Price Check!

The old business parable tells of the blind man selling pencils on a street corner.  A business man is walking down the street, and in need of a new pencil, he approach the blind pencil salesman.  Just before he reaches for a pencil he notices the sign that says ‘Pencils- $10,000’.  Confused he asks the blind man “How the heck do you expect to sell pencils if you charge $10,000?”  To which the blind man replies “I only gotta sell one.”

 

While an absurd example, the story does bring to mind the conundrum of how to price one’s wares in the auction house.  How much do you typically hope to make from selling an item?  What is a fair price for an item?  And, perhaps more profoundly, is fair a factor at all?  Take for example a common cooking recipe that can be purchased from a vendor.  While this recipe can be bought for only 1.5 Gold, the vendor himself is in a somewhat remote location.  Upon searching the Auction house, there are no others of this recipe listed.  How does one price this recipe then?  Does one simply add a nominal cost for your time and effort put forth to acquire and list the recipe?  Perhaps simply doubling the price?  Doubling the price may only reap in a modest 1.5G but looked at another way it is an amazing 100% profit margin.  The problem, however, with simply looking at the profit margin is that it discounts the opportunity cost in acquiring the item.  How far did you have to travel to get the item?  Was there any amount of damage taken in getting it and hence a (perhaps even negligible) repair bill?  Did you have to do additional work such as questing to progress to a different game phase or farming a certain amount of rep to be able to attain the item?  Is there a flight cost involved for flights taken?  And, most importantly, what else could you have been doing with the time spent acquiring the item that might have been more profitable?  The point being, that if you spent 25 minutes and 50 silver in flight costs to get the item, 1.5G may not look to be like such a profit after all.  Even if you just happen to be in the area doing an old quest or a long-forgotten turn-in when you attain the item, shouldn’t your price on the recipe still reflect the amount of effort it would take the average player to attain it?

 

It may not be the fair way of pricing but certainly the most profitable way is to actually set the price as high as you think you can sell it for.  Reap in as much profit as you can while still pricing the item cheap enough to attract potential buyers.  Remember, however, that while tempting to set your price high enough that you can retire upon a single sale- as with the story of our blind pencil salesman- you don’t want to set your price so high that you scare away any and all potential buyers.  That said, when deciding on pricing it is always best to remember another old business allegory wherein a man goes into the jewelry store to purchase a diamond ring.  Upon scanning the display cases he finds one he likes and says to the young woman behind the counter, “That one!  How much is that one?” And, of course, she replies, “Well how much did you want to spend?”

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3 Comments

Filed under WoW Gold Making Tips, WoW Market Commentary

3 responses to “Price Check!

  1. Pingback: A Fool and His Money… « WoWenomics

  2. Pingback: WoW Deflation- A Conversation with Tobold « WoWenomics

  3. Pingback: Hot Item of the Week- Book of Glyph Mastery « WoWenomics

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