Three Legged Stool

Posted by Markco at 8:00 AM

Written by: Aleithiawow.

Running an effective and profitable gold business boils down to three essential principles. Without one of these "legs" in the stool, your business won't be as profitable. So what are they? Optimization, Reducing Costs and Diversification.

Optimize

Ford Motor became a powerhouse in the car industry not because they had the best product, but because they were the most efficient thanks to the assembly line. They were able to crank out the most cars because they optimized their process. Setting up your business requires some optimization. Two quick considerations:

• Profession Pairings: Jewelcrafting + Alchemy or Enchanting both have some nice synergy. If you make a lot of jewelery to disenchant, save yourself some time and mailing costs by pairing them up. Or maybe you're transmuting Carnelians into Inferno Rubies? JC/Alchemy might be best then.
• Daily Routine: How many characters do you need to log into each day? Depending on the time of day, load times can eat into your routine. Balancing multiple characters and professions can be difficult. Which ones need to be "craft on demand" because of space or volume limitations? Which professions can you get away with crafting only weekly and storing the goods in the bank or in mail messages?

Reduce Costs

To turn a profit, you absolutely must sell above your cost. If someone is constantly undercutting me for less than my cost, I have to wonder: how are they doing it? Probably they have lower starting costs than me. If you can't drop the price more, how can you reduce the costs? Consider:

• It's been well documented that there are market swings. As you gain capital, start buying out supplies when the market is low and use your stock to carry you through the high points. Use a snatch list of some sort.
• Build relationships with farmers and suppliers. Negotiate a price and then give them some incentives to meet. "I'll buy Pyrite Ore for 60g/stack. In addition, I'll supply you with 1 free cut gem of your choice for every 20 stacks." People see that little bit extra and might lower their price for the allure of the free stuff.

Diversify

Diversification will help you keep a consistent cash flow going. Gem prices are down this week? Try focusing on enchanting scrolls instead. Enchanting Rods are down? Start looking for a new market. I like to master a single industry before going all out in another market. However, while I was busy building my gem business, I also started testing the enchanting scroll market. Now that gems are on auto-pilot, I'm focusing on optimizing scrolls and testing the waters in Darkmoon and Mysterious Fortune Cards.

Which of the three core practices are you strongest at? Where are you weakest? What's your plan to improve?

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