Monopoly for fun and for profitFollow

Cornering the market on an item can be lucrative and enjoyable, but you have to do it responsibly. On my server, I am basically the only person selling sniper scopes. Let me explain my strategy and maybe you can become the sole supplier of the item of your choice.

When I first got my sniper scope schematic, I figured it was probably a waste of my money since I am a priest. But I reviewed the market and noticed that only a couple of people sold scopes, and they didn't have them up all the time in the auction house. I analyzed the cost of materials and decided that I could undersell them and make a good profit.

Testing the Market

In my case, I can buy materials for about 2 gold per scope. The asking price was 8-10 gold. I figured that 5 or 6 gold profit for almost no work was good enough, so I put a few scopes out at 7 gold buyout. Of course, my scopes sold first.

So my competitors lowered their prices. Now you will hear advice not to get into price wars on the auction house because everybody loses. Wrong! Eventually someone wins, but that isn't necessarily you. I lowered my prices to see who would quit first. It was an experiment, so I didn't care how low I went, I just wanted to see when the other people would give up. At five gold a scope, I was the only one selling scopes for a week.

Establishing Your Price

So then I raised my prices. But you can't raise them too high or no one will buy. When you see those 99 gold buyouts, they don't expect someone to buy, they are hoping someone buys by mistake. Real prices have to be reasonable. So I started asking 8 gold.

Of course, the competitors come back--and ask 7 gold. My strategy is to set my buyout at their minimum bid. So anytime I see competition, I just price accordingly. Now I have a monopoly on sniper scopes, make a good profit, and keep the competition at bay by underselling them till they quit. My prices range from 7-9 gold for a scope, which brings in about 50 gold a week profit.

On Hakkar I also have an engineer, but the prices are so depressed that I don't bother crafting. Like I said at the start, you can't guarantee you will win.

Selecting Your Niche

This only works with items that are reasonably constrained. Not everyone can make sniper scopes, but hunters definitely want them because they are high end. And hunters buy more scopes because they upgrade their weapons. Lower quality scopes don't sell too well. Don't expect to corner the market on silk cloth because the profit margin is too low already. For comodity items, just sell at the going rate and make your money on volume.

What are good items to sell? Something that not everyone can provide but is the best in class for those who want it. Hide of the Wild is another example. Deviate scale belts also sell well. I don't know all the craftable items, but research your profession and figure out what would be in demand. The golden rule is that it needs to be "best in class" to drive demand, but something that not everyone can make to restrict the supply. Think rare recipe.

Actually, there are a lot of items that should be in demand, but aren't. Part of the problem is that the mats are in high demand for other things, so they aren't worth making. Another problem is that there may be a comparable item that is easy to get. Yet another problem is that no one looks for the item because it is never for sale. You might want to advertise, although I have not had great success trying to drive demand with advertising, unless you are hawking enchants.

Aggressive Enchant Sales

By the way, the best way to sell enchants is to provide the mats yourself and charge a fixed fee for the enchant. People inherently distrust you if they have to provide the mats and hope you don't take them and run. Quoting an all inclusive price will close more deals, but you have to stockpile mats for the popular enchants.

The nice thing is that you can buy mats cheap and quote prices that will undercut your competitors. Why? Well, suppose you can say "I will give you a crusader enchant for 200 gold, just meet me at the bank."

Your competitor says "I will do crusader for 20 gold plus mats." The customer says "What are the mats?" Then he goes to the auction house to check prices. You already bought the cheap mats, so the customer is looking at high prices. He figures out that crusader will cost him more than 200 gold if he provides mats and pays the 20 gold tip.

He also wonders "Hey, what if the enchanter takes my mats and walks? What if he raises his price?" (This is a shrewd strategy salesmen use all the time). He will say "What a waste of time, I will just go with the guy asking 200 gold." And when he gets a better weapon and wants another crusader, he will come back. And he might even recommend you to his friends. This is how good business is built.

The key here is to buy up the cheap mats for good enchants so that your lazy competitors cannot offer good prices. Then you have the safe, secure, cheap product and drive them out of the market. Most enchanters have a devil-may-care attitude about their customer's comfort and convenience. Provide the service and corner the market.

Stocking Enchanting Mats

But selling enchants is a dicey business. It would be risky to use your entire fortune buying expensive mats to test my theory. From experience, pick two or three enchants that do sell and get mats for one of each enchant. Try offering a fixed price and see what happens.

Always price in terms of replacement cost for mats, not what you paid for the mats. If you are going to advertise enchants for a while, check prices on mats in the AH first. If shards are usually 10 gold, but today they are 17 gold, you might want to raise the price to reflect replacement cost unless you are confident the price will drop.

Going back to my scope example, the price of rubies varies dramatically. Sometimes they are less than 1 gold and sometimes they are more than 3 gold. I buy them when they are cheap, but sometimes I run out when they are expensive. I have to decide whether to make expensive scopes that may not sell or not make anything until prices drop.



Edited, Jan 11th 2007 2:09pm by AddictedFanatic

It was fairly well organized, in good order, and put out well in grammar and in paragraphs... how is that difficult to read?

Good guide, rate-up.

I still don't understand how it is difficult to read a guide. If it was any shorter or abbreviated it wouldn't be a guide. But to each their own I guess...

With guides, it is usually customary to break them into sections. This gives the illusion of a shorter read.

Also, it allows people to quickly look up what they need to know.

I found this write up to very clearly written and Helpful. I think it will take some trial and error at first to see which items are in demand for a certain class, but will be a huge help in raising money for an epic mount.

I'll stick to disenchanting thanks, I think it's easier and more profitable and I can't be bothered to do both, but if it works for you and others good luck to you. I commend you on sharing your ideas with the community. I hope there are some players less lazy than me willing to give it a go.

edit: grammar

Edited, Dec 26th 2006 11:37pm by wowtrollmage

Very nice actually ( ididnt read all cause i got the jist of it) Im not sure if u posted it but how would Alch fall into this? Dont say stone scale oil cause EVERYONE does that >.>