How A 9 Gold Vendor Value Changes The Jewelcrafting Market
Vendoring cut gems has been a staple of Jewelcrafters for a while; there was nothing else to do for most of WotLK than vendor the stacks of Dark Jades and Shadow Crystals, because the supply always outpaced demand. Cutting these gems doubled their vendor value (50s/piece, up from 25s/piece); this led to a lot of Jewelcrafters selecting a cut, clicking “create all,” and then walking away to get a sandwich. With the end of WotLK, rare quality gems are facing a similar end. Forest Emeralds and Sky Sapphires vendor for 4.5g cut, so there’s no reason to ever list them on the AH for less than that.
It seems that in Cataclysm, people are forgetting about this simple principle. I regularly see uncut common quality raw gems on the AH for much less than their cut vendor value of 9g. At that price, these gems are basically free money. They’re useful for the daily Jewelcrafting cooldown (Fire Prism), and if you don’t need them, then you can use them to make disenchanting greens or just vendor them. It’s the Obsidium Shuffle- just like the Saronite Shuffle, except it applies to Cataclysm. (Maybe, in a few months, this will be changed to the Elementium Shuffle; I’m not married to the name.)
However, this doesn’t end with uncut gems. People are also selling common quality cut gems for less than 9g each. Not Hessonites or Nightstones (because they have very strong value to levelers), but cut Zephyrites and Jaspers sell for as low as 7g each on my server. (Pro Tip: When something is posted on the AH for less than vendor, buy it!)
Why is this happening? My hunch is that it is due to the amazing increase in vendor value- a cut WotLK common gem vendors for 50s; a cut Cataclysm common gem vendors for 9g. That is an 1800% increase! Because people are leveling Jewelcrafting, they’re cutting stacks of gems to get skill ups, and then throwing the cut gems on the AH without thinking about it. People are not stopping to consider that their gems might actually be worth 9g if they vendored them.
This high vendor value of the gems impacts the Jewelcrafting market in a number of ways, because it effectively reduces the risk of prospecting by guaranteeing a higher price floor. What do I mean, Dear Reader? Well, think of it this way- Hessonite and Nightstone currently sell for as much as 75g each, because they are in demand for leveling and for Jewelcrafting dailies. Currently, Obsidium Ore sells for around 140g/stack (but you can get it for less if you buy in bulk). Prosepecting Obsidium yields, on average, 1.5 gems per prospect, meaning that a stack of ore will net you 6 gems. If all these gems were Hessonites or Nightstones, you’d be sitting on a (theoretical) 300-ish gold profit per-stack. (450g gross/140g investment= about 321% ROI.)
However, it is highly unlikely that your prospects will yield 6 Hessonites/Nightstones. In fact, you’ll probably get whole stacks that yield neither gem after prospecting. Why does the 9g vendor value matter? It guarantees a minimum value (aka: a price floor); furthermore, that value is much higher with Obsidium than it was with Saronite Ore. 6 non-Hessonite/Nightstone gems can be cut and vendored for 54g. This guarantees a 38% ROI (54/140). That sounds low, but it’s actually amazingly high. Why? Well, this is a statistically-unlikely, worst-case scenario. We’re completely ignoring the chance to proc a rare-quality gem, and we’re ignoring the AH value of the non-Hessonite/Nightstone gems that will crop up as demand for these gems rises and falls (ie: due to gemming, creating eternals, leveling JC, etc.) Also, as soon as a Hessonite/Nightsone drops, the value of the stack of ore increases dramatically- 1/6 valueable gems= 120g (85% ROI); 2/6 valuable gems= 186g (133% ROI); 3/6… etc. You can do the math.
Still not convinced? Consider the same situation with Saronite Ore. Obsidium ore costs 140g/stack and guarantees a return of 54g, leaving you with the aforementioned 38% ROI. Saronite Ore purchased at the stupidly low cost of 12g/stack also creates, on average, 6 gems/stack. Worse case, these vendored gems return 3g, leaving a 25% ROI. And, this is with current market prices! We’re not talking about the start of WotLK, when Saronite sold for hundreds of gold a stack. We’re talking about Saronite at a price that is, effectively, below vendor. Even with these drastic numbers, Obsidium still, today, carries 50% less risk than Saronite Ore!
Finally, there is one last thing to learn- Obsidium Ore should never drop below 54g/stack. That is the baseline vendor value of the average number of low-quality gems you’ll get from prospecting. This means that mining is going to remain a strong money-making profession for the entirety of the expansion. It won’t be the behemoth that some crafting professions will be, but the lowest value of ore went from 12g-15g/stack to 54g/stack… a huge buff to the gold miners will be making.
If you, Dear Reader, want to get into more math, Warcraft Econ did a wonderful write up a few days ago, and also created a spreadsheet. Head over there, read their article, and if you feel like doing some maths, leave a comment on this post detailing your results. We look forward to all feedback, and read every comment left. Thanks in advance, Dear Reader.