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Hello class, my name is Lyph and I'll be filling you in on some basic rules of economics that should be common sense.
Pricing - this is generally how it works. The harder an item is to obtain, the more expensive it tends to be. The less willing someone is to go out and obtain an item for themselves, the more willing they are to pay a higher price. This applies to not only crafting mats, but also things like companion pets. Supply and Demand also affects pricing, if there's high demand, and low supply, the prices will increase. Don't like paying those high prices on crafting mats, go out and farm some yourself. If you end up with extras, put them on the Auction House (see below) to earn some extra money.
Auction House (AH) - Many people seem to not know the point of an AH. The point is to buy and sell goods at a price that benefits both the buyer and the seller (see points 1 and 3 under Pricing). Now let's talk a little about using the AH. Selling items takes a little more thought than buying items (not much, maybe 2%). When pricing items to sell, you want to offer them for a lower price than your competitors (this is called undercutting) but still at a high enough price for you to make a profit. If you try to price something below the total cost it would take to obtain the item, then you're selling at a loss, which is bad for you, but good for the buyer.
Exercise caution when buying items on the AH. Most people put things on the AH to make a profit. Some even do so by preying on people of lower intelligence. Normally, when buying an item on the AH, you want to buy the cheapest one available. Everyone likes saving money. HOWEVER this is where you must use extreme caution. Not all low-priced items are obtained legally. Gold farmers and botters tend to throw mass quantities of crafting mats on the AH for ridiculously low prices, sometimes even up to half off the going rate. Purchasing from gold farmers and botters is bad for everyone except the gold farmer/botter. It throws the economy even more askew than it normally is.
Trade Channel - Another viable way to sell items is by using the Trade Channel (default /2). One must exercise caution, however, since a vast majority of trolls have taken up residence in this channel (see below). Be careful when selling, especially if your advertised price is slightly higher than what someone else thinks you should be selling it for. Odds are, you WILL find someone willing to pay that price, it may just take a little longer. Likewise, be careful if using /2 to purchase items, be sure to compare prices to make sure you are getting the best one.
Troll - "someone who posts inflammatory, extraneous, or off-topic messages in an online community, such as an online discussion forum, chat room, or blog, with the primary intent of provoking readers into an emotional response, or of otherwise disrupting normal on-topic discussion." The easiest way to avoid the trolls is to ignore them. And report them if they violate the ToS. Please note however, that over the years, the definition of a "Troll" has been degraded by a majority of players to "anybody that talks in trade chat for a purpose other than trading". Trolls troll simply to enjoy trolling. Unfortunately a vast majority of people fail to realize that if you ignore the troll's attempts to troll you, and don't let them troll you, they'll usually get tired of trying to troll you, and move on to their next victim. In short, don't feed the trolls.
In summation, the standard laws of economics apply in most situations.
Buy low, sell high.
Undercut your competitors, but not so much that it destroys your profits.
Be wary of questionable sellers.
Illegal activity will go unpunished until the culprit is turned in.
I price to sell and get out of my inventory. Often selling for 1/2-1/4 of the going rate. The reason is just to unload it. On my Pally I sold 58 gold ore for just a meager 75s ea just to get rid of them. Are you implying that I am a gold farmer/botter? I know of several others who do as I. Overall I do like your write-up.
Anything under 10-20 stacks of an item is someone dumping inventory. Happens all the time. Someone farmed a low lvl dungeon and/or bought out everything on the AH to use to powerlvl a profession or to play the market.
50+ stacks of an item is usually a gold farmer, botter or Banker playing the market. So, when you see 100 stacks of elementium ore selling for 20g a stack that's either a guy who's clearing his mine bot's inventory or a banker that was on earlier than you and bought it off the AH for 10g a stack and is reselling for a profit. :)
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