Market Prices

[Agnar]

Some things in this universe i dont think i will *ever* understand. Like, for example, the market prices that imperators sell components for.


Correct me if i am wrong, but the production cost of making an item, lets say, a Crystal Transformer (E2), can be calculated as follows;



If a factory upkeep costs 100 credits * level * level, and production is level * level units

Therefore, each unit of production costs 100 credits. (assuming you keep the factories fully busy all the time - wastage costs extra)



Construction of an item costs one unit per level.

Therefore, cost of production = 100 credits per level of component, plus the cost of the raw materials (mining or purchase).



So, our E2 (level 2) requires two units at 100 creds each, plus materials. This (obviously) equates to 200 creds, plus the cost of the energium, optium and titanium.

I look at the market price and it is at 130. An E1 sells for just 45!


Am i mis-understanding something or is the universe just a weird and wonderful place?

[Agnar]

"Kosmor Trade
Purchase and sales orders, commercial agreements and market specific talk"

P.S. I post here rather than Talk or Q&A because of 'market specific talk'

[alphabravo]

i know

maybe some people just want to sell something... even if they get little money for it?

of course for pros, the costs drop, but even still it is not as low as that
_________________
Major alphabravo in the house Thalgados-Sissyhood

[Agnar]

My politics dept. suggest that it may be that imperators dont mind selling things at a loss!

They tell me that some governments actually *subsisdise* industry, and run at a loss, just so that their people have jobs!

Socialist i think they called it. I never did understand those politics guys...

[MIHAc]

could be multiple reasons for such a low price... arangemant between houses, extra ship parts,...

[Alteron]

Dear fellow imperators;

If we calculate all raw materials to 10 c/unit, and factory capacity at 100 c/level, my advisor on industrial economics (ie: spreadsheet) informs me that one e2 have a production cost of 270 c. (And one T6 at 9.240 c)

However, he insists on having the factories running to avoid wasting factory capacity. "Why ever would we spend houndreds of thousands on factory upkeep if we don't use them? What fool would want to throw money out of the window?"

My advisor on mercantile economics, however, informs me that there is a hefty overproduction when it comes to supplies, which leads to dumping. "Why do we even own factories in this situation? After all - we can buy the supplies alot cheaper at the market!"

Only when my advisor on mercantile affairs enters the discussion ("You should also account for the volatility of the market. You may ask, but you are not guaranteed to be given!"), the other two agrees to nuance their stances. "Economics is a complex matter, and there is more to it than what first meets the eye", the advisor on mercantile economics concludes. The other two nodds their heads, and in just a short while sums up four of the main issues;

1 - Most imperators develop planets with a lot higher productivity than the basic 10. With a productivity of 15, the raw materials would cost 6,67 c/unit, and an e2 would cost 247 c (not 270 c as in the previous example).

2 - Also, from an economists point of view, there is a difference between fixed and variable costs. In the main example, 200 c is for the factories and 70 for the raw materials. You should at least cover the expences for the raw materials (sell for 70 c or more). The upkeep of the factories runs anyway, and if you can cover at least a fraction of this expence, then it is better than not covering anything at all. From this point of view, selling an e2 at 71 c/unit makes perfect sence - in the short run. If the price will be permanently this low, then you should not produce any more e2's.

3 - Imperators with a Pro-account can create sertain buildings increasing the capacity of their mines and factories with 30% without altering the upkeep. This way, the raw materials from a mine with a productivity of 10 will only cost 7,7 ( 100/(10*1,3)=7,7 instead of 100/10=10), and the factory will cost 77 c/level instead of 100. Then the e2 will cost 208 c to produce ( 154 c for the factory upkeep pluss 54 c for the raw materials). If you have an average productivity above 10, then you can produce even cheaper.

4 - As the market is notoriously unstable, you have to sell cheap to be guaranteed a sale. In other words: it is expensive to get hold of credits fast.

The free market relies on the assumption of perfect information (you knowing my costs and vice versa). On our market there is rather a "perfect lack" of information - noone knows, nor do they seem to be able to make qualified guesses.

[Alteron]

And one last thing:
MIHAc might have a point in pointing at "arangemant between houses".

Because the market is so unstable, I myself prefer to do in-house trading. I can agree on a trade, and use the star trade to execute the trade. I am guaranteed delivery, at a price I am confortable with and I know who gets the goods. This keeps trade off the official market, however, and might help keep the market destabiliced (in other words: we might be in a vicious sircle here).

I would suggest to allow the possibility to make standing orders on the market. For example, one such order might be to buy 1000 units of e2 at 200 c/unit every turn (if I produce it for 208 as in point 3 above), or to sell 250 e2 at 210 c/unit...

This would stabilise both the markets supply and its prices...

[Alteron]

I am getting carried away here...
(the interest is because I am an RL economist: macro is fun!)

But; If we assume that most players are non-Pro, then factories have an upkeep of 100 credits pr level. We will also assume that noone will build mines if the productivity is less than 10, resulting in raw materials costing 10 credits pr unit (or less). The prices we then calculates are the MAX prices that you should find at the market, allowing even the most uncareful non-pro imperator to make a nice profit:

Machinery:
m1 - 170 c
m2 - 330 c
m3 - 500 c
m4 - 760 c
m5 - 1 100 c
m6 - 1 570 c
m7 - 2 180 c
m8 - 3 110 c

Optium processing:
o1 - 130 c
o2 - 260 c
o3 - 420 c
o4 - 630 c
o5 - 960 c
o6 - 1 440 c
o7 - 2 250 c
o8 - 3 620 c

Titanium processing:
t1 - 130 c
t2 - 270 c
t3 - 420 c
t4 - 630 c
t5 - 970 c
t6 - 1 400 c
t7 - 2 180 c
t8 - 3 710 c

Energy cells:
e1 - 120 c
e2 - 270 c
e3 - 440 c
e4 - 660 c
e5 - 1 060 c
e6 - 1 480 c
e7 - 2 180 c
e8 - 3 500 c

Plasma processing:
p1 - 140 c
p2 - 280 c
p3 - 440 c
p4 - 640 c
p5 - 1 010 c
p6 - 1 420 c
p7 - 2 160 c
p8 - 3 620 c

If you use these prices to calculate the cost of components, you would get:

Hulls:
H1 - 3 450
H2 - 7 750
H3 - 13 000
H4 - 22 800
H5 - 34 300
H6 - 62 500
H7 - 116 350
H8 - 206 850
H9 - 371 301
H10 - 689 000
H11 - 1 556 150

Drives:
D1 - 1 460
D2 - 2 640
D3 - 4 180
D4 - 5 490
D5 - 9 380
D6 - 12 620
D7 - 13 940
D8 - 19 220
D9 - 29 000
D10 - 40 880
D11 - 52 360
D12 - 71 240

Lasers:
L1 - 1 160
L2 - 1 860
L3 - 3 240
L4 - 4 955
L5 - 6 570
L6 - 9 040
L7 - 12 770
L8 - 17 020
L9 - 23 540
L10 - 30 500
L11 - 40 780
L12 - 55 700

Torpedoes:
T1 - 1 495
T2 - 2 270
T3 - 3 630
T4 - 4 830
T5 - 6 820
T6 - 9 240
T7 - 13 070
T8 - 15 850
T9 - 22 490
T10 - 28 300
T11 - 35 580
T12 - 45 650

Shields:
S1 - 3 650
S2 - 6 890
S3 - 11 390
S4 - 16 950
S5 - 19 530
S6 - 31 120
S7 - 40 460
S8 - 54 360
S9 - 74 080
S10 - 98 120
S11 - 133 930
S12 - 184 620

No prices should be above this, as even all non-pro's can produce much cheaper than this.

[Gozer]

[Alteron]

Yes, I do that too. There's a chronic shortage of those two raw materials.

But in economic terms, this will increase the average cost, reducing your competitive ability. On the other hand - I don't expect the prices to drop anytime soon...

[Agnar]

i mine those elements at low values also, but with ore refinerery and the market price, it is well worth doing so.

Even with the more common elements, it is worth mining at 7 or 8 as it still works out cheaper than the marketplace.

[Meowakin]

Hmmm, well, I have a planet w/ 15 titanium production =P And another w/ 9 plasma production, so that helps. Need a good source of optium though....oh well

[Alteron]

Hehe,
I got a good source of both optium and energium, but only a scarce supply of titanium and plasma.

And the market prices are directely forbidding!

[Templar_scum]

I will sell low for u my friend

[fern]

he he...i have size 3 with....21...titanium productio....
3 with .....15....optium production
1 with .......15 ...plasma production
if i was pro xyfus would have 27-8 titanium production