Friday, December 7, 2007

Lament of the Fel Lotus

I am still searching for a great money making plan that (hopefully) doesn't involve a huge amount of farming or grinding, though some of this non-recreational time is necessary to make such sums of money.

Briefly, my history of making gold in WoW involved the following:
Level 10-40: stacks of Firefin Snapper, Oily Blackmouth and level appropriate Elixirs of Agility and Defense.

Level 40-60: Arcanite and Ghost Mushrooms.

Level 60-70: Quests and Primal Earth to Primal Water Transmutes.

I thought that Fel Lotus would be a great item to gather and/or work the margins in the AH for profit. However, my server has had a median price that is about 50-66% lower than game-wide pricing (median 12g, realm-wide 18g). I think one large factor contributed to this devaluation of Fel Lotuses and hope to learn a lesson of market patterns from this endeavor:

Fel Lotus is almost exclusively for raiders and as such is a very sensitive to raid volume. From watching the Nordrassil forums, it is clear that raiding guilds are the thoroughbreds of Warcraft- awesome, powerful beasts capable of spooking at the sight of their own shadow. When guild break-ups on the server started to occur (probably 3 top raiding guilds in the last 2 months) I should have known that prices on Fel Lotus would be reduced. If guilds start coming back and our server raid volume goes up, Fel Lotus may again arrive back at its true value.

In addition, it was also apparent from the AH listings that:

1) Many players don't list things for what they are worth or even close to what they are worth. Despite Fel Lotus being rare (only from herbalism and a random pick from other common and "mapable" herbs) and many AH prices with shorter remaining AH duration (very long>short) being much higher, about half of the players were setting buyouts more than 2g below the next highest auction.

2) Low volume markets are difficult to control. On at least 3 occasions, I bought out ALL of the Fel Lotus stock (at around 10g each) and listed my own Fel Lotus for about 15-18g. NONE of my auctions resulted in buyouts or even had bids. Instead, a few auctions listed at less than 12g as a buyout ruled the market (as they should). I think players bought a small amount of the Fel Lotus stock at low price, while a significant amount of low price stock remained on the market for 48-hours, further perpetuating days of low pricing. This maybe another effect of the 48-hour auction?

3) Guild Banks may be creating a repository for raid consumables that causes demand to be less in the AH. Whereas previously raid items may have been lost on guild-bank alts or just simply not donated to raid guilds (less likely, raiding guilds are highly organized), with the advent of guild bank, I think it is likely that more flasks, cauldrons and their respective materials are being put into guild banks by raiding and non-raiding segments of guilds. Arguments against this theory would include the continued high price of Fel Lotus game-wide.

Lessons Learned:
-Don't try to "industrialize" sales of an item that is required by a small, niche population that has highly variable demand for that item.
-Don't try to monopolize the pricing on an item that is vastly and consistently underpriced, because you can never underestimate other players' ability to ruin pricing on the AH.

I'm going back to herb picking and Primal farming.