Manipulating Auction House Prices

Posted by Aleithia at 8:00 AM

For many people, perception is often times reality, even when it's not accurate.

Two people can go to a movie together and walk out with completely different opinions about the movie. One might argue that it's the greatest movie ever, while the other might come away thinking it was all a bunch of fluff and poor acting. Which one of these people is "right"? The obvious answer is they both are (Though not really, because who wouldn't say that was the greatest movie ever!?) because their perception of the movie is their reality.

In the World of Warcraft economy, perception is often reality also. Don't believe me? Nearly every time you spot a killer deal on the Auction House, it's usually the result of a skewed reality. Is it possible to foster a skewed reality for people and thus take advantage of the pricing? I believe so.

"Old" Items Aren't Worth Much

One of the great mysteries to me is that people perceive "old" things to be worthless. Whether they are old patterns, gems from a previous expansion or Bind-on-Equip drops from a previous tier. Maybe they think everyone else plays like them. Maybe they think people don't have gold to spend on vanity or "old" items. Maybe they don't see how the old item could possibly be useful. Whatever it is, they give us an opportunity to profit.

Case Study 1: Bind-on-Equip Epics

I recently purchased a Soul Blade from trade chat. When I asked how much the seller wanted, he told me to make an offer. I offered every gold piece I had on my currently online toon: roughly 4800 gold. He took pity on me and gave it to me for 4500 gold instead so I'd have some gold left in my pocket. I believe he walked away from the sale thinking he got a good price, even with the discount. But why would he think that? Clearly he didn't know that Soul Blades are worth much more than 4500 gold, despite the fact that they are easily replaced with crafted weapons from patch 4.2.

After mailing the Soul Blade to my banker for posting, I discovered why the person thought he'd made a good deal. There were no Soul Blades listed on the Auction House. He had no way of knowing that they go for 10-12k on my realm because none were currently listed. He perceived the item to be outdated and was happy to get 4500 gold, when a little research and patience could have led to double the gold in his pocket.

Case Study 2: Scarlet Rubies

Cataclysm has brought insane amounts of gold into the economy. People have more gold than ever and are happy to spend some of that gold to speed up the grind of leveling alts. I was experimenting with a return to old gold-making tactics when I stumbled upon this old goldmine turned new. I found there is strong demand for the Scarlet Rubies, so I routinely bought out the raw ones, cut them and posted for sale, selling out pretty quickly each time I posted.

The largest problem with Scarlet Rubies is supply of raw materials. Finding enough raws to keep a healthy stock available for purchase was becoming problematic because the old Saronite Shuffle is not exactly standard gold-making practice these days. In my search for cheap rubies, though, I learned a few tricks for manipulating the market to get better prices.

Controlling Information to Reduce Prices

If you're running Auctioneer, Auctionator, TradeSkillMaster or some other addon for pricing information, you'll always know what something is worth. But many people don't bother, or don't keep their information current. If we control information about a market, we can actually control the price to a degree. Here's what I learned from the Scarlet Ruby experiment that can be applied to other markets:

• With no comparison point, Scarlet Rubies are near worthless. When there are no raw or cut rubies listed on the Auction House, the price point is around 10-15 gold. Consistently buying out the raws or cuts below a certain price point will keep prices low because people perceive them to be worthless as none are listed on the Auction House.
• Cut Rubies on the Auction House increase the price of raw ones. If there were no raws listed, but I had lots of cuts up, raw prices would hover around 50-70% of my cut price. People saw there was at least one person willing to try making a profit, so they price the raws at a level they think I'll purchase them in the hopes of flipping it for a profit.
• People will go with the group consensus on pricing if possible. No matter the price of the cut rubies, once raw rubies are posted, that becomes the market price for the rubies and the normal undercutting rules kick in. If it looks like a good undercutting war is going to be waged, I sit tight and wait for them to drop in price before buying everything out.

Controlling market information works best in small, niche markets, but can be done in larger ones as well. However, the larger the market, the more risk and potential loss is involved. For the rubies, I'll often go a week without posting cut rubies and buy up all the raws that appear. This allows me to build a steady supply and then unload them in cut form over a week or two, then start again from the beginning.

A more competitive market like Cataclysm raw materials is much harder to control because of increased players (your fellow AH competition, farmers, etc.) but it's certainly possible. You'll need larger gold reserves to make it happen, and you need to clean the Auction House of lower priced items much more regularly for the strategy to work.

How else do you manipulate prices on the Auction House? When has it backfired? Share your stories in the comments!

I consider myself a somewhat casual auctioneer. I can be found via Twitter @Aleithia3. I also like getting email at Aleithia AT jasonthedce DOT com. Send me your questions and I'll try to write about them on the site.