The Journey To Gold Cap – Beware Of Hidden Losses

I’ve decided to rename the whole AH/JC experiment.  It has grown way beyond just JC, so it is more appropriate to name it something else…

Anyway, any serious auctioneer has at least one toon that they make thier “Bank Toon”.  This toon is primarily used for a guild bank access, and sometimes (like me) just the toon I dump misc. stuff on that I want to sell.  But I don’t sell everything on him.  I usually sell things on the toon that I craft whatever item I am selling on.  But this can be misleading, and often hides away small losses.

Case in point – my bag business.  I have a tailor and enchanter that I use to make bags for a very steady, if not huge, stream of gold.  There are three phases in this process.

1.  Buy mats off AH.  I’m going to use netherweave bags for an example, because the mats are simple – thread and cloth.  I use my bank toon to buy all of the cloth, and then transfer it to my tailoring toon.  This step is simply a “Transfer of Wealth” so to speak, and the point I will get to in more detail in just a bit.

2.  Buy additional crafting mats – In this case that would be thread.  Once I had the cloth, my secondary toon would buy the thread.  This step is called “Supplementing Supply”.  This is of course a fixed cost, depending on what you need to craft.

3.  After crafting, I post the bags to the AH.  Simple enough, right?  This step is the “Recovery of Wealth”.  I.E. – Im getting your gold for my bag.  Remember, I can have a gazillion gold worth of bags in my GB, but until I sell it, it means jack.  The process of selling the product recovers the locked up gold in the product, allowing me to recover my investment, and hopefully make some more on top of it.  PROFIT!

Step 1 and Step 2 are the most crucial parts of this equation though.  It separates the big boys from the babies.

Because I purchased the cloth on a different toon, and transferred it to my crafter, the crafter experiences only the loss in gold of the thread.  So as I start selling bags, if I am not VERY attentive, it looks like I am making money.  In my case, a new competitor had entered the market.  I had undercut the bags to the point where I was losing almost 1g per bag.  But I didn’t realize it until I did the math.  Because I was selling the bags on a different toon, It looked like my overall wealth was increasing.  It was exacerbated by me completing the daily heroic on that toon as well, further covering up the loss.  I was essentially giving money away, and I didnt know it because the net gold on that toon was still rising.

It is absolutely critical that you keep track of all of your auctioned items and their costs.  There is a time and a place where it is OK to sell things at a loss (thats a different article, for another day).  But you don’t want to be doing it all the time.  I keep a sticky note, close to where I am, and I make sure I write the break even point on each product I mass craft and sell (belt buckles, bags, even gems).   If you don’t know your cost, do some quick paper napkin math.  Otherwise, you are going to lose money.  I estimate that I burned 200g – not much in the grand scheme of things, but still, 200g is 200g.

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Comments
6 Responses to “The Journey To Gold Cap – Beware Of Hidden Losses”
  1. Markco says:

    I try to stress buying up materials more than anything as well on my Wow Gold Blog. You did an excellent job of summing up what it takes to be successful at crafting and selling on the auction house. Running out of materials is a real and serious concern for auctioneers who know what they are doing.

    Have you started mixing your professions more such as doing the ‘saronite shuffle?’ Here’s an example of what I’m talking about from my forums: http://20kleveling.com/JMTCforum/viewtopic.php?f=22&t=1047

    I wish I had found your site sooner, I’m hosting a blogging carnival on august 2nd and would love to have you write a quick article. I like your style though and may link to this article as part of the carnival.

    See ya around,

    Markco

  2. Julie says:

    Fire – have you considered turning your talents and efforts to the real world, e.g. eBay… I think it would be scary what you could accomplish. I have every confidence you could host a guild party in, say, Caba. 🙂

    • Firespirit says:

      Julie:

      I have certainly thought about that… But in the end this is fake money im playing with, and WoW econ is not real life econ, no matter how similar they are. Gimmie 4k seed money, and then we might be able to start talking 🙂

  3. cold says:

    Don’t forget that all that mailing of items costs coin too. As does buying thread on your crafter, when your main may get it for 20% off due to being exhaulted with the vendors. So its usually better to buy the mats on your crafter, then send the crafter the other mats, that were bought in large supply with an alt exhaulted with a major city.

    • Firespirit says:

      That is a very good point cold. In this case it really didn’t matter, he is exalted, but it is something too look out for. LOTS of gold can be wasted on this.

  4. Ten'nen says:

    One thing I’ve found myself enjoying more and more is finding ways to have alts with skills to support one’s trades. While slightly less helpful now, my mage and my paladin were both enchanters, with the only emphasis I put on my paladin being really cheap plans and enchantments that make an item soulbound. Otherwise, I basically just use(d) my Paladin to get more enchanting mats for my main.

    My pally is also a miner to support my mage’s JC business.

    My Priestess in an herbalist and a tailor, so she can benefit from my mage’s and pally’s enchanting materials they pick up.

    My DK (that I don’t really level) is an up and coming Scribe, so he benefits from my Priestess’s herbalism.

    My Druid (who has been put on hold) is an up and coming alchemist.

    I guess the point I’m trying to make is that one way to offset costs isn’t just by having tons of high level alts doing all the same heroics and raids, but just high enough to provide mats for each other. DKs are great for this, because with just a little work they can have access to everything you might need in Northrend, which saves you the time and money of having to either buy them or have someone else farm them for you.

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