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Saturday, October 15, 2011

WoW Auction House Fail Tactics | Selling At A Loss To Drive Away Competition


Selling At A Loss To Drive Away Competition
Do Other Auctioneers Think It Works?  Yes.
Does It Really Work?  Only Against Fools.

Selling at a loss means you are selling your goods on the auction house for less than they cost you to craft or for less than you originally paid for the item you tried to flip.  Common reasons you may see someone selling for a loss include:
  • Exiting a market
  • Dumping of items used only for leveling a profession (Glyphs and Enchants are good examples) *This can be avoided with smarter Common Commodity Crafting instead of wasteful power leveling.
  • Lack of storage space
  • Poor planning
  • Incorrect speculation
  • Mistaken crafts (Ever made a whole ton of Netherweave Nets instead of Netherweave Bags?)
  • Attempting to scare away competition
  • Stupidity, ignorance, or poor math skills.
Auction House Market Bullies

I tend to also refer to this "selling at a loss to scare away competition" tactic as "bullying others out of the market."  The idea is this:
  • Your market has too many competitors and undercutters.
  • You are getting less profit per sale than you would like.
  • You start posting your items in large quanitites and at rock bottom prices.
  • This forces your competition to sell for less than you, often for a loss per sale, or stop selling.
  • Once everyone stops selling for the stupid low prices, you return to a less competitive market.
  • You raise prices back up and get more profit per sale.
In a market full of idiots, you may see some success.  This tactic can work, but usually only temporarily and very rarely will it work against a seasoned WoW gold maker or an intelligent competitor.  Why?  Because we are wise enough to see through the glyph wall or the rock bottom bullying pricing structure.  In response to your low price bullying tactics, a seasoned WoW auction house veteran will:
  • Buy out your poorly priced items to sell later for a profit.
  • Wait out your pricing blockade and return to the market once prices rebound.  You can't continue to sell for a loss forever and why would you want to?
Protecting Yourself Against Low Pricing Blockades

If you are a newer auctioneer or a poorly diversified auctioneer, then you are much more succeptable to this type of low priced market bullying.  If your main WoW gold making tactics are within a single market, then you have no choice but to follow suit and sell for lower prices to compete with the market bully or jump out of the market all together.  If you are wise, you should check back and re-enter the same market once the prices raise back to a more profitable selling price.

I've always preached about the need for leveling additional crafting alts, as well as the need for more diversification on your WoW auction house market investments.  Having multiple crafters with multiple profession coverage diversifies your crafting and earning options.  Having multiple profitable markets available to you allows you to easily step aside during undercutting pricing wars, low priced market bullying, and bear markets and you can always return to the same market once the higher profitable prices return. 

If you only work in 1 market, then you are going to be heavily handicapped when compared to the seasoned veterans with more market options and staying power.  Regardless, don't fall for the scare tactics that some auctioneers believe will work to get you out of their market.  Have patience to return to a bull market and diversify your options to protect against all types of unprofitable market collapses.


Enjoy The Posts Here at Cold's Gold Factory? Check Out Cold's Mysterious Fortune Card Mastery Gold Making Guide To Get You Started. Also Check Out The Teenager's Gold Guide To Get Started With Learning The Auction House As A Younger Player Or Check Out My New Favorite All Around WoW Gold Making Guide.

2 comments:

  1. There is a distinction between selling at a loss and selling with thinner margins than others.

    My break-even for gems are lower than most of my competitors. I'm happy to sell at generally higher margins but if I need to send a message I can post wicked low in massive quantities.

    I agree that selling at a loss is generally a bad idea. However, just because an AH price seems like a loss for one player doesn't mean it still is for the seller.

    Case in point: I have private farmers who sell me Savage Leather in huge volumes. My cost to make Heavy Savage and to buy Pristine Hide is way below "market" rates. I will sell these at 325g that are generally where the market is. I can sell the for 250g and still make a profit. I can break even at 220g or so.

    Do I like selling at 25-30g profit? Well, I would rather sell at low profit than not sell at all. Competitors usually drop out before 250g anyway.

    Nice post though. Thanks for the ideas.

    ReplyDelete
  2. Thank you for bothering to explain all this out for folks. It is a great help!Many thanks for this entry and for your website on the whole. Ive just liked it.

    ReplyDelete

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