Eve Economics 101: Understanding Supply, Demand and Equilibrium

Most people have a general idea about the basic economic principles of supply and demand. If something has a higher demand, you can usually get away with charging a higher price. If a market at a hub gets ‘flooded’ with supply, then usually the prices drop as competitors try to get their item on the top of the market sell orders.


However, supply and demand is a lot more complicated, and understanding some of the more complexities of it can help you become a more successful trader. (It can also help you out in the real world!)

First, lets dive into some real world terminology, and analyze how we can apply it all to Eve.

I promise it’s a lot more interesting then it sounds!

Trading: Maximizing Your Profits through Complimentary Units

What items to trade is one of the most important decisions
you will make in your trading career. Different items can have different profit
margins, different liquidity within the market, and could make or break your
trading experience.

Many people thinking linearly. What items have the greatest
profit margin. I will sell these items, and not bother with other items that
have less of a profit margin.

What many do not realize is that the market of one item
greatly affects the market of another item. Selling items that ‘go together’
can greatly increase your overall profit margin, even if a few items sell for
relatively low net profits.

Trading: Using Buyers’ Psychology to Your Advantage

In real life, marketers use psychology to get people to buy something. 7.99 sounds ‘cheaper’ then 8.00. Buy one get one free sounds like an amazing deal, even though the item is already highly marked up.

In Eve, you can also play into buyers’ psychology, although Eve buyers tend to react differently to things then people in real life. 

Tapping into Laziness

In Eve, you will find a lot of laziness. People don’t always want to travel to market hubs to get the best deal. People also don’t want to travel around to collect everything for one ship.

Panic

Paying attention to political changes in the area you trade in can greatly influence what you sell/buy. If there is some major hostilities going on, pvp ships and items can often go fast for unreasonable profits. People don’t care the cost, they just want to protect…whatever it is.

Also, if a corporation or alliance is getting forced out, they will often ‘dump’ on the market. It’s a great opportunities to peruse contracts, the mineral market, along with other things to see who’s trying to get rid of stuff fast. (Sometimes, you will need to hold on to things for a while and allow the region to stabilize before maximizing your profits from this, so you don’t want to invest to great a % of your trading isk into this.)

Trading: Dealing with Competition

Competition can be tricky to deal with as a trader. Especially, if you are not one to sit in a station and 1-Isk someone every 5 minutes.

The first step toward dealing with your competition is to figure out where the competition is, and  what they are doing.

Figuring out where the competition is:

This is usually the easy part. You notice that when you first put up your stack of modules, there were no others available on market. Now, there are 3-4 other stacks by several unknown people.

To really watch competition, you have to be watching your orders in relation to the market. This doesn’t mean checking every five minutes, but glancing through your primary orders a few times a week is important.

An important aspect of identifying your competition, is to realize who they are not! A random person posting one item on the market is NOT usually competition but a lone pilot trying to clean some stuff out of their hangar. Don’t adjust your entire market strategy based on non-competition!

The Scheme: How I Ripped-Off 25 Billion ISK from my Alliance

When pvp pilots are in the middle of an op, and need a fit ship NOW, they will pay almost anything for it. I found this out during my stay in Aggression. Alliance, which no longer exists.

I had started trading at least a year before, and had only been doing some small time stuff with 0.0 contracts. Sure, I’d occasionally bring a few things out and ‘experiment’ but hadn’t really build up much ISK.

You have to understand, when I started trading I had less than 100million ISK to my name. Most of that had been given to me by a previous corp member. I slowly worked on it until it was 200million, and then 500million. I didn’t have much more than that when I joined Aggression.

Due to being on satellite internet at that point, doing much pvp was not an option. I could never load the grid in time, and things lagged so bad that I couldn’t even lock things most of the time. (We’re talking bit 0.0 fleet battles where things are laggy anyway.)

So, I traded. (I also provided emergency cynos in my falcon for the titan.) It started small, where I was bringing a few things out. Logistics, in trade, is the biggest issue. We lived in several places including Curse and Immensea. I didn’t really feel right about having corp members jump stuff out for me to make money off of, so I usually offered to pay someone.

Starting Out: The Most Important Things for a New Trader to Think About

Sometimes, the hardest part about trading…is starting. (I’m pretty sure that would be some sort of Old Chinese proverb if they had heard about Eve back then. ) But, it’s true. Just like with college term papers, chores, projects at work, and exercising, starting takes about 75% of the effort.

So, what types of things should you be looking at straight from the get go?

5 Traders’ Secrets: Making Billions in Eve Online

I remember the day when I dreamed about affording a Drake. Now, I barely remember to buy insurance on sub-battleships, as the little ISK I might save after buying the ship, buying the insurance, and getting it blown up, is nearly inconsequential.

After I became a semi-successful trader, I was constantly approached by people asking me to ‘train’ them in the fine art of trading. Unfortunately, most of the people looking to be ‘trained’ are looking for a solid, one size fits all formula that they can follow every day…with the end result being lots of ISKies piling up in their wallet.

Silver and Gold: How the LOTRO Economy Could be Improved

In every game that I play, I have this tendency to gravitate toward the market or 'trade' side of things. In some games, the economy is relatively simple, or ultra controlled. In others, it can be somewhat more complicated.

After playing Lord of the Rings Online for a few months, (off and on) it was no big surprise to me when I started hanging at the auction house, scanning for trends and researching ways to make some quick gold. I admit, I wanted a deluxe house with all the trimmings, so I had some motivation for making some easy gold.

Unlike the EVE Online economy, the LOTRO economy is much more simplified. You still have the ability to produce goods out of raw materials and then sell in an auction type setting, however, you are not given many options. You are limited in the number of auction houses available in game (usually no more then one per region) and all auction houses tie into the same 'pool' of auctions. (So what you see in the auction house of one region is exactly the same for all other regions.)

Also, there is no concept of location in the economy. You bring your product to the auction house, put it up on a post, and someone could buy it in a completely separate auction house and immediately have it show up in their mail box. Therefore, you have one mass economy, and not one that is separated by in-game locations.

Also, because there are multiple servers in LOTRO instead of all players sharing one identical world, the economy could be different depending on what 'world' you're on. The supply and demand couple be different based on what type of players are on the server, and since you can not transfer your characters between worlds, there's no way to use this to your advantage or sell things cross-worlds.

After playing with the markets and economies in several mmorpgs, I think that several things could be done to improve the one in LOTRO:

Falling into Disrepair

So, my Lord of Ultima hasn't been checked or updated in at least two weeks, and I accidentally let my EVE account run out. Granted, I've been told by fellow EVE players that it's probably not the worst thing...as captain's quarters are "completely worthless and most people have disabled them." 

However, I have heard that due to the ability to make comparable amounts of ISK in empire compared to null sec, that the common empire hubs have been full with an influx of returning null sec goers looking to get in on the fun. As a result, faction warfare has taken off --and as I was a pilot for the Amarr for over a year, this somewhat perks my interest and I might might resub in the near future to see if the rumors are true. (And, of course, to look up some old faction war friends and see what their take is on this entire ordeal.)

Due to being somewhat uncaring of my LOU and EVE accounts, I have been keeping up with LOTRO, though have found increasingly better ways to make gold and have become relatively quite prosperous. This is slowly leading to my boredom of the game. I tend to be a bit of a trader and marketeer in most games I try, so whenever I 'figure' the system out...I get bored very quickly thereafter. Eve, on the other hand, has such a complicated market system with such a changing and fluctuant economy, that I never got bored with it...though after playing for four+ years, it would be nice to see some new content that is relevant and brings back my more enthusiastic attitude of the game. 

2,000 Tech II Mining Drones, Please (ie: How I made 200mil Without Doing a Thing)

I'll never forget the day that I bought over 2,000 Tech II Mining drones off contract from some random dude in 0.0. I realized what a big mistake it was as soon as I put them on the market and couldn't sell one...

Sure, compared to what they were going for on market, I bought them at a huge discount. However, buying that quantity of something I knew little about in a region that was not particular hot with mining was not my biggest moment of triumph.

How I Made My First Billion

After taking a significant amount of time off from trading (I got pretty burn out) I have finally resubbed my trade account.

Trading to me is somewhat addicting...even more so then killing people. When I go on a binge, I spend  hours analysing trade routes, popular items, margins, and other various things.

I started trading a couple years ago while I was living in Fountain as 'allies' to Pandemic Legion. (Yeah, that was a long time ago.) Anyway, I noticed that Tech 2 Expanded Cargoholds were selling for over 2.5mil and that there weren't a lot available in the region. So, what the heck? I went with a covert ops and filled my cargo with them (at around 650k from Jita) and flew them back out, dodging bubbles, and gate camps, through over 20 jumps of null sec.

To my surprise..they sold within a few days! and I was making over 2mil PER MODULE. This was pretty sweet stuff.

So I upgrade...bringing in larger quantities...stacks of 50-100. (I occasionally would sell as many as 100+ in a week, making over 200mil profit on just that one item.)

Of course, by this time, I was completely hooked to trading and started experiementing with other items, buying stuff off contracts...pushing up prices by buying items that were already in the station I was trading in and putting them back up at a higher price.

Some things worked...other things didn't work. I experimented and 'played' around with my isk until my measly <100mil (I was always grinding missions and ratting to get enough isk to pay for my pvp ships) turned over into plus 1 bil numbers.

And that's just the beginning.