Another month means another Blogging Carnival hosted by JMTC!
This months question: "What Mistakes Have You Learned From While Playing the AH?"
Control is my biggest mistake.
What do I mean? Cornering a market. Raising prices and driving out other competitors. At one point in time, this was a common practice. A single auctioneer could corner a market, buy out everyone elses materials, supply a very low amount of those materials back into the economy at over inflated prices. A lot of people got very rich off of that method. However, this isn't Vanilla anymore.
There are so many players in the game now that completely controlling a market is next impossible. Especially if you're looking to make any kind of real profit. Buying up all of a certain good and raising the price usually reduces the amount of demand for the item, and increases the amount of people who are willing to go farm them/find other methods to obtain them. (This doesn't apply to unique one time situations, like Glyphmas.)
The biggest problem with artificially raising a price, without a rise in demand is it's nearly impossible to choke off the supply.
Here is a recent example for me. Last week Greater Cosmic Essence was at a low 9g each on my server. They historically sell for much closer to 20g. I bought out everything and re-listed a portion. While some of my stuff sold, the majority was still on the AH, over priced and the price was back down to 9g again. To keep my price high, I would then have to buy out all of those under my new 20g price.
I lose. Because if I really want to make this price the new standard I have to be willing to buy out anyone who posts at 18 or 19g. In the end, I lost money. Not only did I lose gold, but I now have a guild bank tab full of these things. Sure, I can save them until Cata, but that wasn't my intention. I wanted success now, not later.
Why can't I maintain control?
It's all about supply. If I want to keep my price high and keep people from posting up the same stuff just under my price and forcing me to buy it then I have to choke off the supply.
With an item like Greater Cosmic Essence this can be a very large investment.
Am I going to buy all of the Saronite Ore?
Am I going to buy all of the craftable gems?
Am I going to buy all of the Frostweave cloth?
Am I going to buy all of the Cobalt Bars and Ore?
The list goes on.
The point here is that without being willing to buy out all of these markets too, I'm not going to be able to maintain complete profitable control of the Greater Cosmic Essence market.
Hindsight is always 20/20. Had I sat down and thought about all of these things before buying into a new market and trying to control it, I probably would have never made that decision. At the end of the day, that's the best thing you can do as an auctioneer. Take calculated risk. If you've looked at every possible outcome and still see it as a profitable investment, then jump in.
However, if you haven't researched and calculated the risk don't just jump in and hope you can tread water. No one is going to throw you a life preserver. You'll be bait for the other Auction House sharks.