At WoWenomics we occasionally use certain terms here that may be unfamiliar to the reader. Understanding these terms and the concepts they represent can be of huge benefit to the savvy trader. This page will be updated from time to time with new terms.
Our Testing Terms
Fair Price: The average of the bottom five, or up to five, prices within the Going Rate range. Intended to represent what you might actually pay for an item as opposed to the average price. In short, when you actually make a purchase you don’t in practice pay the average price but rather the cheapest price that you can find at the time.
Going Rate: An average of all prices for goods within a range that excludes any prices 10% higher or lower then the last consecutive incremental price. This prevents the inclusion of ridiculously high or low priced goods within our average and thus allows us to produce a more consistent price index.
Price Index or Index: A summary or average of prices with special consideration given to specific factors that might not otherwise be considered in a straight forward average (arithmetic mean) calculation of those same prices. Our own Going Rate process, as described above, is an example of a price index in that prices too far from the center (10% from the next highest/lowest) of the price average are given a weight of zero when comparing data and thus not considered.
General WoW Finance Terms
Farming: Generally refers to repeating an in-game action with the hope of attaining a certain item or amount of gold. One example of this is killing a certain creature or type of creature repeatedly because that creature has a chance to drop an item (or items) of value upon death.
Gold Sink (AKA Gold Drain): A feature or item put into the game with the intent of removing capitol from the server economy. Gold sinks are necessary to fight inflation within the game economy. Gold sinks are typically not items required by the population but rather novelty items and services. Typical game gold sinks that a developer might implement include the introduction of a gambling like meta-game or expensive player housing. In WoW some of the more common gold sinks are mounts, jewelry and high capacity bags.
Inflation: A rise in prices of items or services. For our purposes, we are generally talking about items in WoW going up in price when we speak of inflation. This is an important distinction if you are only familiar with the word in terms of monetary inflation.
Mudflation: The phenomenon wherein the introduction of a new item into the game economy causes older, similar items to lose value. For example, if we are all eating vanilla ice cream cones and we are offered double scoop chocolate ice cream cones, the original vanilla ice cream cones may begin to lose value.