Saturday, September 8, 2012

A High Market Price Strategy

You can hear people talking about it in every Village gathering place - hey, you can hear it right here on Stone Street. Nobody is happy with the aligning of high prices that affects Food, Stones, Woven Fur, and Lumber!

Here's my reminders for you:

A. Unless that store is on the Red Ink List* - it is making a profit. That means every 100 coins you spend on it results in MORE than the 100 coins you put in. According to both my algebra and business classes, that means you are making money.

*(I publish a Red Ink List with every Market update. It's a list of stores which run at a loss at that day's market prices. I note here that some stores spend nearly all their time on the Red Ink List.)

B. If you don't run a profitable store when the prices are high, you are losing your profits.

C. When you don't run a store, you make no progress to your next level of goals, because that's the only place experience is coming from.

D. Selling resources at market when the SELL price is high makes you a fraction of the money you can make from the recipes in stores. If you have excess resources, buy a few more stores that use them, don't sell them for the paltry price the market offers you.

When I was in the level 20's, I made more lumber than I knew what to do with. After a couple visits to the SELL board, it was clear that there was not much money there.

If I sell it at market, I can sell it for 2-3 coins per piece of lumber. Sometimes less. But, a quick consultation with my abacus tells me the Furniture Store will always give me a little over 5 coins for every piece of lumber from the 5 minute bench recipe.

So I bought extra Furniture stores. Problem solved, money more than doubled for every single Furniture store.

So here's my time-tested strategy for high market prices:

1. Take a deep breath. Exhale. Find your favorite beverage. If said beverage involves a little umbrella in it, all the better.

2. Know your break-even prices for every recipe on all the shops active in your village. What worked 3 months ago may not work now because of continuing price-hikes at market. Break-even prices are your reality check.

Here's how to figure it out. (Abacus optional.)
Coins (of the finished recipe) divided by Resources (used in the recipe) equals Break Even Price of an individual resource.

Now, I don't buy resources in singles - so I multiply the resulting number by 1,000.

For an Apple Store's Fried Apples, that's 1600 coins from 500 food resources; so it looks like:
1600 / 500 = 3.2
3.2 * 1,000 = 3,200

As long as food costs me under 3,200/thousand, that Apple store is making money. Even at today's record-setting price of food, fried apples are making you a profit of 775 coins every 45 minutes. Per store.

Go ahead, multiply the number of stores you have (I have 8) times 775. Then multiply that amount of times during the day that you will run the recipe. Let's just figure 1 time per waking hour, 16 hours.

775 * 8 * 16 = 99,200 coin profit for the day.
Plus all your experience gained.

3. Be smart about which recipes you run. If you need a push to a level goal, you want to spend your money and time on the most experience you can. That sometimes means running a recipe at a loss anyway.

Use the profit from recipes which are making money to offset the losses in recipes which are losing money, but make great experience, like paddles in the canoe store. I can run all my apple stores today and offset the tremendous loss in 2 of the Canoe Store's paddles recipes. And still be money ahead. And loads more experience.

4. Just because your favorite resource is high, don't stop production and collect from your decorations. Aside from the occasional Wonder decoration, there are no decorations that can output the amount of money a store can. Factor in the experience, which is the only way to achieve levels, and stores win. Every time.

Know when to stop production and do it with an informed decision, do not do it in a panic. My Canoe stores rarely are at full production, because they use so much lumber, and the break-even point is below even the average cost of lumber. When lumber is low, they all run. When lumber is high, only a few of them run - and I run those few knowing that I must off-set the losses from my other store's profits.

We are already in a Market cycle where the prices are increasing. The higher level stores seem to have been designed for it. The older, middle shops are hurting with this market. Woodwinds and Terra Trainers, the staples for many older players through the early and mid 30's, spend more and more time losing money now. It used to be a rare day when they would run at a loss.

Know your break-even points and use the market to your advantage. It's the only revenge we have for a market which is not free.

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