Thursday, July 31, 2008

EVE online: Pricing Buy and Sell Orders

EVE's market screen is a wonderful tool giving every buyer and seller full visibility of all the prices in a region. This is great for creating an efficient liquid market but it also means that buying and selling are "winner take all" games. If a competitor puts the same goods up in the same station for a paltry 0.01 ISK lower than your price then your sales won't drop by 20% or 50% they will go to zero. Likewise if your buy order is even 1 lousy cent less than the market leader you get nothing.

I am convinced that only the price leader actually completes a buy or sell order and only price leaders actually make any money. If you want to be successful in EVE trading you need to pick your chosen market and you need to own that market. I don't know of an easy way to do this. From my experience you need to fight aggressively for each and every order that you hope to complete.

Here are some of the things I have tried:

- Set a fair price and let it sit hoping to get some sales when the low price leader has sold out. You could be lucky but be prepared for a long long wait. Sounds nice but in my experience it doesn't work. In all likelihood someone else will come in at a better price point than yours and you will buy or sell nothing.

- Find a market that has no competition. Well duh.... If you can find a good one go and milk it for all it is worth. In my experience an uncontested market is usually uncontested for a reason - often because turnover is so low that there is no money to be made. I have found a few cases of uncontested markets with moderate turnover but even then it rarely lasts for long - usually within a day or so someone else finds it too.

- Fight it out by dropping your own price in response to the competition. In my opinion this is the only real option if you hope to sell your goods in a reasonable time period. Unfortunately this is hard work and requires that you log on regularly to monitor the price of each and every order. Since you can only monitor market prices in one region at a time you need to visit every region in which you have open orders. The effort involved in this has convinced me that it is best to focus on a small number of goods in no more than two regions. Any more than this and it becomes a nightmare trying to maintain price leadership on all your open orders. Alts can help a lot here - using one alt in each region in which you are trading.

By the way I have also formed some opinions on the best way to fight for price leadership. Do not be tempted to lower the price by a healthy chunk (eg 10%) in order to buy yourself some breathing space. This won't frighten off anybody and is really just a signal of weakness. It tells a competitor that you are hoping not to update the price again for some time. Also if you drop your price too far an aggressive competitor may just buy your stock and relist it at a profit.

In my opinion the best price change is to set your price exactly 0.01 ISK below your competitors price. The sooner you do this after he has set his price the better. In addition to maximising your profit this also sends the most demoralising message to a prospective competitor. Many just give up and go away when they see that their every move is countered in this way.