Phase 3: Profit !

The cake does not lie about profit!

Sometimes I wish that Blizzard would let us make up our own titles. Me? I’d be Bigjimm, “Master of the Obvious.” Why? Because to make gold, that’s really all I do- I master the obvious. I made my first 100k by prospecting saronite ore into common (green) quality gems (bloodstones, chalcedonies, etc). Why did this work? Because of the saronite shuffle. What was my strategy? It was obvious. I couldn’t believe I was the only person selling green gems for 2-5g each. Were those gems worth 3-5g in infinite dust each? Yes, sometimes. But not all the time. And I would have had to have gotten ugly in the enchanting mats market, and that’s a hassle I didn’t need. I had a 100% of a middle market- I’ll take that over 10-50% of a high-competition market any time. But I digress…

ANYWAYS, this post is about something that is obvious. It’s about buying something now that will be worth something more later. This is an economic phenomenon known as arbitrage, with a slight twist. Let’s talk economic theory for a sec.

Classic arbitrage is, basically, buying something in one market (Market A) and selling it in another (Market B) for a profit. Back in the day this was something as simple as buying Pork Skins (or Garlic, or Gold, or any other commodity/widget you can think of) in the New York market for $1 and selling that same bundle of Pork Skins for $1.50 in Chicago. A good example of this in WoW is when people buy a faction-specific pet for a few silver from a vendor on one side, and try to sell it for a ton of gold to the other side via a neutral auction house.*

(*For all the econ majors out there, I recognize that this is a good example, but not a perfect one. There is also an issue of access- namely, they’re often faction specific pets, so you must rely on someone from that faction for supply. So please, give me the benefit of the doubt on my hack-WoW-econ, and keep reading.)

But again, I digress. What is the item I’m talking about? It’s a stupidly, amazingly, incredibly common item. It’s been written about in almost every WoW gold blog I’ve read. It’s an obvious strategy, but it’s on that will give you 500-1000% returns. What, dear reader, do I suggest you buy?

Small Eggs.

That’s it. Buy small eggs. Buy them now. Why? Because Christmas Winter’s Veil is coming. What do you need eggs for? For a delicious chocolate cake. Why is that valuable? Because when winter comes around, people need to complete Bad Example a number of Winter’s Veil achievements. (Thanks for the clarification, Justarb!)

To complete this strategy you have to be a long-term investor. And, also, I should say upfront that Cataclysm might completely end this strat, because they might remove those achievements. However, I consider these to be relatively low risks, because eggs are cheap now. Everyone is out leveling new toons, not thinking about winter- it’s the dog days of summer! Who’s thinking about Winter’s Veil?! So, just look for Small Eggs on the AH. Every day, every time you scan, look for eggs. If they’re cheap for your market (say… 60-70% of market value), then buy them. And wait. When December comes, sell them for 500%, or turn them into delicious cakes and sell them for more.

What does this have to do with Arbitrage? Well, if you’re doing this then you’re practicing arbitrage, but with that aforementioned twist- Time. Market A, to continue the example, is your AH market today; market B is the market in six months, during Winter’s Veil. So instead of changing locations at the same time, you’re changing time in the same location. It’s not classic arbitrage, but it will do- buy something cheap now, sell it for more later.**

(**Again, for all those econ majors, I understand that this concept could also be called “speculation” or even generally “investment.” However, my goal is to inform as well to enrich, and so I thought I’d try to make people think about arbitrage, time, and cost all at once. Please, again, permit my my blogger-liberties.)

Also… it’s a middle market! It’s the market I love! It doesn’t make anything, but it let’s someone else make something, namely the cakes! You’re not making them (well, maybe you are) but you’re selling to those who will. This is a gravy-train. Selling to buyers is a hassle; selling to sellers is what I prefer. So buy eggs, sit on them, and wait for the cash to roll in.

Finally, if you’re starting out and the eggs are too serious an outlay (ie: you can’t afford to spend all of your 10g on eggs that won’t gain value until 6 months from now) then go out and FARM THEM. They drop from mobs of level 1-18. No matter what the level of your toon, you can go farm for 10 mins and get a few eggs. Try it now, sell for more later!

GL! /bow

The wonderful Larîsa over at the Pink Pigtail Inn recently took the time to talk about a post here.

In a blog entry from 5/12/10, she asked a specific question: how much money should she, as a non-goblin/gold-making type, plan to bring into Cataclysm? I am happy to try to answer.

(Just as an aside, let me add that a gnome mage with Pink Pigtails… hubba hubba! Larîsa, call me! I’ll tank whatever you need. I’m at room #1 in the Inn in Ironfor- oh wait, I’m a freaking cow now! /sigh. Nevermind.)

ANYWAY, how much gold does one need for Cataclysm? I think the comments to her post are worth reading. They all express well-reasoned points of view. So, go read them at her site.

With that said, there is an easy answer to your question, Larîsa- it depends. I know that’s not satisfying, but let’s talk about some questions:

(A) Toons: How many are you talking about? Just Larîsa? Or are we talking about alts as well? How many alts? More toons = more gold required.

(B) Professions: Which ones? Are you going to stay alchemy/tailoring? Or are you going to be changing to something new ahead of Cataclysm? Obviously, a gathering profession will level itself. A crafting profession? Not so much. Finally, how quickly do you need to level your professions? It will be absurdly expensive to level a crafting profession right after the advent of Cataclysm. The longer you wait, the cheaper it will be.

(C) Level 85: How soon do you need to be there? Are you looking for server firsts in raids? If Cataclysm drops on Wednesday, does your guild have a raid scheduled for the following Tuesday, and you have to be at level 85 no matter what it takes? Or are you going to chill out, level slowly, enjoy stuff along the way, etc.? The faster you need to level, the more it will cost.

These are the things I’d keep in mind as I went about calculating costs. Let’s try to keep get some answers, or at least some pointers.

(1) First of all, I’d focus on one toon. This is probably just my personal playstyle. I have Jimm who is the first to do everything, then I have an 80 druid and a few other miscellaneous toons (a 74-ish DK, and some “vacation” toons in the 20s and 30s). Bigjimm will be at 85 first. And he will have professions maxxed out first (including secondary professions). And he’ll be in any raid I can get him in first. And I’ll experience the lore with him first. After all that, then I’ll level my alts. Leveling one toon will be cheaper than leveling many. So, we’ll call the cost of this basic facet leveling to be 0g total, as you’re only leveling one toon.

There are going to be a few sunk costs that we have to anticipate, and we don’t know how much they will be. The most obvious ones are Cataclysm flying (1,000g- faction discount in WotLK), and the cost of leveling skills/talents.

The cost of Cataclysm flying is hard to predict. I anticipate that it will be relatively low, mostly because I imagine Blizz will want almost everyone to have it. However, I’m really just guessing. I’d guess that it would be achievable by doing a few days worth of dailies, but how much will those dailies pay? It’s unclear. The dailies in WotLK pay about 10g each, so let’s be very, very modest and assume the increase will be about double (much less than the increase in stat-inflation, but it’s a round number). So, if WotLK flying cost [1,000g-faction discounts], I’m going to hazard a guess that Cataclysm flying will cost 2,500g. (Maybe with faction discounts, maybe not- I dunno about that.) Why 2,500g? It’s a nice number, half of epic flying, and it’s a little more than 2x WotLK flying. So, we’re at 2,500 thus far.

But, there’s also the chance that there will be a further cost to train to 310%. Blizzard has said that this will happen. So, how much will this cost? I, personally, find it nigh-impossible to guess. It might be cheap, so as to make it available to everyone. But I think it will at least be more expensive than Epic flying, and will probably require Epic flying training (ie: 280% speed). So, let’s just keep with the “double it” theme and say that it will cost 10,000g. This seems steep to me (I’d actually guess 7,500g, but I’m being cautious), but this number will work. Total: 12,500g.

Finally, we have leveling costs for talents and skills. It seems to be Blizz’s approach, currently, to make leveling pay for the costs of leveling. So if you’re questing and such, you should be able to pay for leveling training in Cataclysm. For the sake of simplicity, I’m going to guess this is a wash (0g). Total: 12,500g.

(2) Professions. Just a few pointers here: first of all, gathering will be IMMENSELY profitable for a short period right after release. Everyone remember Cobalt Bars at 100g-200g/stack, right? Well, Cataclysm will be the same song, second verse. You’ll be lousy with gold if you take two gathering professions and sell everything right after the release.

However, I don’t advocate doing this. If you have a gathering profession currently, then stick with it. If you don’t though, just deal with your crafting professions for the benefit of long-term gold making. This will be expensive, but prices of raw materials will drop over time, you’ll make money questing… and really, you should keep what makes your toon unique. Maybe I’m too focused on this “uniqueness,” but for Bigjimm, being an Engineer/Jewelcrafter is very much part of his personality.

So, let’s say you’re patient in Cataclysm, not in a rush but not slow either. Let’s also assume that you have one gathering profession (you do- I count tailoring as a gathering and crafting profession). Currently you can level a crafting profession to 450 with about 2,000 gold. I’d allot about the same to get from 450 to whatever the cap is in Cataclysm… about 2,000 gold. Total: 14,500g.

(3) Level 85: If you need to buy every piece of awesome BOE gear off the AH that you can find to get to 85 faster, it will cost you. But let’s say that you’re not that kind of player, just because that’s the vibe I get from your blog. This will be a wash then- you’ll get some BOE drops, sell some, maybe buy some… it’s all RNG. And the most likely number between 1 (100% probability of something) and -1 (0% probability)? It’s 0, and that’s how much gold we’ll account for this category.* Total: 14,500.

(*Yes, I know this is a total bastardization of Probability and/or Cartesian coordinates and/or Physics and/or other Maths… but it looked good, right? Yes, at University I got an A in Logic, a C in Physics, and yes, it shows here. Give me a gimme from time to time, please.)

Sum total: About 15,000g.

Here’s the payoff: We’re at about 15,000g, and that number seems right to me. If I wanted to totally secure, I’d hold onto more: 25,000g at least. And I think you’ll be able to get by with less. Perhaps much, much less even. Remember, Blizz has to enable all those players who are terrible at making gold but still want to level to 85. So stuff like basic flying and talent leveling costs might be very cheap. But my final advice? 15k gold seems like a good amount to target.

Thanks Larîsa for pointing out P3P to all your readers. You wrote a gracious post. As ever, dear readers, let me know if you think this post is accurate by putting it in comments. Did I forget to account for something? Are my figures way off? Let me know.

GL! /bow

PS: @Larîsa: Are you crazy?! Alchemy/Tailoring is a potential CASH COW! Epic gem transmutes, bags, spellthreads, flasks, pots, niche-leveling gear… ZOMG. You could make 1k gold per day by spending half an hour focusing on the AH and crafting stuff for people to buy. Making gold isn’t hard anymore- any gnome *cough* cow can make money with any profession. If you want more specifics, I’m happy to detail. GL! /wink

A while ago I put up a post about soloing Stratholme. However, I made a mistake and said that the gear in Strath disenchanted into Small Radiant Shards. I was wrong (Strath= Large Glowing Shards)… but small radiant shards are worth farming too! And where do they drop? That’s right, you guessed it…

Scarlet Monastery!

Okay, so they drop other places too- notably Razorfen Downs. What is the allure of Small Radiant Shards? Like the previous Starter Cash article, the allure is the vanilla enchant that require these enchant mats, specifically Enchant Weapon: Fiery. These enchants are in constant demand, and generally go for at least 75g-ish each. And if you thought Strath was easy to farm at 80, you’ll love Scarlet Monastery. My advice is to aim for the Cathedral wing, but you might have to run the other wings first to get the Scarlet Key in order to unlock the door to the Cathedral. No matter which wing you are in, the mobs are level 28-36 elites, meaning that you can literally pull a whole wing at a time and then AOE them down, especially if you’re in plate. In fact, if you keep something like Retribution Aura or Thorns up you will be unable to keep the mobs from killing themselves. And, just as a bonus, you could get a tabard in the Armory wing!

The drawbacks? There are very few, but one is remoteness. This effects Alliance more than Horde. Horde can head to Undercity and run up; Alliance have to fly to the Western Plague Lands and then take a longer run through territory full of Horde. I’m sure that anyone at level 80 is familiar with this run because of various world events- Hallow’s End, etc. However, knowing about the run doesn’t make it any less annoying to do. The other drawback, particularly when compared to running Stratholme, is the lack of anything else that you get from the instance. In Strath you get Large Glowing Shards, Argent Dawn reputation and potentially the Baron’s horse. In Scarlet Monastery you get Small Radiant Shards, that tabard… and that’s about it. (And I’m much more interested in a shot at the Baron’s horse than I am another dumb tabard, but maybe that’s just me.)

So, if you want to make some easy money, go solo Scarlet Monastery! Remember, if you’re not an enchanter, group up with one to receive the ability to disenchant gear that drops as you’re in the instance. The toon doesn’t even have to be in the instance, just in the group. So group up, farm shards, and make some fast money!

Finally, a last note: Markco wrote a post on this topic a short while ago. I normally don’t like to write about what he’s written about, but I wanted to put this post on the site because of the confusion stemming from the previous Starter Cash post. Because of the great feedback on that post I was able to make that post accurate, and I also got enough information to write this one. P3P has the best readers around. Thanks everyone!

(And let this demonstrate that Zekta and I do read our comments. I, for one, really love feedback, and I read every comment that people make. I wrote this post entirely because of the comments in that Stratholme article. Sometimes it only takes one comment to validate the effort required for a post, so if you have something to say about something we put up here, please take the time to let us know!)

GL! /bow