I'm Drowning in Undercutters... Help! (Suggestion Box Friday)

Posted by Markco at 8:00 AM

"Hey Markco,

I wanted to ask you about something I've got mixed up in with the greedy goblin.

A guild mate of mine directed me to his main page branding me as "moron of the week" informing me that I was a moron for attempting to explain to this "Jason" on my server why he shouldn't undercut glyphs by 40% (the conversation with Flamybank, who is me).

This person would go down to 11g on ~20g glyphs that I had listed throughout the day. When I went to go check on them, I didn't expect for the price to be as low as it was. Spirestone has four players on it who habitually undercut on glyphs regardless of their price. Several others had undercut his 11g, he undercut again to 5g, and believe it or not, three others had brought it down to 3g per glyph, this particular case being the popular Glyph of Judgement. I believe he's citing his piece about inelastic demand and supply as the source for me being a "moron," because dogmatically, higher prices = higher profits = more sellers (according to his blog). This is definitely not the case on my server, as these four individuals don't seem to mind undercutting to 2 or 3g on important raiding or PvP glyphs.

My only strategy for attempting to sell glyphs in such a market defined by "geniuses" who think everyone else are "morons" is to attempt to sell them as high as possible and hope that players needing the glyphs will go to the auction house while mine are the cheapest. I do post these only at prime hours. I've had conversations with many people on the matter, particularly what they believe a fair price is for a glyph and the herb supply on my server. In my surveying, I have found no reason to believe that individuals are turned away by a 20g price tag for a glyph, nor have I found any reason to believe there is a shortage of ink supply for these four players.

I apologize for the lengthy e-mail, but I was hoping you'd be able to shed some insight on my situation. Frankly I'm quite offended to be publically listed as a moron when very few people are aware of the greater picture (my server's dynamics) and read his blog with a dogmatic knowledge of "right" and "wrong."

Thank you for your time :)

~Flamy"

It's suggestion box friday, so how would you handle this?

I'll give my response, then you guys as a community take a crack at it.

First off, they are mocking you because they are undercutting you and still making money and they really don't care how far they undercut as long as they make a sale. To them they are winners whether you whine or do not, so therefore they don't care what you have to say. If you want to win, then you need to compete with them. Start selling the two ink types themselves, armor vellums, weapon vellums, offhand weapons, cards, and glyphs that are discoverable. This is what I do and I make an easy 500-1400 gold every day.

What you posted to the person screenshotting your conversation was actually a viable way to deal with the situaion. You could also offer to buy his glyphs up every day and relist them. In the end though these players only really hurt themselves. They compete with each other down to the wire and scrape up a small fraction of the profit they could make sharing the market and diversifying. Be smarter than them and expand into the other ways to make money with inscription. Also look into all the other ways you can make money on the auction house; never ever stick to one market/profession.

22 comments: on "I'm Drowning in Undercutters... Help! (Suggestion Box Friday)"

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debussy said... December 4, 2009 at 8:20 AM

How do you explain a moron, exactly why he is one. That's a tough one. Maybe because he pays for a stack of herbs less than he expects to sell a single glyph for? How does somebody expect to not get undercut at 20g/glyph.
jimmyolsenblues said... December 4, 2009 at 8:27 AM

I agree with marko, the inscription market is flooded on the azshara server too.
Mine, skin, herbalist, always no matter what make money.
Use Auctioneer buy a cheap stack of anything and sell one at a time for a profit.
Alchemy , Jewelcraft, and disenchant.
You have to have many dogs in the fight. Some hit , some won't. But overall you will do very well. I just bought my third epic mount since Feb 1st. Good luck!
Anonymous said... December 4, 2009 at 8:31 AM

Flamybank: "If everyone were to undercut in leaps and bounds there would be no point in trying to sell them anymore"

That's it. And then you will be out of the market.
Maybe that's what the 4 undercutters are trying to do with each other and with you!?
Mac said... December 4, 2009 at 9:05 AM

It seems as the primary purpose of the deep under-cutters is to drive the competition out of the market. In the real world this practice is called dumping and can't go on forever due to resource constraints, which isn't an issue in WoW. In fact, WoW is the ultimate free market system without any significant barriers to entry into any market or resource constraints.

The only way to compete with an under-cutter is to make their inputs too expensive to continue. Otherwise it is better to find a different market for your goods.

It also seems that a major issue with deep undercutting is that it sets the price expectation at such a low level that the idea of profit maximization for any one transaction is completely ruled out.

I use the auction house for my in game needs and typically buy only those items that I need for my toon's activities. (i.e. I'm not trying to hit the gold cap)If I see that a particular item that I frequently use is "on Sale" I will stock up for my future use and will frequently find items trading at fractions of their "normal" price and buy them out. I imagine that this behavior is common. It seems that while this benefits me it doesn't benefit the under-cutters or the traditional market players.
Gold NoScripts said... December 4, 2009 at 9:07 AM

A lot of AH players have an ego. (I refuse to use the phrase 'epeen', oh f**k I just did, damnit!) They will undercut down to nothing because they must really believe they are winning at something.

In reality there is no measurable way to win the AH. As long as you end each day with more money then you started then you've won also. Undercutting at a loss is really loosing. Some people might see it as a way to gain market share by eliminating the competition, but bottom line is that there always be competition. If player X drives out player Y, player Z will just fill the empty spot.

In the real world selling at a loss (at times) serves a purpose. Stores having 'door buster' sales drives more people into the store. More customers equals more opprotunity for sales. The sales alone create brand recognition, and customers will associate your store with good deals, and come back. In the AH no one gives a f**k abour brand, or buying from the same seller, they just buy the cheepest item in the list. There is no need to worry about quality, customer service, or return policies. Undercutting at a loss does nothing but loose.
Bob said... December 4, 2009 at 9:11 AM

Gevlon can pretty much post whatever he wants on his blog, regardless of logic, facts, or morals.

He considers himself above everyone else and has collected a following of individuals who have bought into his line of thought.

Over time many of the smarter individuals saw his thinking as flawed (because it is), and have moved or only read his blog in a "Weekly World News"/Jerry Springer kind of way.

This has left much of his blog commentors as a mass of dimwitted socials who have no clue that they are what they hate.

So don't worry about what you look like to them.

As for your economics, time to find a new route for money-making while occasionally checking out the glyph market to see if your competition has wised up (don't hold your breath).
Bux said... December 4, 2009 at 9:24 AM

I agree with Markco with regard to diversifying. It was one of the best business decisions I ever made once more people became interested in Inscription.

Secondly, the fact of the matter is there are 2 ways to price your glyphs (at least in popularity).

1) Off of market price. This person seems to sell their glyphs at 60% of market price. That is, when yours are 20g, theirs will be listed at 12g. The funny thing is, you're in control of the market - YOU are determining the "market price" in this case. That means, you are in control of their profit margins whether they admit it or not.

2) Fixed undercutting (using QA2). This method of posting will just undercut the highest seller. This is what Gevlon refers to as an M&S, simply because he doesn't like the way they post (because it's not how HE does it). This way of posting allows for more people to be involved in the game. Bad for you, okay for the economy.

In either scenario, the key factor is that YOU are in control of the pricing as much as the next guy. In your case, it seems as though this guy is posting at market value. Solution? Make 60% of the market value not profitable for him. Or, camp the AH and repost right after he does. Obviously the second takes more effort, and I'm assuming you've already tried it. So try posting glyphs at 5g for a while. You might take a hit, but he's going to have to change his ways if he wants to make any money.

But if by then, you've diversified into JC/BS/Enchanting/Alc/whatever, you'll be okay with a little less money from inscription.
Crabby said... December 4, 2009 at 9:26 AM

Marko said it best for inscription and that is, it's all about niche diversification. I tried the goblin way and was a lot of work for so-so profits. I simply diversified and do much better profit-wise without 1000 auctions up.
Florentine said... December 4, 2009 at 9:28 AM

There's only so many things you can do, and I agreee with Markco that it really doesn't matter what you say as much as what you do. In markets that are saturated with pricewars/undercutters, you've got 3 very simple options to pick from(And I'm sure there are other solutions of varying simplicity as well.)

1)Diversify: If your glyphs don't sell, step away from the glyph for a bit, Keep what you have and wait for the war to end. The Glyph of Judgement(Coming from a person who raids as a paladin) is undoubtedly a valuable although rarely exchangable glyph(Few repeat customers, but many new customers). Sell some other glyphs/materials, and do what Markco suggested. It's a good tactic, because you're smart enough not to lower your own standards(And price), and oppourtunistic enough to return later when profits make sense.

2)Dominate: When reason and evasion doesn't work on the auction house, you could always try brute forcing a profit. Prove them right and show that their glyphs will sell, but to you. When you have their glyphs, repost at an increased price. The downside to this is if they have an unlimited/near unlimited supply of materials to make the glyphs with, you're likely to not get very far with this. However, if they are making glyphs with the expectation of breaking even or even possibly going into the red, this will quickly show them the error of their ways, so long as they're smart enough to pay attention to who is buying what from them.

3)Disturb: While it's not always a 'friendly' tactic, if you can figure out where they're getting their supplies from, you could always try cutting them off there. If the market is profitable enough to actually warrant doing this, you could try to undermine their supply. If they ARE getting their materials from the auction house(In this scenario, I can't believe they are and still making profit) you could buy the materials out from under them to the point where manufacturing the goods at that price is too unreasonable. At that point, what you do with the materials is up to you. I'd personally suggest suffocating the market by making something else with the materials if you plan on using this method, so you can relist your own product later. You could also relist the matierals for higher prices, if the situation presents itself as more profitable to do so.
dozenz said... December 4, 2009 at 9:36 AM

The guy is still a moron, and doubly so for responding to his outing in this way.

Someone with intelligence would not have even wasted time trying to change the mind of a frequent AH seller (if he was contacing him to offer him a deal like buying all his glyphs COD than it is different). If he is so confident about his own posting price than he shouldn't have needed "Jason" to point out the "if my prices are too low than buy them and resell" advice. Flamybank would still be making 9g profit.

Heck he should be buying all those undercut glyphs than, or contact the 4 players and buy them all COD.

So I can't give Flamybank a pat on the back and boost his confidence for pulling an idiotic move.

"If you want to win, then you need to compete with them"

There is nothing to win. Flamybank just wants to make gold and could easily continue to do it without competing, and even without contacting the other sellers.

Sure, the gobliins and the other sellers will still be making their gold, but then isn't it win-win? Flamybank gets minimum of 9g profit in this specific instance, and the Goblin and other sellers continue to keep their postings.

The others will eventually adjust if their margins are too low, but while they are that low Flamybank should be taking advantage of their lower prices.
Zeran said... December 4, 2009 at 10:07 AM

Well first I have to pick on you, and say you are a moron for trying to reason with the unreasonable. That being said, you should only be in one market long enough to get into another. I made enough off jc to fund enchanting which funded my inscription. Now if one tanks I'm still making money.
Finally, you have to think of why he's torching the profit margins. He wants the competition to be gone. If you MUST have the glyph market, then you must fight a long war of attrition and destroy his profit while not going bankrupt.
AlexS said... December 4, 2009 at 10:37 AM

I love it how people think that "I sell more so I win" On my server there are at least 7 different characters posting not including mine, and I got tired of fighting over "more sales" So, I let them have it. I raised my threshold from 1.5g to 3g. This way, I don't need to re-craft small profit glyphs and I won't burn myself out restocking my supplies. Another way Markco suggested to stop having people undercut to a very low point is to disrupt their sales of other things on the market. A week ago, I looked for snowfall ink sales on my server, they were going for 15-20g each. I put up a few for 10g, and now everyone is posting them at 7g.
Unknown said... December 4, 2009 at 11:17 AM

Well, the GG has a legion of blind followers, spurred on by the success stories of those who follow his methods on high-pop servers. But in reality, many of his blind followers are really AH campers, because they continue to relist and undercut.

The GG wouldn't drive a glyph down to 2G in a reverse bidding war, but these morons will.

But I have to agree it's rather stupid to try to reason with them. GG has set the stage for the "outing" of anyone that anyone else feels is a AH moron.

On my server I recently gave up on inscription, and may drop it for alchemy or something. After getting about 1/2 way through learning all the glyphs, it got to the point where I was still only selling 15 or so at most in a 48-hr window, and would have 4 or more pages of glyphs coming back. There wasn't ONE glyph in my price listing with a sell price of over 15G. most were less than 1 G.

So I went back to engineering... My hunter is a miner/engineer, and I discovered that I could craft the Saronite arrows and sell a stack for ~5G, getting rid of all the "trash" saronite that I pick up doing rounds for titanium.

And I'll tell my own moron of the week story here... :-)

Last night as I was logging I see some guy spamming "wtb titanium ore 260/stack, there's none in the AH" over and over. So I cancel the logout and go check, and sure enough somone has bought out ALL the ore, even the overpriced ore. So I go ahead and post all I had (about 8 stacks) for 345/stack, and logout. As I'm shutting down, my GM tells me in vent that this dude is flaming me in trade chat "F*ck this guy, I'm not paying that price, he thinks he can charge whatever he wants because he has the only ore there..." and so on. If I hadn't already logged, I would have had a nice chat with him. :-)
Wodinn said... December 4, 2009 at 11:21 AM

I boil things down to the minimal argument in my mind: roughly how many sales did I miss because I was undercut, and how low can I set a fallback/threshold before the profits-to-time ratio drops below acceptable levels for me? I'll push much lower very quickly if I find that I'm losing a lot of sales to under-cutters and prices are still over 5g. If I go to a 5g wall and they still undercut me, that's fine. I don't have much interest in spending the time milling and crafting mass quantities of glyphs for such little profit, and they obviously value their time differently than I do.

When I started my glyph business, avg sale prices were around 25g, and sales at my 59g fallback were common. Now the main competition has set a fallback of 13g, with most glyphs selling for around 5g. Markets change, don't just bitch about it. Adapt. Crying to the competition gives them a big boost to their determination, as well as their ego.
Anonymous said... December 4, 2009 at 1:02 PM

The problem with the glyph market is that no one can constantly be on their computer so no one completely dominate the glyph market. The reason is because the barriers to entry are very low. Every scribe knows that without competition we could sell every glyph for 50g and we wouldn't see much drop in sales. The flipside is the cost to make a glyph before considering snowfall ink is 2-3g so a high competition server ensures that this is the floor price for glyphs. When I first started glyphs about 6 months ago, I tried to kill off the competition with 2g glyphs and quickly realized that it wouldn't work and that my time investment was worth more to me than the additional profits I received. That is because there is always one person on the server that is willing to drive the price lower and you need to accept that fact.

My server current has 6 scribes that are constantly undercutting each other. Since I knew I couldn't really beat them I came up with a strategy that I felt maximized profits and time. I am still making decent money but the key is have been much happier since I now have time to actually play the game.

I have always liked reading Gevlon's blog and especially enjoy the "moron" postings. But just so you know, everyone has been tempted from time to time to do exactly what you did. There is nothing more frustrating that to post 500 glyphs and realize 5 minutes later that someone just undercut you on all of them. The difference between you and them is you actually sent a post to the undercutter complaining about their practices. My suggestion is to come up with a plan, stick to it, and not worry about things you can not control.
Anonymous said... December 4, 2009 at 3:53 PM

I agree with last anon

It's already been said, but this guy needs to diversify. Gevlon's blog has pushed so many people into the glyph market. These "Goblins" think they are total geniuses just because they follow his methods. Defeating them however would take a great deal of time and gold, which the average guy probably doesn't have.

It's funny to see how the drama perpetuates through posts like this though.
Anonymous said... December 4, 2009 at 4:54 PM

There's nothing you can do except play the game. Glyphs sell for profit even without snowfall inks. You either have to do the same as them or stop all together which is what they want. I find it's best not to let your threshold drop below 3g and if you don't sell glyphs it's not a big problem because the glyph market is cylcical. Glyphs that sell for 20g one day can be down to threshold in a day or less but there will always be another glyph thats going for 20g, and if there's not there will be. Same goes for profits. Sometimes you will have a cutter killing your profits but once he gives up or reduces the time he spends at the AH your business will pick up again.
Bristal said... December 4, 2009 at 5:11 PM

Flamybank: those Goblingeeks are playing a different game. it's not about making gold, it's about power, control and humiliating the competition.

you may not have asked for it, but it found you. my advice is not to openly confront or try to reason with your competition. if you're up for the battle, read his column to understand your enemy and learn to play their game better than they do.

otherwise find yourself a friendlier niche.
Whitewolf said... December 4, 2009 at 6:52 PM

Just remember this addage:

When someone points at you and calls you a moron, he has one finger pointed at you and three other fingers attached to a hand that probably can't properly wipe its own butt.
Anonymous said... December 5, 2009 at 5:37 AM

I'm in a similar situation with Infinite Dust on my server, ore selling for 15g a stack dusts have been cut down to 1.60-70 each. With few people buying rare gems these days (also having more supply than demand) the old saronite shuffle has become a waste of money. Its at a point where even if you dominate (which I managed to do via alternate resource supply) the time spend getting from ore to dust would be better spent on crafting incedentals which might only sell a few a day, and only DEing with what little time left after youve filled those markets (which could take a couple of hours) In short I too agree with marko to diversify your market into more profitable areas, and then to explore other sources of mats so that you can drive them out of the market with your excess time.
Goth said... December 6, 2009 at 2:59 AM

I have done a market reset and have sold glyphs for as much as 200 gold each and undercut by 1 copper. Is this excessive or do we as a community service provider devalue our goods? How many 3 gold glyph sales can fit into one glyph that sells for 200 gold? My average glyphs sales are 40 gold each. Of course, my values are higher than yours?

I am happy to be a moron that makes over 10K a week in selling glyphs. Stupid morons like me read Gevlon's drivel for the comedy - I "learned" how to make gold by using Markco's resources.
AHAntics said... May 7, 2010 at 4:53 PM

"Be smarter than them and expand into the other ways to make money with inscription. "
This is only smart if he researches the other areas first. Odds are, if the goblins are in the glyphs, they'll also be in other things.

For the record, I would be undercutting your 20g glyph, as well. Currently, glyphs are costing me about 2g to craft, but that will drop in the near future, as I get more data on my recent return to WoW.

And yes, I'd probably follow the undercut down to 2g50s. Maybe even further. It's a big game of chicken, and eventually someone turns away.

It sounds like the emailer is upset because he has competition. That's not going to earn him any Nobel Prizes for Economics. Markco is also correct in stating that the goblins don't care what he says.

Actually, that's false. They LOVE it when you mail them, trying to cajole them into "allowing" you to keep your profits. It gives them laughing material and screenshots to send to their favorite auction house guru. Just like web forums, don't feed the trolls.

And if your costs are too high or you don't have the wherewithal to compete at close to or below zero margin, I would recommend trying to find a different market.

It's either that or out-goblin the goblins.

Either way, good luck.

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