crafting that specific version quite well and has worked really well for me in BfA.
Flipping markets are a diverse set of markets, so there is significant differences from one to the next. In general the main consideration is what price level you are buying at and what you can hope to move your stock at. Since we do not have crafting costs it is much harder to find a good price level for our effort in obtaining the items.
Generally you will rely on some multiple of dbmarket or dbregionmarketavg in TSM. These represent the price of an item over the last 14 days, with higher weights for the more recent prices.
Typically you will want to post items somewhere between 90-150% of the market value depending on the market and your realm.
Materials have a very high volume posted. This means that you are generally extremely unlikely to sell large volumes above the market value. For this reason I do not suggest posting above 100% dbmarket. Materials sell quickly and are farmed quickly, so the price variation is generally quite small. I stick to trying to get a profit margin of about 20% so then I buy below 80% dbmarket and sell at 100% dbmarket.
BoEs is a much lower volume market than materials. Depending on the variation you have you will often be the only one posting it on the AH and finding a good normal price source is really important. The market typically differs a lot between realms so finding the right level for your realm is crucial.
There are two main approaches, one is to be a market maker. To do this you would make a separate price for every variation by utilizing the itemlevel source in TSM or making sub groups for each item level and bonus roll variation. This is very time consuming, but gives you great control of your pricing. Some of the biggest BoE flippers in the game use an approach where they set a gold price per 5 item levels and use a linear or some other scale for their pricing.
I don’t try to be a market maker, and I prefer having everything in one group and just use one operation to save time. To do this I rely on using multiples of the region market value. The exact percentage will depend on your realm. My challenge realm is slightly more expensive than the region market price so i use 125% region market value as my normal price. Finding the right level here will depend HEAVILY on your specific realm. The reason why I don’t like using dbmarket here is because it will often be very wrong for the rare pieces. If you are the only one posting it how can it have a well converged market value on your realm? You will be changing the market value every time you repost. If you post a rare item at 120% dbmarket eventually the dbmarket value will be in the millions regardless of value. The region market value gives a great average price level that has been reached across a ton of realms and auctions posted.
By looking at what price level you are buying at relative to region market value you can get an idea of the level you want to be at. I generally aim for 30-100% profit margin on BoE flips so if the cheapest you can find on your realm is 100% region market value a normal price of 150-170% might make sense. If you find them at 30% then a normal price of 50% would be more appropriate.
Test some stuff out
Hopefully this gave you some insight into how you think about your normal prices. I’m sure I may have left something out as this post ended up becoming quite long. Let me know if you have any questions in the comments!