World Of Warcraft, WoW Hand Armor

Wednesday, February 29, 2012

Do Servers Matter When Pricing Items? Does Rarity? Or?

Ahh. Walmart. The king of Retail.

This post is in reference to @GrayzBDF reminding me about a comment left on a post from a while back Transmog Items How To Price For Your Server. I started writing a comment there and it just got too long...So here it is, in all it's ADD riddled glory.....

If it were only this easy to read your AH....

Does your sales reflect a Wal-Mart mentality or a mom and pop's County Market? Wal-Mart stores are constantly redefining pricepoints, stock, vendors, locations of sales, etc. County Market? They do one thing. Try to stay in business and be competitive with Wally world so they don't have to close their doors....Who's business model do you most likely mirror in WoW? Are you a leader on your server or a follower? Is it better to be either one? Or in the middle?

As a Logistics Manager, I see quite a bit of the who's/what's/where's/ and why's of distribution. I have worked with half of the top10 3PL companies. One of which was Wal-Mart. Below, I explain some of the things that you might not know about the inner workings of companies and how it applies to my sales in WoW. Business platforms, whether in game or in RL, are extremely similar. Is your AH PvP successful? Or are you struggling to keep up? Is your mindset on pricing automated, or just a guess? Let's look a bit deeper....

WM Price-points/ Location Based Pricing:

Go ahead and hit When you are searching, they will ask for your zip code. Why is that? Two reasons: One, they collect records online of what Joe from Kokomo searches for (best items for resale- or most popular), and combines that data into what goes on their shelves. They have a whole team that adjusts prices based on per capita. Lower population/lesser household income= lower prices. Higher income area? Higher prices. Or you can see it as "x" item is searched for more in Chicago than it is in the suburbs. So it can be seen as that 52" plasma might be priced $50 more downtown than in the sticks....

A good example of "location based pricing" is Keelhaul's (The Mogfather) setup. Whether he is aware or not, he follows this for the most part. His main servers are high population (location). His pricepoints follow suit (high profit). This can be thought of as why some servers demand such prices where as other servers you can be lucky to get 10% of the same amount.

PoS- Point of Sale 

This is taken at the register. Walmart decides their stock by what is sold at the store. When you buy a bag of Cheetos, the scanner tells the store that (1) Cheetos bag, 20oz, sold at 2pm on Friday for 2.18. The data is then compliled against all the other bags of cheetos sold. Next week, you might not see a 20oz bag due to you were the only purchase at that store for that size. However, data shows that they can sell a 24oz bag for .98 more and have a higher profit margin. Or the flipside that they can sell you "cheeto-heads" 4 4oz bags and profit 1.29 more. So when you go into wally for your fix this week, you only have the option of 24oz or 4oz. Get it?

A prime example of this is selling by stacks or singles, with adjusting pricing as you see fit based on sales. Why list 200 individual pieces of Whiptail when you can price 10 stacks at a 10g more per stack and they sell faster? Or vice verse, why try to sell a stack of 10 Glyph of Shockwave when sales show to sell 10 "stacks" of 1? Pricing and selling items, although in some cases extremely basic, are things we do everyday, without thinking twice.

Similar Goods:

Most GenX readers can remember seeing all yellow cans of beans or corn when they were younger. This, my young pups, was the generic brand. Walmart introduced something similar, the Great Value brand, for their stores a few years back. This allowed them total control on pricing goods, not having to rely on "x" company stating they needed to follow "x" pricepoint (i.e some companies will not allow stores to price below a certain amount if it is in a "flier" or a "ad").

Now Joe can get his Cheetos in Great Value brand, saving .75 per 20oz bag. Little does he know that although he is saving .75 per, Walmart is profiting more due to lower initial cost as well as more sales due to the discontinue of name brand at that size. Win/win. But then of course you have someone else that, no matter what, will pay for the Cheetos brand only, and wouldn't be caught dead eating a "lesser brand" (although some great value brands are packaged in the exact same location with the exact same goods inside as the name brand).

We can see a similar position with Transmogrification. Some folks are just fine with an item that has ten "look-alike" recolors. It tastes the same, looks the same, but is way cheaper than buying a "name brand". Some buyers are more top end, and will pay more to stand out in a crowd wearing their Hyperion set (insert "Sexy and I know it" music here), and wouldn't be caught dead in the generic [insert any bloody anything here] set.

To follow up, even though an item might be a "rare" drop, doesn't necessarily mean that the selling price is the same as one with the same drop rate. One might be ugly and one might be hot. You don't decide that, Blizzard RNG and your buyers decide that....

Most folks on most servers do not know about rarity of items. If you are a transmog seller, you know what I mean. You log on your toon, and you get mail or tells or /2 sets afire with comments "Why do you price that level 30 item for 1K?". Knowledge is Power. You know that it will sell, albeit sometimes later than sooner, but you stick to your guns.

So what was this post for other than a drawn out comment for a previous post? Knowledge. The more you understand why prices are what they are, and how to decide what item is worth what, the better off you are. One server might allow much higher prices on gems, and their glyphs are 10g each, while another server might allow glyphs for 500g and gems are worthless. The more you can decipher your server and what markets do what, the better off you are.

Now go to TuJ or your local AH, look at your professions versus pricing, and see where you fall. Are you going to be run out of business (profit) by a more demanding Auctioneer? Or are you going to see a niche that no one else is in and define your own profits? It's up to you. I wish you the utmost success!



Anonymous said... Reply To This Comment

Excellent post, this was basically what I needed to read, right when I needed to read it. I was wondering all the factors that really determine price points and you've allowed me to see how much pricing strategies in the real world can be used to determine such pricing in a virtual economy. Thanks a lot for this! Been struggling a bit trying to carve out my own little X-mogging corner myself, but I'm learning and this sure helped me a bit. :)


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