tag:blogger.com,1999:blog-9101917425752696234.post8964497550564567800..comments2023-10-15T06:10:02.124-07:00Comments on @GamerChick42: Eve Economics 101: Understanding Supply, Demand and EquilibriumUnknownnoreply@blogger.comBlogger1125tag:blogger.com,1999:blog-9101917425752696234.post-48277763935613575612011-09-13T02:52:55.425-07:002011-09-13T02:52:55.425-07:00Nice article. One point I would like to expand on:...Nice article. One point I would like to expand on: "Overall profit is more important, and will make you more isk in the long run then the individual profit margin of one unit."<br /><br />This is true as far as it goes, but when you look at profit, be sure you consider net profit, not gross. You have to allow for trading fees, hauling costs, potential losses due to market fluctuations and the biggie that a lot of people omit: the opportunity cost of your time. If you spend 3 hours buying, selling, hauling etc to earn X profit, how much could you have earned in those 3 hours trading something else, or doing something else like mining or missioning?<br /><br />When I manufacture or trade for each item I calculate 4 factors:<br />1) net margin (both isk and %), this is important because along with volume it goes to calculate my profit, but I also look at the raw margin in consideration of expected fluctuations in the price of that item. If my margins are too small and the price drops I will be making a loss irregardless of volume.<br />2) return on investment (as %), important as I will have isk tied up in stock. Could that investment be earning me more elsewhere?<br />3) isk/hour, realtime. How much profit I will make in a given amount of real time. Obviously this is the main thing I am trying to maximise and considers both margin and volume. It is effectively the "overall profit" already mentioned.<br />4) isk/hour, my time. This is a similar calculation, but with respect to the opportunity cost of my time as a player. I can't play 23.5/7, so I prefer to maximise the earnings for the time invested.<br /><br />I do not have a hard formula to caluclate weightings for these factors, nor do I calculate them overly frequently (as that is another opportunity cost), but I do consider all 4 when I am chosing products and prices.Johnnoreply@blogger.com