The Art of Undercutting

Undercutting is an art form in its own right. Some players undercut by 1 copper, others by 10-50% of the original price. Some use the Quick Auction addon which you can find detailed in this thread on the JMTC forums.

Many of you are probably wondering, well what does Markco do? Does he play the 1 copper fiasco and sit at his computer for hours waiting to be undercut so that he can return the favor? Does he always stick to a 10% reduction of price, hoping to infuriate his competition? Does he enjoy talking in the third person?

I'd have to say no to all three of those questions.

What I do is gauge supply and demand. Price is merely the bow with which I play the perverbial auction house violin. Undercutting is a powerful tool which will always negatively effect the price of an item. By being wise about how much and how many items you undercut with you can keep the price from dropping too drastically, or you can send it into the stinking pits of the earth, dragging your competetition down with you.

A normal undercut is what I like to refer to as a 5% cut in which I am selling one or two items and want them to be the best deal when I think they are going to sell rather quickly. A severe undercut is when I want to drive off competetition and force both the auctioneers and then buyers to grab my goods. I find that the latter is far more profitable because 1. people will not undercut someone who drastically goes below their profitable price range and 2. you're now appealing to another market entirely: your fellow auctioneers.

Take armor vellum III's for example, I can sell these for 2 gold each and still make a minimum profit. So I post three hundred of them for 2.5 gold each on any given day and every single one will sell in 24 hours. The next morning I wake up and there are my armor vellum III's sitting pretty and being sold for 500% markup from what I was selling them at. In comes another 300 armor vellum III's for the auctioneers and buyers to pick up. I make oodles and oodles of cash and the people buying me out relist for oodles and oodles of cash. I win, they win, and the consumers win. What's more, no one else has the cahonies to do the same, and if they do I will simply run the price into the break even point which I know they can't compete with. That's my favorite way to undercut.

Keep in mind that undercutting drastically effects supply and demand. If you want your goods to sell quickly and efficiently then do not preform a small undercut with so many items that supply gets too far ahead of the demand for the item. You'll be stuck with items that quickly become undercut and never sell. Remember that undercutting is an artform, so don't go in there wildly waving giant paint brushes while drawing stick figures on a torn canvas.

Strategic Plan for the Wealthy Auctioneer

The large majority of players using the auction house are one time shoppers/sellers who are unaware of the eb and flow of the river they are temporarily traveling. Nor do they understand the dangers of attempting to cross without understanding the factors involved. Luckily, you are not one of those people. You came to this blog and the hundreds like it because you wanted to unlock the 'secrets' to making gold but mostly because you want to understand.

There are three 'pieces' to making gold that you need which mirror the factors required for success in real life:

1. Motivated to Learn
2. Organizaion
3. Determination to Stick to a Plan

Being motivated to learn is what will begin your quest for gold domination as well as keep it healthy and growing. If you ever stop learning you will soon fall prey to the person that didn't stop. When you first start out you want to be a voratious reader and be like a sponge to a current of knowledge. Experimentation is also part of being motivated, so feel free to take big risks and remember that even if you lose out you still learned something in the process.

Organization is what seperates two well learnt auctioneers from each other. If you have everything planned out into a system then you will not only save time but your customers will come to expect your goods. Organization is the key to creating a consistent income, as well as helps you learn your own markets because you are always present in them.

Determination to stick to your organized and motivated plan for success is what allows you survive tough times. Don't mistake determination for stupidy however, as a wise man once said: Consistency is a virtue if you aren't a screwup!

What should you do with this post?

First, get a piece of paper out and organize everything down to running to the mailbox for all your characters. Create a day by day to-do list as well as organize any cooldowns you might have on various cycles. Try to focus on a Tuesday to Tuesday cycle that you can follow along and repeat. Write down everything including which characters you log on, what you will sell and in what quantities, time you will spend farming, etc. In other words become a well oiled machine following an intricate plan for success.

Second, stick to your plan and ride the tough days out. Think long term, and always look to take advantage of those that aren't. Look for price gougers, people dumping stocks, etc.

Finally, keep learning and experimenting. You'll find that the time you save with your organization will allow you to mill around the auction house looking for deals or taste markets. Find farmers, play in trade chat, or do anything else you can think of to continue learning and exploring.

Most importantly... HAVE FUN!

Suggestion Box Friday (11/6/09)

Suggestion box friday is your chance to be the blog author. It's when I, the money making guru of glorious gold stacking glory descends from my frozen, saronite plated throne for a short time in order to provide you, the loveable rank amateur, a chance to try your luck at making heads or tails out of the living beast we call the auction house.

In short: You can basically write about anything you want, and I sort of take the day off to go get smashed on kungaloosh.

Comments of the Week

Regarding Two Manning Flame Leviathan for Gold

Thomas said...
Doomwalker can also be two manned (even soloed according to wowhead comments) and drops even more gold as well as level 70 BoE epics (which, granted, doesn't sell for all that much anymore)

Regarding Winter Veil Coming Soon

Deborah said...
Agreed. The holiday market is, at times, amazing. I sold much more ice cold milk and simple flour than I thought I would in the past 2 days. But the reason why is so obvious that it is easy to miss: no vendors in dalaran sell these items. Or they sell just one, I can't remember which now. Being a mage, I can port willynilly to get what I want (hint: exodar) and be back again quickly. Except when the bug for the bread of dead existed and it all went poof* when you ported.

In any case, don't underestimate the power of small items. And since these are such cheap investments, you can undercut way down to the quick. Also - if you end up with excess supply, keep it until the next holiday. Odds are that there is some item that will use them.

Cataclysm - The End of the Individual Auctioneer

I've been thinking lately about Cataclysm and how guild talent trees are going to play out. For one, I see these trees being very customizable but also restricting like a normal talent tree in that you have to choose specific talents for specific goals. There will most likely be a 'best' pve spec, pvp spec, but then there will be the hybrids as well.

There will be one hybrid that is going to be focused on making gold, lots of gold actually. Everything from increasing the amount of gold your guild farms from mobs to the amount of gold bosses drop are already talents on the trees, and I'm sure more will be developed.

A long time ago I made a joke talent tree for the auction house, this was before the Cataclysm was announced so the idea was pretty revolutionary. With the onslaught of guild talent points this 'farming spec' or even 'auction house spec' could become a reality.

Imagine guilds for your alts based solely on farming cash... will this destroy the individual aucitoneer? Everything about the cataclysm seems to suggest that blizzard wants to focus on group play... bgs and instances are going to require a guild to be effective and earn top gear. With talent points that boost your income while farming, how could you pass this up as an auctioneer?

Now obviously I haven't forgotten the fact that most of you savy auctioneers use your own single player owned guild banks and guilds, but this will not work in cataclysm. In order to get guild talent points you will need to build up some form of guild points (not yet announced) which will allow you to purchase those precious talent points. Ideas for accruing the points include daily heroics, bgs, arenas, and dungeon clears... how are you going to get all those points solo?

There is one final work around for those of you who do not want to lose your individual selling style and that's the purchasing of guilds already built with talent points and guild points for retalenting their trees (since you'll want to change their pvp/pve spec'd guild to a money making one). How hard will this be? Who knows, all I know is that guild cartels are going to start showing up, and it will be interesting to see what this does to the auction house. These cartels will be able to spend their guild points on raiding consumables and sell those to the various raiding guilds on the same server who might be saving points to buy more talents. The possibilities are endless and the speculation bottomless until more concrete information comes out. Just be ready to start making more friends on the auction house!

Two Manning Flame Leviathon for Easy Gold

This tip comes from Ashe, one of my favorite youtube gold making artists!

Hey again Markco!

Just thought I'd make a quick email about something I like to complete each week. This is not a new idea but I imagine a few people might not know about it.

Two manning Flame Leviathan in Ulduar 10 can be great fun and provide some real benefits. You usually receive around 150 gold as well as two epic ilevel 219 items that can be disenchanted. If you are an engineer the profit is even greater as you can disassemble the boss for extra items.

I have made a very quick youtube video showing how I two man the boss and I hope this cold be useful for some of you: