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I am a WoW player and also an economics student. There is a good chance that I'll be able to use the WoW economic data that I am collecting in a future academic project. Since I have to do all of that work, I figured I would post some of my findings on a blog.
I don't farm or mine or actually produce much of anything. I take advantage of what the Greedy Goblin calls "dumb people," and what economists call information asymmetry. All that means is that one party in a transaction knows more than another. There are two basic things that I do in the game to make gold. It still hurts me a little bit to share these things, even if nearly no one ever actually reads this blog. Since if even one other business man on my server starts taking the advice I give, it could have a big effect on profits. But alas, here it goes.
While not exactly revolutionary, disenchanting is my primary source for gold in the game. I am a big fan of the Greedy Goblin. He has some wonderful tips and some real insight into the WoW economy and economics in general, but I thought he missed the boat a little bit on his post about tradeskills. This is what he has to say about enchanting:
"Enchanting: The only moneymaking is disenchanting your soulbound stuff. Quest rewards and obsolate items. More than nothing but only a little. Otherwise you are just one in the million, every other enchanter knows what you know."
That would be right if you didn't take into account the auction house. I made my first 20k in WoW from simple arbitrage, which is another way of saying buy low and sell high in the auction house. I used auctioneer to find the best deals on items and then repost them at the market price. I spent most of that while leveling on all of those epics that would end up being worthless in 5 or 6 levels anyway. After a while a got a bunch of spirit gear that wouldn't sell, because at the time I was a noob and I didn't know that spirit was worthless to most classes in the game. So I disenchanted them and sold them as mats, which ended up being worth more than the armor itself.
Fast forward a year or so to the launch of Wrath of the Lich King. There is new dust and new shards now, and new items to disenchant. The value of these ilvl 130 green armor and weapons after disenchanting them is from 13g to 19g a piece on my server and I can sometimes pick them up for 3 to 5g a piece. Right now the shards aren't selling all that well, but I think that has to do with people still leveling enchanting. I think that maybe they just aren't high enough yet to use the shards all that much, although those that do sell are going for 50g for the dream shards and 18 to 20g for the small dream shards. The infinite dust though is going from 140 to 160g a stack.
Another one of the advantages of going into the enchanting mats business is that there aren't any deposit costs in the auction house, which can add up. I post around 400 auctions a day, so not having to pay deposits saves a good amount of gold. A failed auction with the mats doesn't have any real penalty like when I dealt with armor primarily. Every time an armor auction fails you lose money so there wasn't a lot of room for price experimentation. With these mats I can try to squeeze every copper of consumer surplus out of the poor saps with the only consequence being that I might have to post the auction again in a couple days.
All of that was a longwinded way to say that there is a good deal of money to be made from disenchanting. So far I have spent nearly 10k on ilvl 130 weapons and armor from the new starting zones in Wrath. I expect around a 50% return on my investment, and I really think that is a low ball estimate. I'll have specific numbers in my next post.
I don't farm or mine or actually produce much of anything. I take advantage of what the Greedy Goblin calls "dumb people," and what economists call information asymmetry. All that means is that one party in a transaction knows more than another. There are two basic things that I do in the game to make gold. It still hurts me a little bit to share these things, even if nearly no one ever actually reads this blog. Since if even one other business man on my server starts taking the advice I give, it could have a big effect on profits. But alas, here it goes.
While not exactly revolutionary, disenchanting is my primary source for gold in the game. I am a big fan of the Greedy Goblin. He has some wonderful tips and some real insight into the WoW economy and economics in general, but I thought he missed the boat a little bit on his post about tradeskills. This is what he has to say about enchanting:
"Enchanting: The only moneymaking is disenchanting your soulbound stuff. Quest rewards and obsolate items. More than nothing but only a little. Otherwise you are just one in the million, every other enchanter knows what you know."
That would be right if you didn't take into account the auction house. I made my first 20k in WoW from simple arbitrage, which is another way of saying buy low and sell high in the auction house. I used auctioneer to find the best deals on items and then repost them at the market price. I spent most of that while leveling on all of those epics that would end up being worthless in 5 or 6 levels anyway. After a while a got a bunch of spirit gear that wouldn't sell, because at the time I was a noob and I didn't know that spirit was worthless to most classes in the game. So I disenchanted them and sold them as mats, which ended up being worth more than the armor itself.
Fast forward a year or so to the launch of Wrath of the Lich King. There is new dust and new shards now, and new items to disenchant. The value of these ilvl 130 green armor and weapons after disenchanting them is from 13g to 19g a piece on my server and I can sometimes pick them up for 3 to 5g a piece. Right now the shards aren't selling all that well, but I think that has to do with people still leveling enchanting. I think that maybe they just aren't high enough yet to use the shards all that much, although those that do sell are going for 50g for the dream shards and 18 to 20g for the small dream shards. The infinite dust though is going from 140 to 160g a stack.
Another one of the advantages of going into the enchanting mats business is that there aren't any deposit costs in the auction house, which can add up. I post around 400 auctions a day, so not having to pay deposits saves a good amount of gold. A failed auction with the mats doesn't have any real penalty like when I dealt with armor primarily. Every time an armor auction fails you lose money so there wasn't a lot of room for price experimentation. With these mats I can try to squeeze every copper of consumer surplus out of the poor saps with the only consequence being that I might have to post the auction again in a couple days.
All of that was a longwinded way to say that there is a good deal of money to be made from disenchanting. So far I have spent nearly 10k on ilvl 130 weapons and armor from the new starting zones in Wrath. I expect around a 50% return on my investment, and I really think that is a low ball estimate. I'll have specific numbers in my next post.
5 comments:
Welcome to the World of Richcraft! :-)
It's always good to see another AH-trader.
BTW some clarification about my referred post. I never said you can't make profit from enchanting. Hell, I made most of my money from enchanting. I just said there is no natural (game-programmed) limit on the supply of enchanting.
Gathering professions are limited by the limited amount of time you can spend seeking nodes/dead animals/killing them. Competition also decreases these resources by taking these nodes.
CD-ed tradeskills like Titansteel smelting is limited by the game-implemented time-requirement. You can create 1 titansteel/day/char.
However enchanting is not limited by any of these, anyone could undercut you. They don't do though because they are too dumb to try it.
Yet I strongly believe that the money coming from "enchanting" is 95% coming from arbitrage. You could
- buy the same armor (low cost buying)
- find an enchanter, who disenchant you for free or for negligable price
- sell the materials (high cost sell)
While the disenchanting action is necessary for the process, it can be performed by anyone in no time, so it does add little to the cost.
You being enchanter just adds some comfort to you by letting you disenchant anytime, don't have to stockpile the stuff, spam trade and open trade windows. While time is money, if we calculate the value of time by daily quest reward/completion_time, you'll find that being enchanter gives you silvers while selling the mats give you golds.
Cuthbert, I'm looking forward to hearing what you have to say on the issue of WoW econ. Since the 3.0 patch came out I've gained interest in reaching the gold cap in the game and to do so as a simulation of economics. I don't actually need the gold for anything because I am in high end guild that supplies items; I simply like profiting for the sake of profits.
Welome and nice blog, any that helps me gain insite into getting gold is good XD.
Looking forward to reading your blog :).
Thanks for responding guys. I hope to give you guys some tips, and at least a little to think about.
@Gevlon- I do agree with you about enchanting profit being from arbitrage. I have never once in my life sold an enchant. Too much work for me. Seems a little like holding a cardboard sign in Stormwind, "Will work for food."
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