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How Should Markets Make Money?


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       The best way to make money off running a market will probably be the percentage based approach. When I first thought about it, I thought price per volume would be a good way to go but now that I've thought it out a bit, I don't think that would work very well. For instance, I initially thought that since almost all goods will take up physical space in the market area, the main limiting factor for a market (at least in the beginning) will be pure volume of storage space. So for bulk items like basic raw materials, it would probably make sense to charge per cubic units of storage space. However this does lead to several changes in market behavior:

          Not every item will have the same ratio of price to volume, so the percentage cost for lower ratio items would be much higher than for higher ratio items. For example: Say you charge $5 (is there a term for the in game currency yet? idk) per cubic unit of space. Item A sells for $20 per cubic unit and item B sells for $100 per cubic unit. That would mean 25% of item A's income would go towards the cost of selling while only 5% of item B's income would go towards the selling cost. Therefore, as it's 5 times less profitable to sell item A as it is to sell item B, merchants will likely start to favor items with higher value to volume ratios. These higher value items may have a lower velocity (the rate at which they pass through the market), so you may end up with a lot of stagnant orders waiting to be sold.

      TL;DR: I guess long story short is go for a percentage based approach. It's just less headache for everyone and shouldn't affect market behavior too drastically in any particular direction.

 

That makes sense.

Another thing to consider will be the difficulty of obtaining the item(s) and how quickly the item tends to sell.

To use your example, lets say item "A" only sells for $20 per cubic unit, but is easy to craft and sells quickly. Meanwhile, item "B" sells for $100 per cubic unit, but is much harder to craft and sells more slowly. The MO charges $5 per cubic unit of space taken regardless of item type.

If seller "A" sells 400 cubic units of his item per day, he makes $6,000 after the market takes their cut.($2,000)

However, seller "B" only sells 40 cubic units of his item per day, and as a result only makes $3,800. ($4,000 - $200 Market Fee.)

So, in this case, seller "A" made more profit in one day than seller "B", even though he paid more in market fees.

Also, the market made more off of the sale of item "A" ($2,000) than item "B" ($200). If anything, this would encourage the market to favor item "A".

It would come down to whether seller "A" deems the percentage of his profit lost to the market acceptable compared to his potential total profit.

 

That being said....this scenario is purely speculative. I am not necessarily defending the use of the price-per-cubic-unit method, just presenting another angle to consider. It might very well play out as you described.

 

Very well-thought-out post!

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I'd say ignore volumetric properties entirely. Charge percentages per sale. You get constant percentage charges across the board and zero headaches. I say go with an extended #5 from OP. You can alter percentages on every material or item individually. Iron ore could be less than copper ore, for example, instead of the same rate for all types of ore.

 

If having the required space is really too much of a concern for market managers, then the obvious thing to do would be to charge the seller for the space used. Some kind of flat rate per cubic meter. It could be a one time charge, or possibly a lease. Depending on what kind of transactions can be made, this could be easily used by players.

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If having the required space is really too much of a concern for market managers, then the obvious thing to do would be to charge the seller for the space used. Some kind of flat rate per cubic meter. It could be a one time charge, or possibly a lease. Depending on what kind of transactions can be made, this could be easily used by players.

 

Not a bad idea, having sellers "buy" space with a one-time fee or lease it for a set period of time would add another element to the market. It would be especially useful in very busy or small markets, since the seller would have space guaranteed​ for their future listings! This could also be used to help fund building more market space!

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I believe markets will follow the mines and production zones.

 

If there is a big research center with hundreds of builders/scripter somewhere on the system you will be sure to have a BluePrint market just next door.

Same thing with mined zones and planets because the less people will travel the less risk they take and so the providers will want to minimize their risks by selling to a closer market and well... buyers will go where they can find the things they want to buy.

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That makes sense.

Another thing to consider will be the difficulty of obtaining the item(s) and how quickly the item tends to sell.

To use your example, lets say item "A" only sells for $20 per cubic unit, but is easy to craft and sells quickly. Meanwhile, item "B" sells for $100 per cubic unit, but is much harder to craft and sells more slowly. The MO charges $5 per cubic unit of space taken regardless of item type.

If seller "A" sells 400 cubic units of his item per day, he makes $6,000 after the market takes their cut.($2,000)

However, seller "B" only sells 40 cubic units of his item per day, and as a result only makes $3,800. ($4,000 - $200 Market Fee.)

So, in this case, seller "A" made more profit in one day than seller "B", even though he paid more in market fees.

Also, the market made more off of the sale of item "A" ($2,000) than item "B" ($200). If anything, this would encourage the market to favor item "A".

It would come down to whether seller "A" deems the percentage of his profit lost to the market acceptable compared to his potential total profit.

 

That being said....this scenario is purely speculative. I am not necessarily defending the use of the price-per-cubic-unit method, just presenting another angle to consider. It might very well play out as you described.

 

Very well-thought-out post!

Very true! There would be a lot more factors in play than just the price to volume ratio, and honestly it would be impossible to predict exactly how things would play out.

 

This is a very good point you made about the velocity of an item affect the profit from selling it and it would definitely affect miners/builders who are bringing their products to market. Very well thought out!

 

In my discussion on the price to volume ratio, I was thinking more of merchants and "market makers" (aka station traders), basically people who have no involvement with the actual process of creating the various products, to whom the only thing that matters is the pure profit margin. It is possible that since people want the goods badly enough that maybe the markets would just adjust and sell the items at a higher price difference between the buy price and the sell price. 

 

Either way, this is (like you said) all speculation at this point.

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In my opinion, to be the fairer, you will have to first pinpoint what it does costs you to run the market and expand on that.

Everything else would just be selling a false service and you would be had by fairer concurrents after a while (unless you thoroughly destroy them but that is another level of unfairness :P).

 

Transparency should be the best way to get the the trust of your users and stay in the long run.

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In my opinion, to be the fairer, you will have to first pinpoint what it does costs you to run the market and expand on that.

Everything else would just be selling a false service and you would be had by fairer concurrents after a while...

 

Good point, good ol' private enterprise at work!

 

 

Transparency should be the best way to get the the trust of your users and stay in the long run.

 

Absolutely true! This will be the main focus of A.S.T.R.O.(see signature) as it should be for all markets!

 

A good market is one that knows it can rely on return customers, and therefore doesn't have to wring every possible cent out of every transaction.

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As previously mentioned, once you are able to calculate the costs of running a market - Costs of location, storage facilities, power, user interface?, then you can calculate what you need to get out of it to be profitable, then if we are limited by space(we should be) then you would want to charge based off of storing the item to be sold, and potentially add a percentage of sale price.  That being said, it could be beneficial to open a market near a mine without fees, thus allowing the market owner to get more materials for less, allowing for a crafting profit.  The economy is going to be one of the most interesting parts to me and will be an awesome facet of PvP.

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I must agree with phroshy on this matter. Outside of the safe zone, territories can have what is called a protection bubble, which is planned to be very difficult to destroy. The owner of this territory will charge taxes which will be likely used to power the bubble. Although yes you can set up a market on any non-claimed territory, it is likely that players will pay the premium to have their resources protected. 

 

The game is centered around player choice and player action. This is one of the core foundations of the game to make gameplay emergent, decisions relevant and politics community driven. Thier is nothing to stop a player charging 1000% rates, but that market owner will have a limited space to store items to sell. If they are not selling items because of astronomical sales taxes then they are going to lose out to the competition quickly as no 1 market will be able to sell every players item in the game. Also, you will not know what other players are charging say on the other side of the planet unless you travel regularly. Planet travel is not really very unrealistic or expensive meaning that monopolies will be formed by supply and demand, and healthy competition is advised. Thier is also nothing to stop the miners selling their own goods without player market vendors, so again if they are not getting their items sold they will just start selling it themselves or using someone else ect.

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