This is a shopkeeping tutorial, by The Man Behind The Curtain (forum name BehindCurtai).
- Work in progress. Costs for opening/rents are currently placeholders; actual numbers are linked. Feedback on organization is welcome (please use the "Discuss" page, second tab, press "+" on the next screen.) *
- 1 Background
- 2 Introduction to running a shop
- 2.1 Critical: Your niche
- 2.2 Basic theory: Lasting out a price cycle
- 2.3 Basics: The three tiers of shops
- 2.4 Approximate startup costs to run a shop
- 2.5 Labor: The lifeblood of a shop
- 2.6 Spreadsheets: Useful BEFORE you open.
- 3 Operations: How to set up numbers and buttons
- 4 Location: How to determine where to operate
- 4.1 Identifying raw goods needed
- 4.2 Identifying finished goods needed
- 4.3 Do you want to ship?
- 5 Introduction to Tax Rates
- 6 Tax Rates and Price Cycles
- 6.1 Raw goods, and ocean demand
- 6.2 Theory of pricing
- 6.3 Finished goods, and ocean tax level
- 6.4 Lasting through price cycles
- 6.4.1 Collecting data about price cycles
- 6.4.2 Aquiring goods during highs
- 6.4.3 Determining sell price during highs
- 6.4.4 Watching the price falls
- 6.4.5 Determining the market bottom
- 6.4.6 Determining how many commodities you need
- 6.4.7 Getting a purchase price in ahead of time
- 6.4.8 Waiting out the cycles
- 7 Tools
- 8 Putting it all together: A real example over a week
- 8.1 Typical day
- 8.1.1 Examining orders / escrow / products ordered / labor report
- 8.1.2 Examining store stock
- 8.1.3 Examining building records (buys/sells)
- 8.1.4 Adjusting pricing
- 8.2 Day one of live tutorial shop work. Saturday, march 4th, 3:20 pm
- 8.2.1 Shop review
- 8.2.2 Cleanup needed: Order
- 8.2.3 Comparison shopping
- 8.2.4 Price rebalancing
- 8.3 Day Two of live tutorial shop work. Sunday, march 5th,
- 8.4 Day three of live tutorial shop work. Monday, march 6th,
- 8.5 Day four of live tutorial shop work. Tuesday, march 7th,
- 8.6 Day five of live tutorial shop work. Wednesdday, march 8th,
- 8.7 Day six of live tutorial shop work. thursday, march 9th,
- 8.8 Day seven of live tutorial shop work. friday, march 10th,
- 8.1 Typical day
- 9 "Value of a commodity"
I ran a distillery on Midnight (full shop) before mugs, and learned how to make a small profit from high volume rum sales. It was less than fulfilling, and I ultimately moved on. I also ran a deluxe shipyard stall.
When Sage opened, I tried to run an IM. I figured that balls would be essential on a new ocean, and they were. I moved into swords easily enough. Opening was a case of, "Look at the 4 islands, see which ones had shopkeepers doing reasonable stuff dockside (instead of stupid stuff), of those two see which had lower labor costs, and open there.".
I made a fortune on Sage.
I tried to replicate this on Viridian (TigerLeaf), and made no profit -- heck, often I didn't make rent. Improving on my operations, I moved to Fintan when it opened. But still no good.
So, I decided to do some investigating. I found that the mineral layout on Sage and Viridian was very, very different from Midnight, and very different from each other. And in the process, I realized something:
All of the other shopkeeping tutorials I've seen are about how to run a shop.
This one is about how to make a profit running one.
Everything from how to choose an island, to making the best of a bad island (complete with a real example being "tuned" in real time as this tutorial is written). What to look for, some of the "red flags" to avoid, and so on.
The goal is simple: If you have the time and desire, this will show you how to turn a large stash of PoE into a giant stash of poe.
This guide does not assume anything about your knowledge of how to run a shop. All interfaces are explained.
It does assume you have time, patience, and starting capital. It does assume that you have the ability to make good estimates (and the better you can estimate will be the difference between profit and loss). Finally, we assume you can do some basic math to work with those estimates.
Introduction to running a shop
Critical: Your niche
You must be able to find a niche for your shop before you begin.
Possible niches: 1. "I have more than enough money, and can afford to stock up on lows in the cycles, ride the cycles through the high and back". This is the best possible situation, as you can operate at the lowest costs of operation the entire time.
2. "I have enough money to stock up some stuff, to last me part of the way through the cycle; while I can't last the whole way, I can make some money". This is intelligent. You can compete with the well funded shops enough to profit. You won't make as much, but you will operate profitably.
3. "I cannot stock up on everything, but there are things not being sold here". Example: Someone who can arrange a supply of rare goods (example: gold dust from a friend that forages) or hard to get intermediates (example: Talking to an apoth to ensure that black enamel is made regardless of the price). This is acceptable. This is still a useful niche -- you have found a way to provide something that isn't provided by others.
Do not under estimate the power of black enamel. Unlike black cloth and black paint, where the dye comes from Kraken's Blood, black enamel comes from Sassafrass. IM's will find that black enamel is consistently a good seller.
4. "I cannot afford to stockpile significant amounts of commodities. Nor can I deal with other people to arrange a supply of inputs. However, I play on dub oceans, and I love labor puzzles". Such a person can potentially find a niche as a self-supplied labor alt workforce in the puzzle industries. Before you do this, see if you cannot make more money hiring out to other stalls.
5. "I cannot afford to stockpile. I can't deal with other people. I want to just hire laborers, buy stuff on the market for immediate use, and not deal with anything more than adjusting these numbers". The only place where you might make money is in shipyards -- shipyards do not have the hold space to store more than one large (brig-sized) ship, and have to operate from current pricing. However, a much better choice in this case is to NOT open a stall at all.
6. "There are shops on this island that provide all possible items, in all possible colors and options. Nothing is understocked by existing shops. I don't have the money to stockpile and last the entire tax cycle. I'm not able to provide expert labor, or I'm able to get large rates from other shops. Checking the time to completion of other stalls shows plenty of low-time turn arounds". In this situation, you have no business at all opening a stall.
Basic theory: Lasting out a price cycle
All goods will go into a price cycle. Whether it is merchant delivery of raws, or intermediate goods produced locally from merchant supplied raws, as long as the raws are delivered to the island by merchants there will be a dependable cycle of pricing from low to high and back, with a reliably supply of goods. Your job, to run a successful shop, is to find these price extremes, determine how long the cycle lasts, determine how many units of commodities you'll use in that time, and then figure out what price you need to offer to collect that many units.
Once you get into a situation where a needed raw is only delivered by players, the reliably supply model will fail; at that point, you have to either ship, or arrange shipping. While a high price is likely to attract shippers, it is no longer guaranteed.
Be prepared to spend at least a month tracking price cycles. Some commodities (high price, low volume ones) take three months or more for a cycle.
While RustyCutlass can be of use in determining price cycles, keep in mind these limits:
- RusyCutlass shows tax values, which lag behind actual dockside prices. By the time the tax value starts to go up, for example, the dockside prices have been going up for a little bit already.
- The prices seen on RustyCutlass are ocean-wide tax averages. Tax values are based on more than just dockside trade values. Some islands will trade commodities entirely outside of the listed range.
- There is no alternative to actually checking what posted prices on the island are. Pay attention to order prices for intermediates (hemp oil, paint, enamel, cloth, etc) and the delivery times as well.
Basics: The three tiers of shops
There are three levels of shops. (link: TedV's post on rent reform, opening cost revisions).
- Tier one: Distilling and Iron mongering
- Tier two: Weaveries and Apothecaries
- Tier three: Shipyards, Furnishers, and Tailors
Each tier is more expensive to startup than the previous. For most, this is because the operations are more expensive, and require more funding to succeed.
The exceptions are shipyards (which are very simple and straightforward, but need lots and lots of labor), and "sword mongers" -- Iron Mongers who specialize in swords. They are as complicated as Tailors, as expensive to operate, lack the racks that Tailors have, yet are the cheapest way to get into the business.
This does NOT mean the cheapest way to make money, as will be seen later.
Scope of competition:
- Tier one: High volume is sold to local ships. High profit is sold to pirates oceanwide.
- Tier two: Medium volume sold to local shops. Apoth also sells paint to local houses
- Tier three: Variable volume sold to pirates ocean wide
Iron Mongers and Distilleries sell mugs and swords to pirates. Everything sold by Shipyards, Furnishers, and Tailors is sold to pirates. With Global Purse, this means that you are competing against the entire ocean, or at least the entire arch. Even on a large arch (Cobalt/Viridian), it only takes 10 minutes to shop around. Since shopping around can give a 50% discount, pirates will.
This means that you, as the shopkeeper, need to do this as well. You need to price-check your competition, and determine what you can do to compete with them.
Apothecaries and Weavers sell primarily to other shops on the same island. For most of them, selling to dockside shippers is a secondary business.
On Hemp islands, cloth can be cheaply sailed to other islands.
Special note on Apothecaries: Apothecaries make enamel for swords, mugs, and gloves. Apothecaries use hemp oil (from distilleries) and herbs to make paint (for houses, etc). On dub oceans, this requires doubloons for their primary docksidable selling item. Apothecaries use herbs to make dyes (for weavers) Apothecaries are the ultimate mixed-in shop; their end products require goods from other shops, their raw commodities produce stuff for other shops. They both aid the establishment of a local economy, and depend on the local economy.
Cost of opening
Note: This has nothing to do with the cost of STOCKING. Stocking costs will vary significantly; the cost to stock a ball monger will be very small compared to the cost to stock a sword monger. This is the "sunk cost" to open the stall.
Note: These are the base costs, for an island with 0% extra tax. Actual price may be up to double this.
Opening cost (dubs) for a stall is always 10, regardless of size.
Weekly Rents and throughput limits
Note: This assumes 0% additional local tax. Actual price can vary to as much as double this number.
<< See tax_baseline for weekly base rents >> (placeholders follow)
<< throughput limits are coming >>
|Iron Working||4 / 3||6 / 4||8 / 6|
<< Effective operating overhead costs are coming >>
Note: The "75%" rule comes from labor allocation flaws in YPP. It is NOT a hard rule; I've personally seen 87.5%. It is a reasonable level to target in projections.
Approximate startup costs to run a shop
- Including stocking costs
- Sword monger, Mug maker, Paint shop, general color weaver, full range color weaver, general tailor, full range tailor, shipyard by size, basic furnisher, full furnisher.
Labor: The lifeblood of a shop
You can get all the raw goods you need dockside.
You can have the lowest price in the ocean.
Yet without labor, you cannot even show your low prices to others.
Labor is the key for any shop that is going to be a producer of goods. It is not needed for resell outlets.
- It is possible to operate a chain of stalls where production occurs in one centralized place, and finished goods are shipped out for resell at distant locations. Rum and shot both lend themselves to this nicely. Running a trade empire like this is beyond the scope of this tutorial.
We assume that you will need labor, because you will be producing. So how do you get it?
On dub oceans, you can add a labor alt to start your shop. On sub oceans, you can hire yourself. That works for shops without puzzles, or for one where you can personally get expert.
Otherwise, you need to hire people. If you are at a puzzle shop, I recommend getting one friend that has expert in the puzzle to help you out for a few days. You can always get more.
So how do you get labor? You post a set of wages.
No More Than The Best You Can Find For Your Own Labor.
That may seem like odd advice. It's the best starting advice I can give.
If you can earn more than X by working at someone else, then do so. Worse, would-be employees will do so. You need to raise your wages.
If you are the best possible wage? More people will work for you than you can use. You'll have people with only partial work done for you, and partial work for other people who are paying less. These people will work for less, so you may as well pay less.
Start with this wage for two weeks. As time goes on, you can see if you get too much, or too little labor, and adjust accordingly.
<< more >>
Spreadsheets: Useful BEFORE you open.
Excel: The Shop Tool
Open Office: Shop Spreadsheets
Neither one works in the MacWorks program that comes standard on macintosh systems.
Limitations of pre-operating spreadsheets
- Theory versus practice
- "The best laid plans..."
- "Auugh! No one will work for me"
Operating without a spreadsheet
- Cannot test pricing without supplies
- Profit margin can be controlled by commodity and labor markup
- Short term profit taking (if you are backlogged) can be handled by item markups.
Ref: existing shop management tutorial
This section -- mechanics of using the shop interfaces -- may not be done before the contest ends. These two articles do a good job of covering this information.
Commodity level pricing and dockside sells
Finished product level pricing and order placement
Labor page and open for business
Location: How to determine where to operate
Identifying raw goods needed
Location of commodities
Identifying finished goods needed
Importance of apothecaries
- Enamel for swords, mugs
- Dye for cloth
- Cloth for tailors, cloth and varnish for furnishers
- Think twice about opening a shop without a local apoth. Limited to:
- Balls (IM)
- Rum (Distillery)
- Sailcloth, Black, brown, gold, grey, tan, and white cloths (Weavery, tailors)
- Ships (shipyard). Small set of gloves (colors).
- Partial list of items (Furnishers)
Apoths may be the most important support shop for an island.
All of the missing items (varnish/lacquer, dye, enamels) can be shipped in. See the section on shipping.
Do you want to ship?
Shipping will be the most imporant question you answer before opening a shop.
If you do not want to ship, then you have to locate yourself where others will ship for you, at reasonable prices.
Things to consider for NPP merchant supplies
NPP merchant bots will only deliver raw commodities, and only if the source islands are uncolonized.
Things to consider for player shippers
Merchants basically ship risk free, and with no opportunity cost (there's nothing else that they can be doing). Players however have a risk of losing to brigands or other player; they have the oportunity cost of being able to do something else (like pillaging, or playing poker), so you need to pay them at least as much as what they could otherwise do.
Player shippers are expensive, in other words
Ref: Bazaar thread, requesting papagoite from PP to Fintan
As an example, in this bazaar thread, a request was made for a player willing to ship stuff across about a third of a colonized ocean. The price quoted in that thread -- 1400 -- was more expensive than what people had as posted dockside sells.
There are two exceptions to this:
- Short trips. Many players discount the cost of shipping a short hop of 3-8 leagues that are intra-arch.
- High volume. If you are buying 100 units of a high priced item, you may find that players will ship it halfway across the ocean for you. (Ref: Sage shop receiving 94 units of white enamel in two trips one day.)
Things to consider for self shipping
Most important question: Do you enjoy shipping?
Are you good enough to sail a ship, quickly, avoiding brigands? Do you enjoy doing this?
Determine how much you could have made during this time. If you're a good pillager, what could you have made by killing brigands instead of avoiding them. If you're a good poker player, how much would you have made at the tables in the time it takes you to ship. If you're a good trader, what can you make by shipping stuff elsewhere for others during that time?
That's your cost of shipping. You have to factor that cost into the cost of the goods. If, for example, it costs you 1000 PoE to ship a load of 100 units, that's a cost of 10 per unit. Your shop needs to spend at least 10 per unit MORE than what you paid where you picked up the items.
And, if you see another shop on the island that has a price higher than what your shop will pay?
Either sell to that other shop, or raise your shop's buy price.
This is serious. Do not dismiss this.
Remember, this isn't "How to run a stall". This is "How to make a profit by running a stall".
If someone else is paying more than you, then you are either underpriced, or you will make more money selling to that other person.
If nothing else, raising your price may result in other players shipping stuff to you. Stuff that you won't have to ship, while you make money killing brigands, winning tourneys, or playing poker.
Introduction to Tax Rates
- Sales tax, and commodity production.
- Not rent.
Ocean Wide versus Island
- Commodity production, ocean wide, as a function of tax.
- Local harvesting, and sales tax
- The unanswered question. (Hinted, but not answered): Does the local bid increase local production even if the global tax rate is too low?
Tax Rates and Price Cycles
Raw goods, and ocean demand
Theory of pricing
Fast swings, long ranges
Short ranges, rapid swings
Examples of both
Conclusion: It depends
Finished goods, and ocean tax level
Apparent inconsistency in tax value
Lasting through price cycles
Collecting data about price cycles
Aquiring goods during highs
Determining sell price during highs
Watching the price falls
Determining how many commodities you need
Getting a purchase price in ahead of time
Waiting out the cycles
- Global tax rate tracking over time
Pirate Commodity Trader
- Ocean-wide price information, relatively up-to-date.
- Provides location-value snapshots for "now".
- Can be used to arrange supplies, or determine future costs
Talking to people in game
- Can turn up "Goods produced, but on standby, not yet being sold".
- Example: Has provided me with black and white enamels at reasonable prices when none was being sold dockside.
Putting it all together: A real example over a week
This section will look at a successful Iron Monger stall on Sage::Greenwich
Typical maintenence operations in a successful shop:
- Review outstanding orders and escrow. Look for long backlog
- Review shop records since last visit
- Review orders placed; look for long gaptime of no orders
- Review labor reports. Look for large (>75% max) usage over several days.
- Review employee list and count. Look for major drop in worker count or large worker counts.
- Review inventory; look for shortfalls.
Typical active operations
- Review dockside ordering of commodities and competition.
- Arch wide comparison shopping.
Examining orders / escrow / products ordered / labor report
- "order "
- "placed an order"
Examining store stock
- Using "Manage prices" rather than "Manage Inventory"
- Function of "Manage inventory" : managing deliveries of remote production.
Examining building records (buys/sells)
- "units of"
Technique: Multi-clienting (using an alt to help manage the shop)
- One on "Trade commodities", one on "Manage prices"
- Compare the rate (units per day) of resupply versus target stock and expected time for resupply
- Expect to take at least two tax cycles to get this part down.
- Adjust upwards if no supplies after two days.
Technique: Building records as an easy "flush" of changes.
Technique: PCT and Rusty Cutlass
- "Date zoom" for RC
Day one of live tutorial shop work. Saturday, march 4th, 3:20 pm
We start looking at Longjohngrey's IM stall on Sage::Greenwich
The shop has 4 labor alts, able to provide about 96 hours per day. There is also two real employees. One since march 1st, one since mid feb.
It has been several days since this shop has been checked, so we need to do a full review.
First, check the labor reports for the last week.
Day Total labor Other people's labor 2/25 101 5 (3/2/0) 2/26 97 1 (0/1/0) 2/27 96 0 2/28 94 0 3/1 90 3 (3/0/0) 3/2 57 7 (2/1/5) 3/3 23 0
Currently in the queue: Nothing.
Alright, what can we tell from this?
First, we are not paying enough for labor. People are finding better work than what we are paying. The basic labor is almost enough, the skilled is somewhat low, and the expert is way low. The answer is not to supply labor alts -- our labor alts can make more money working elsewhere.
Second, our orders have dropped off. We are no longer competetive on price, and need to recheck prices (expected; it has been two weeks since the last price check).
- ACCK! It turns out we are out of iron! Wisky Tango Fox. We did not purchase enough iron the last time around.
Ok, buying 6 units of iron dockside, and quickly upping our buy to match everyone else (several thousand units are being bought dockside at 13), we can proceed with comparison shopping.
Out of order, first observation: Our buy price on iron was too low; we did not get filled on the recent low price in the cycle. Our buy price needs to be raised for the next cycle.
Cleanup needed: Order
It is only meaningful to fix pricing adjustment for products AFTER adjusting pricing for the commodities.
This is critical. As directly written below, this would first adjust pricing factors, then adjust commodity pricing (which in turn would alter pricing factors even more).
Again: Although it is useful to know what others are charging for finished goods (and we will make use of that information later), it is necessary to cleanup commodity pricing first, and finish products second.
All pricing is based on yellow/yellow swords. This is important.
Yellow will be the cheapest enamel 98% of the time. Comparing yellow enamel allows us to check the lowest price of the sword; essentially, it allows us to compare the cost of the sword with other places, without involving the things which alter/enhance/raise the price of swords.
Short 1260 Chalc/1, 15 basic. Long 6887 Rapier 4938 Leush/2, 15/15 Dirk 846 Sinc/1, 15 Scim 15200 Masu/3, Lor/3 25/15/25 Cutlass 4278 Masu/2, 10/20 Poin 5797 Tell/2, Leush/2, 15/25/15 Saber 4824 Tell/3, sera/3, chalc/3, 15/25/20 Stil 923 Sera/1, 15/10 Skull 7075 Papa/3, Chalc/3, 30/15/15 Falch 8314 Cuba/3, Masu/3, thor/3, 20/25/15 Cleaver 12854 Thor/3, Lor/3, 35/25/30
First, I'm going to resort this in a different order.
Chalc: Short 1260 Chalc/1, 15 basic. Skull 7075 Papa/3, Chalc/3, 30/15/15 Saber 4824 Tell/3, sera/3, chalc/3, 15/25/20 Leush: Rapier 4938 Leush/2, 15/15 Poin 5797 Tell/2, Leush/2, 15/25/15 Masu, Lor, Thor: Cutlass 4278 Masu/2, 10/20 Scim 15200 Masu/3, Lor/3 25/15/25 Falch 8314 Cuba/3, Masu/3, thor/3, 20/25/15 Other: Dirk 846 Sinc/1, 15 Stil 923 Sera/1, 15/10 Long 6887 Cleaver 12854 Thor/3, Lor/3, 35/25/30
Why this sorting? Here is where knowledge of the industry is important.
Each group has a good seller. All of the chalc group sells. Rapier sells in Leush. Scim and Falch sell in the Masu/Lor/Thor group. And for some odd reason, the Cleaver sells. It could go into the Masu/Lor/Thor group (it uses those). However, it is grouped with the Long sword because like the long sword, orders of these swords are relatively few.
Dirk and Stil are grouped in "Other" for two reasons: First, they are rare sellers; second, they are usually sold at impossible low prices. More later.
In checking prices, we have to have a cutoff time. Lets say someone has half the price we have, and 15 days to deliver. Well, that's not someone we want to compete with.
My cutoff: Hours versus days. If the estimate is 48 hours or less, we consider them. If the estimate is 2 days or more, we don't.
Where you draw the line will affect your bottom line. Your choice.
Looking at the same island, our price/others price:
Chalc: Short 1260 / 1284 Skull 7075 / 7559 Saber 4824 / 4947 Leush: Rapier 4938 / 5014 Poin 5797 / 5877 Masu, Lor, Thor: Cutlass 4278 / * 4246 Scim 15200 / * 15102 Falch 8314 / 8640 Other: Dirk 846 / * 709 Stil 923 / * 699 Long 6887 / * 6759 Cleaver 12854 / * 12440
The stuff that needs masu and lor are cheaper from others. This tells us that we may be overpaying for those. We'll check that later.
Things like the Dirk, and the Stil: These take one unit of a cheap mineral, and only basic labor. Our price on these minerals is competetive; these places are either very low basic shops, or messed up shops. Either way, they are not major profit items.
Checking the rest of the arch gives the following as the "target prices".
Chalc: Short 1260 / * 1179 Skull 7075 / 7284 Saber 4824 / 4947 Leush: Rapier 4938 / 5014 Poin 5797 / * 5795 Masu, Lor, Thor: Cutlass 4278 / * 4078 Scim 15200 / * 15102 Falch 8314 / 8640 Other: Dirk 846 / * 682 Stil 923 / * 667 Long 6887 / * 6406 Cleaver 12854 / * 12440
Things to note:
- The poinard's best price in the arch is 2 PoE off. That's not something I'm worried about.
- The short sword is beating us. This is also a one (low) mineral basic sword, so it's not that suprising. We may be able to match this one; we'll check.
- Our prices on Greenwich are competetive; Greenwich is a good place to run a sword shop.
Note that Blackthorpe and Spaniel might be good locations for supplies, however, neither has an apothecary bazaar, restricting supplies of essential enamels. (See the section on shipping).
Price examination time:
For the short sword: Our chalc price is 642 per unit. Current market dockside buy is 750 and above. To get below 650 requires selling 36 units. Shop records show chalc fills at about 10 per day when deliveries arrive. Conclusion: Either the people underpricing us got cheaper deliveries (location or timing), or their basic labor is much less than ours.
Well, we know from our labor check that our basic labor can't really go any lower than we have it (several days where no third party basic labor was supplied). We would need to drop 81 PoE on a 15 hour item; that would drop basic labor by 6 per hour.
Rasing basic up (to 10 as a next step), and dropping basic charged down to 14 would make it completely unprofitable. We will not attempt to compete with this.
Keep in mind: To run a successful shop, this is what you have to do:
- What do you need to do to compete with others,
- What does that do to your profitability,
- Is it worth it, or not.
Pick and choose what you make money on. We cannot compete with low basic shops (heck, even with employees they did not work for us), so we are not going to try.
After doing comparison shopping, the next step is to rebalance your prices to come close to these.
This is the one area that is definitely easier with a spreadsheet. With a spreadsheet, you can just modify things trivially.
There are two approaches to this. One is to say "We will put in modifiers on the product page". For example, we can add 200 poe to our Skull Dagger price, and still be the lowest price in town.
The second is to adjust the charged values for labor. Since we know that we need to adjust what we pay our workers, it makes sense to determine what we can charge people for labor and still come out with a good price.
We will use this approach -- adjusting charged values for labor.
Before we do, however, we want to make sure we have sensible values for the commodities themselves.
First, it is now 9:15 as I resume this first day's activity. Remember that it was about 5 hours ago when I resupplied on iron, and went back into business? Yep.
Remember also that price comparison that I did?
Short 1260 / * 1179 Dirk 846 / * 682
Those are for yellow/yellow. Other colors might be cheaper for us.
For now, figure we have a 10 poe per hour profit margin; those three swords have just earned a profit of 150 per short sword, and 200 per dirk, for a profit of 500 PoE. While that may not sound like much, keep in mind that this is around 1000 poe per day, or roughly, at 800 PoE per dub, 37.5 dubs per month.
Add in a couple of labor alts, and you get a subscription paid for in about 30 minutes three times a week. Or, enough dubs to handle your furnishing purchases and parlor badges.
As I said, this is a tutorial on how to make money with shops.
<< EDIT: This next section is way too wordy, and turns ME off. It will lose all audience >>
Ok, so we know people are ordering dirks and short swords. That tells us that our pricing for chalcocite, sincosite, and basic labor isn't far off from what it should be.
On the higher end swords, chalc is also used in Sabers and Skull Daggers. Now we need to do a little analyzing
Skull daggers add skilled, expert, and papagoite. Papagoite is only used in skull daggers (at least at IM's.), so it is a way to adjust skull daggers arbitrarily.
Sabers add skilled, expert, tellurium, and Serandite. Tellurium (Poinard, saber) is relatively cheap (currently crashed on Sage to around 9; currently priced at 16.) Repricing to 10 will drop 18 from the Saber. Serandite (Stiletto, Saber) is effectively a Saber only item. It's current dockside value is 95; our price is 77 (purchased at a low in the price cycle).
Remember, we need to add (our first guess) two poe per hour to the basic wage. If we also raise the charged rate by two poe, we will add 30 poe to the cost of these two swords (short sword, dirk). Chances are that 30 poe will not make a difference in ordering.
Keep in mind: The dirk has an escrow value of about 3000. The short swords: one has a value of about 1500, the other has a value of exactly (not started yet) 4984.
All of these are being ordered with special enamels. A purple/purple short sword, for example, is only 2800 escrow. One of the enamels must be black (white/purple is too cheap, white/white is too expensive).
This is the other important point. Being able to provide the hard to stock items (white and black enamels in particular) really helps the sells.
Conclusion: 30 poe increase (two per basic) will not effect pricing on these items much, and will attract more labor.
Now, lets run through commodity pricing. First, here's what we had before we start changing
Lorandite is currently near a peak. As seen in the tax tracking << image: http://rustycutlass.org/tax/graph.php?ocean=5&mode=raw&commods=22&pre_date=11/01/2005&post_date=03/04/2006 >> we see that the last cycle ran from about november 15th to february 10th, about three months. It is currently near the top.
What do these tell us?
- Lorandite is buying at 2475, but a supply at 2500 is being ignored. Someone is being cheap. More to the point, they are not out -- they have enough for at least one sword, and are not in a hurry to replace it.
- Descartes is willing to pay more (as expected; remember, they are behind us, farther from the supply, just as we are behind Spaniel, who is closer to the supply).
- No player trader has found it (yet) worthwhile to ship our lorandite.
<< image: http://rustycutlass.org/tax/graph.php?ocean=5&mode=raw&commods=22&pre_date=03/01/2006&post_date=03/04/2006 >> Here we see a closeup of the last few days. Take a good look at the 2690 price point.
For most of the 1st and 2nd, the price did not go below this point.
On the 4th, it reached that point, and then later went below it.
Technical/charting analysis tells us that the price is expected to drop -- significantly -- at this point.
<< Graph analysis details are too wordy, and turn people off>>
PCT tell us that the current demand at Wensleydale is approximately 23 in the low 2800's, and another 45 in the 2700's. Then another 9 at 2682.
Lincoln has another 25 around 2620.
That's at least three day's demand. Although the prices are dropping, they will come back up as those markets are filled.
At the same time, the supply pressure is starting to be relieved.
Keep in mind: Lorandite is supplied from Gauntlet (north of Spaniel). It is much closer to this arch than the other arch. This low tax value only tells us that local shops (lower price) are starting to be supplied. We can expect local supply to be plentiful for the next two days or so at this price.
In particular, we do not want to drop our price (note that we are not being overfilled yet), nor do we want to raise it (local deliveries are occurring). It's fine just where it is.
Leushite spawns at Jack's Last Gift. We are equidistant with Lincoln, and farther than Kent. PCT tells us that we are offering more than either of them, but less than Admiral and Wensleydale. Admiral is demanding 5, Wensleydale about 30. Supply rate is at least 18-20 per day near the price bottom (determined the last time it went down).
Day Two of live tutorial shop work. Sunday, march 5th,
(Sadly, real life prevented any game-play today.)
(Continuing from where we left off)
Day three of live tutorial shop work. Monday, march 6th,
Normally I would finish this AFTER doing commodities. However, this is taken longer than expected, and something needs to be changed quickly -- we are not paying enough, and not getting enough workers.
Quick conclusion: We are not charging enough.
Raising paid wages from 7/11/14 (note that we had workers at 8/10/12) to 11/15/19, and charged from 20/26/30 to 22/29/35
(Continuing, 7:45 pm) First, even after raising prices this morning, another falchon was ordered (backlog of 4 days). Although I don't know the details, SOMETHING is going on with Falchons. I am adding a 300 poe markup on the falchons in the product price adjustment, as a quick fix. I will take a more detailed look later to see what amount is better.
Two days ago, I said:
- We are equidistant with Lincoln, and farther than Kent. PCT tells us that we are offering more than either of them, but less than Admiral and Wensleydale. Admiral is demanding 5, Wensleydale about 30. Supply rate is at least 18-20 per day near the price bottom (determined the last time it went down).
A correction on my thinking last time: We are NOT equidistant with Lincoln; we are about 10 farther away.
Today, we see (we are still asking 1630) admiral demanding 1. Wensleydale is demanding 30 above 1701, and more between 1700 and 1630. Even lincoln is paying more than us. Clearly, the bottom has passed. Now we need to determine what to offer to maximize fill cheaply.
Remember distance: Kent, Wensley, Admiral, Spaniel, Lincoln, Greenwich, Descartes, Blackthorpe.
Price/Distance: Kent 1550 Wensley 1706 / 1850 Admiral 1700 Spaniel 1660 Lincoln 1650 Greenwich 1675 Descartes 1652 Blackthorpe 1500
After the 1 demand at 1850, Wensley drops to 1706. There is a LOT at 1706. We need to look more attractive than 1706, despite being longer. We will offer 1775, and see what comes in overnight.
At the same time that we raise buy to 1775, we raise charged to 1775 as well. Charged should never stay lower than purchase price for significant lengths of time. The goal here is to purchase as much as possible, as cheaply as possible, knowing that the price will go way up, and we will profit over the next 3 month cycle.
Before the change
After the change
Keep in mind: By tomorrow, most of the people on the island will have upped their price to match, or slightly exceede mine. Can't be helpped -- we'll be crawling up over the next few days. In the mean time, we adjust our "target low" for the next tax cycle down to around 1660 instead of the 1630 we were offering this time. "Around"? What, you expect me to give away all my secrets? Ok, 1675.
As seen in the Rusty Cutlass tax graph (Image: http://rustycutlass.org/portal.php?module=tax&mpage=index&toggle=no&commods=24&ocean=5&mode=raw&toggle=no&pre_date=2%2F10%2F2006&post_date=03%2F06%2F2006) ), Tell has come out of its nose dive. So what happened?
The mineral was over supplied from people that had purchased very large amounts earlier, and wound up stocking lots and lots. This was then resold to other shops at a rate below the "target tax rate", causing harvested supply to fall, and fall. Eventually, it triggred a price rise (as people wanted more than was available), and the constant one-upping caused the supply to go way, way high -- high enough to over flood the market even MORE than the previous overstock sellers did (note the tax value went even lower than before).
Now the global tax rate shows an increase, that is NOT reflected back at Greenwich. Although there is a price spike up to 16, PCT shows the ocean-wide purchase prices do not go above 8. That "16" is a strange spike, probably from someone that didn't pay attention when setting prices.
This implies that the "nosedive" is still going on; 8 is below the 9-10 that marks the bottom of the tax graph. (Incidently, this is a clear indication that "use" factors into tax calculations, as no one would be buying large amounts at the tax rates shown.)
Curious over "How low will it go" more than anything else, we put a buy at 5, and wonder if we'll get anything. At the same time, we note that the price did NOT go high enough to buy from us at 30 (previous dockside sell price); we lower our dockside sell to 25.
(( http://rustycutlass.org/tax/graph.php?ocean=5&mode=raw&commods=25&pre_date=12/18/2005&post_date=03/06/2006 )) shows that thorianite is around the high point of its tax cycle. Shop records show that we are selling it dockside at a decent pace. We have gone from about 350 down to 250. Frankly, it is selling well, earning a profit; we have no reason to want to purchase it. The only question is are we selling too cheaply, but that seems unlikely. Beyond that, the only concern is how much to sell -- is the current cutoff of 50 units sufficient to keep for the second half of the cycle.
Day four of live tutorial shop work. Tuesday, march 7th,
I do not yet know how much they will actually contribute -- I will find that out by checking the labor reports over the next two days.
(9:30: Now up to 5 other workers.)
(Continuing 9:30 pm)
Rule of thumb #1: When a commodity is falling in price, lower your buy price to match, even if you are not buying.
Rule of thumb #2: When the price drops to the level that you think it will stay at or near, raise your max stock up to try to catch enough to last you through the next price cycle.
In our case, we are targetting 8 poe as the "Buy a large amount" point, so we wait with just a 30 stock limit.
We have a large supply of chalcocite, purchased back when it was cheap. At the moment we are watching the price rise, and seeing if we have enough supply.
Rusty cutlass shows that we are currently near the middle of the price cycle http://rustycutlass.org/tax/graph.php?ocean=5&mode=raw&commods=26&pre_date=01/01/2006&post_date=03/06/2006 so there isn't anything to do at the moment.
Our supply of Cubanite is excessive. During ocean startup, the price seemed really low compared to midnight levels, so large stocks were purchased on the assumption that this would be a profit when prices went up.
They did not; prices on different oceans are NOT the same. So we are slowly selling the overstock.
Look at the buy price. Notice that people have posted buy prices that exceede the posted sell prices.
What do we do? Why, we sell stuff to these people at the prices they will pay. It's not much money, but every little bit helps.
The astute watcher will note that we are also buying chalcocite, at the same time we are overstocked and selling. The reason is simple -- every unit we can churn is more profit. At the same time, this allows tracking what the actual price of the mineral really is.
The last purchase was on March 1st; actual price seems to be 19, not 18.
Rusty Cutlass shows a price on Cubanite that is much higher than this. The reason is simple -- we are the closest island to Cubanite's only source, and the northern arches have to pay a large sum to get the NPP merchants to ship it to them.
We are hoping that some player shippers will find it worth it to ship our selling supply in large quantities.
Another overstocked item, waiting to resell.
In this case, we missed one tax cycle high, and are now waiting for the next one.
Our buy price is 77 because that was where we managed to aquire large amounts (last tax cycle low). There is no point to grabbing more at the moment.
Although buying more -- and holding for the next high -- is a valid way to make money, we have made an agreement with a local apoth, and need to keep funds available for black enamel purchase. As such, we cannot tie any more up in long-term minerals storage.
Essential for Skull Daggers. This is another case of "purchased at the last tax low". However, here is a case where we don't have a huge surplus. This time, we think we have enough to make it through the cycle without much surplus.
Rusty Cutlass http://rustycutlass.org/tax/graph.php?ocean=5&mode=raw&commods=29&pre_date=01/01/2006&post_date=03/06/2006 for this shows a price around 950, a huge spike, and then pricing around 850. We don't know what the "high" price will be without that crazy spike. Instead, we watch the market, and see where it goes.
The price is currently rising. This is also a "sit and wait" item.
Sincosite is only used for Long Swords and Dirks. Neither is a big seller. We have a small supply, but generally are not concerned with this one.
Watch the dockside prices, and Rusty Cutlass, simply to see when the prices drop down to a low again. This mineral appears to be heading into a narrow trading range, with no major highs or low.
Masuyite is arguably the most important mineral, given the swords that it makes and their popularity.
Looking at Rusty Cutlass http://rustycutlass.org/tax/graph.php?ocean=5&mode=raw&commods=31&pre_date=02/01/2006&post_date=03/06/2006 we see a tax cycle high which decreases each cycle, and a low that increases slightly each cycle. Our last purchase (shop records) was around Feb 24th to 26th -- the last low cycle
The past lows have have two "low drops", and only one low drop has been seen so far this cycle. This is the time to buy. The last cycle, we only managed to aquire 12 units. We need more.
Note that Descartes and Spaniel are paying more. It is unlikely to go below 1413 over here. It might not even fill at that price locally.
We are matching it for now, and will recheck it tomorrow if we have not filled.
Remember how I said yesterday that I expected others to catch up to me?
Clearly I am no longer competetive on this. I did not get any overnight. Leushite is still near its low, but not for much longer. PCT's information is out of date, so wisks to the other islands in the arch give an estimate of increasing demand.
- Blackthorpe: 1500 (way too low)
- Spaniel: 1650
- Descartes: 1705
So only Greenwich is out of date in PCT.
Conclusion: Although the price is going up, it's not up much yet. One more day before we raise our price.
Day five of live tutorial shop work. Wednesdday, march 8th,
(8:45 am) First, both Masuyite and Leushite came in (5 units each) overnight.
Masuyite came in from a bot (well priced); Leushite came from another stall (may still be low).
And, in fact, a review shows that another stall is now higher than us for Leushite.
Remember how we raised falchons by 300 earlier? Falchons rely on Masuyite, and we raised our price on that to attract bots. Since we no longer have any falchon orders in the queue, we can eliminate the surcharge.
A quick check with the surcharge removed shows that we are 380 PoE over the next person. Given that our prices for the other ingredients(Thor and Cuba) are as good as they get, this must be from the price increase last night in Masuyite, and that other shop is on older pricing. We won't match them today.
With 2 other people matching our price, and only one delivery overnight, a 2 PoE raise will hopefully catch some deliveries today. Yes, it's the "one upping" time.
Day six of live tutorial shop work. thursday, march 9th,
Real life prevented any playtime.
Day seven of live tutorial shop work. friday, march 10th,
A quick review of the orders placed in the last few days: 12 swords in the last 5 days (Middle of the 5th til middle of the 10th.) ((Inmage 21))
Dockside iron is down to 9. We've already stated that the target price is 8. We have enough iron on hand (30 units) to last until the price drops to 8.
Therefore, we've set our buy price to 8, minimum stock to 150, and maximum stock to 1000.
The time from highpoint (at which point we will sell down to 150) and the next low point (when we will buy again) will consume some iron, about 2.2 swords per day, or about 7 iron per day. 150 minimum stock means we can handle a time of 20 days before running out. That seems like a good buffer.
Leushite is arriving, slowly, but steadily. We can keep it where it is. ((Image 22))
Lorandite's local buy price is 2480. Our sell price of 2500 was too low; people gladly bought at that price.
The next local sell price is 2750, and not sold out.
We will set a sell price of 2625 (split the difference), and see how that works. And, buying at 2485 since we are currently at zero stock.
((Image 24)) Sadly, we are underpriced, as shown here. It's time to up it. With 4 other buyers, we would only get 1/5th as much if we try to match others, so we are going to go 2 poe over them.
Enamels are similar to other commodities. However, they are made by middlemen -- apothecaries -- so tax rate tracking is a little confusing.
You need to track the underlying herbs, and the rates paid for the enamels across the ocean. Just as the price of the herb will change across the ocean, so to will the price of the finished enamel.
As the tax price of the herb falls, the tax price of the enamel will (usually) fall. However, they will NOT be in synch with each other.
First, some apoths will purchase large supplies of herbs when the prices are low, and then keep a more-or-less constant price as the herb goes up. (That is the style demonstrated here). In that case, the price will stay mostly constant until the low priced place runs out of herbs, at which point the price will go up to the next shop's price.
As the stockpile of herbs run out at all local apoths, the price will rise based on the current price of the herbs themselves.
As the herb prices reach the top of their tax cycles, and herb prices start to fall, apoths will generally be lowering their prices SLOWER than the drop in dockside buys for the herbs.
Bottom line: The lowest prices on enamels will occur AFTER the lowest prices on the herbs.
"Value of a commodity"
So what is a unit of Lorandite worth?
This is one of those questions that is implicit in pricing considerations, yet often not clearly asked.
In doing this tutorial, I realized that I have a good idea of what something is worth, but never actually got it clearly stated.
1 unit of Lorandite plus 1 unit of Masuyite is 1/3rd of a Scimitar (about 22 hours), or at least 220 PoE in profit.
1 unit of Lorandite plus 1 unit of Thorianite is 1/3rd of a Cleaver (about 30 hours), or at least 300 PoE in profit.
1 unit of Chalcolite makes a short sword, 15 hours.
1 Chalcolite, with a serandite and a tellurium, make 1/3rd of a saber, about 20 hours. Since tell has no value, and chalc has 15 hours, a sera has a value of 5 hours in a saber, yet 25 hours in a stiletto.
This line of thinking needs more fleshing out.