Playing the Auction House: A Qualitative Study

In my efforts to start up a small bookselling business on Amazon, I ran a little experiment on the World of Warcraft economy. As described in my February Update post, I determined I would start with a small amount of ingame currency, then proceed to play the Auction House to see how much of a profit I could make with it. This was to simulate the real world market of buying items used and trying to sell them up for a profit.

It’s now one month into the study and I’ve decided to post my findings thus far.

The UnNamed – Wyrmrest Accord

The first character I attempted this on lived on Wyrmrest Accord, which is a heavily populated RP server for North America. I won’t be giving out her name, as I also do roleplay events on that character and want to maintain a bit of privacy.

I started out with a little over 1 gold (100 silver = 1 gold), and by the end of a two-week period, was down to around 44 silver. (Most of the prices in this article will be rounded off.) At least, that was silver that was coming out of my own budget. I had to cut short this character’s experiment due to a guildie dumping 15 gold on me for use in a guild event, and I hadn’t kept good enough record keeping to account for this. So, this is lesson number one. Good record keeping is very important in the running of a small business!

Wool Cloth: A Lesson of Price Fluctuation and Sustainable Volume

Despite the short running time, there were still some lessons I could glean from the experience. I started the experiment by dealing mostly in Wool Cloth, as it was a well known resource item that also sold in small enough increments I could afford playing the prices up and down a bit. (Depending on the item, you can list them on the Auction House in “stacks” of anywhere between 1 and 200, and other players must buy up the whole stack.) Over the course of two weeks, I bought and sold Wool Cloth to end up with a profit of around 2 silver and 50 copper–which isn’t too bad, given the profit margins I was working in. That’s making back about 2 percent of my starting funds, and only with a few hours work!

Yes, a few hours work, but also days of the waiting game. One lesson I learned with the Wool Cloth pretty quick was that waiting for prices to go up was key to the game. Though sometimes you can force the issue yourself by buying out all the Wool Cloth below your target price, I didn’t have the funds to do this. Instead, the majority of those two weeks was spent waiting for Wool Cloth to go back up over 12 silver per unit (which was what I had bought my first stack for) after it had gone down to 8 silver per unit.

The other lesson was one about volume of sales. I only did a few transactions with a relatively low-traffic item, and my 2.5% gain in net wealth reflects this. If I had been buying more popular items, such as Tidespray Linen which is used in the latest expansion’s crafting, I may have been seeing a much quicker turnover of my inventory. Also, if I had spent more time on playing the Auction House–checking every hour instead of every other day, for instance, or finding an even lower priced item than Wool Cloth so I could have more transactions coming and going–I may have also been able to increase this percentage. These will be hypotheses to test on future characters.

Mageroyal: A Lesson in Fees

Wool Cloth wasn’t the only item I worked with with UnNamed, however. I also looked into the sales of Mageroyal on my first day, and spotted one up for 49 silver while the others were selling for 10 gold each! Thank you, Auction House; that Mageroyal is now mine.

Then I hit a snag. I couldn’t relist my Mageroyal at 10 gold, because my listing price (the fee the Auction House deducts for posting your items there–much as Amazon does) was not one I could afford! As it turned out, I was never able to afford this listing price, so that character is still sitting around with a single, perfectly sell-able Mageroyal. Perhaps if this was the real world, she could’ve taken out a loan to get it up on the market or worked her way up there with Wool Cloth profit, but that went a little beyond the scope of my experiment, plus I was closing this character down anyway because of the fore-mentioned accounting issues.

Maluki – Sisters of Elune

Maluki was my next attempt at playing the Auction House. This time I tried rolling on my home server, which has a much smaller population than Wyrmrest Accord and perhaps might better represent a slow economy. This time the character was an isolated alt, who would have no problems with random guildies throwing random fortunes at me.

Linen Cloth: A Lesson of Windfalls

Maluki only had 32 silver to his name, which wasn’t enough to play the prices with. He did have a small stockpile of 12 Linen Cloth with which to start his own little business, though.

Maluki’s time as an Auction House player also only spanned a couple of weeks, yet in that time I had managed to increase his savings to 49 silver and a stockpile of 80 Linen Cloth as of yet unsold. Whoa! That’s almost a 6 percent increase of my funds with lots of inventory to spare!

Yet that’s only showing part of the picture. Whether due to the whims of the market, charitable players, or players who couldn’t be bothered to research their prices properly, the price of Linen Cloth usually wavered around 10 silver per unit, but every so often I would find it being sold for as low as 19 copper (100 copper = 1 silver) per unit. At one point in time Maluki was sitting on a veritable treasure trove of 2 gold and 94 silver made solely of taking advantage of these low, low prices.

It is not easy to tell whether such windfalls are common in the Auction House game, or even in real life at large; more experiments across different World of Warcraft commodities would be needed to determine this. In Linen Cloth alone, however, I was able to buy up auctions with significantly smaller prices 3 out of the 6 days I checked. Without these windfalls I would probably have made more along the lines of UnNamed’s profit of 2-3%.

Also Linen Cloth: A Lesson of Outliers

Given the windfalls that seemed inherent to Linen Cloth’s market value, it was sometimes difficult to keep on top of being the lowest priced listing, in part because I still didn’t have funds to buy up other listings willy-nilly to get the market down to my target price. As it turned out, Linen Cloth sold quickly enough I didn’t necessarily have to worry about this. Two out of three attempts to sell above the lowest price still ended up succeeding. In some cases, the gap in prices was large: the first day, I put up 14 units of Linen Cloth for 20 silver per unit when the lowest prices were 63x for 10 silver each and 68x for 12 silver each. (My listing still sold.)

Being that this is such a small sample size, there are some issues with these numbers. Did my expensive Linen Cloth sell better because the buyer did not want over 60 Linen Cloth (the difference between buying items singly and buying them in bulk in the real world)? Or was the demand for Linen Cloth so high that the 63x and 68x had been bought up before more lower priced listings could be added, thereby dropping mine to the bottom of the price bracket? Or, perhaps, because the Auction House only keeps listings up for 2 days at maximum, they just happened to expire before any buyer could get to them?

There are a few ways to determine the answers to such questions, which I will be dedicating future experiments to. One way is to start keeping track of who lists what. Though I do not have a window into the merchant lives of other players on World of Warcraft, seeing the same player post the same 63 units of Linen Cloth a day is probably a pretty good indicator that their listing isn’t selling (unless, of course, they are a farmer (AKA dedicated collector) who just likes selling their Linen Cloth in stacks of 63 for some inscrutable reason).

Another way is to start selling my own Linen Cloth in different increments, such as 4 stacks of 1 unit of Linen Cloth each for 20 silver, then 1 stack of 5 Linen Cloth for 10 silver per unit. As World of Wacraft’s interface includes price per stack as well as price per unit in the stack in its Auction House tooltip, I find it hard to believe you could fool other players this way, but perhaps the need for convenience and not having extra Linen Cloth on your hands that you didn’t want will win the day.

Conclusion

In conclusion…well, there is not much that can be concluded yet, to be honest. As any real scientist will tell you, 20 is the magic number for sample sizes, whether you are talking people, weeks, or number of transactions. For this little experiment to have a hope of being accurate, I would need to expand it out to 20 different servers, 20 weeks, or 20 different commodities…or all three. For obvious reasons of time and not letting this game take over my life for the sake of mere curiosity, this probably isn’t happening.

The other issue with any conclusions drawn from this experiment is this: World of Warcraft is a game. There are some elements of it that do not have clear parallels to real world situations, and vice versa. For instance, the other day I had to handle my first return for an Amazon book that the customer claimed had been printed with some pages upside down and missing. In World of Warcraft, this is never an issue: if an item is labelled as a Raptor Egg, that egg will always be fresh, will always be just enough to make one Curiously Tasty Omelet, and will always taste Curiously once made into an Omelet. (Or so I assume. I don’t know what my characters think of the taste) Furthermore, if I receive a Raptor Egg back from a buyer, I won’t have to worry about half of it being missing or tampered with: a Raptor Egg is a Raptor Egg and always will be a Raptor Egg, end of story.

Second, because it is a game, it is meant to be won. If the players complain enough that Linen Cloth is too expensive or that Raptor Eggs don’t sell, the developers are able to edit the game’s coding to amend this. That doesn’t happen in real life (though some governments do try). Though this issue is ameliorated a little that the Auction House is driven by player demand instead of straight up game code dictating prices, on the whole, a game is supposed to be enjoyable and easily accomplished, while in real life, there is never this guarantee.

Still, for the purposes of seeing whether or not it is possible to make a profit by buying and reselling items, the experiment has answered that question. Yes. Yes, it is. To greater or lesser extent, depending on a number of factors, such as the timing of your listings, the strength of your economy, whether you list your products singly or in bulk, and even what those products are.

I also have questions I want to answer in further experiments. These are: how does the Auction House game change with more popular and relevant items, like Tidespray Linen? Is there more to the story of fees? (For instance, could you make money buying vendor items and selling them just above or below the fee level and make a profit that way?) Does listing items in different increments AKA different stack sizes make a difference? How about listing different size stacks with different prices per unit? Finally, I want to extend all the above experiments across more servers, across more months, and across more different types of items.

Thanks for the read (if you got that far!) Also, feel free: if you have your own tips, tricks, or myths you want tested about the Auction House, please post them in the comment section below. Cheers, mon!