When To Buy, When To Sell – And When To Farm?

Farming is not something we do. It takes a perfect storm of circumstances to make me even think about it. But there are a couple of situations that came up recently that basically required doing a little bit of actually getting my hands dirty.

Well, OK, they weren’t my hands, but someone did some farming. It pointed out that there is a really good way to tell when there is a huge hole in the market where supply is way below demand. The good part is that it’s pretty easy to spot since the holes are HUGE on many servers.

In the end I didn’t actually do any farming at all, but I have some folks around the guild and the family that tend to miss the finer points of auction house Domination, but they understand that if they go get a few stacks of something they can get paid – by me.

The guy who has the gold makes the rules. It’s been that way ever since the Magna Carta. That one document took most of the power away from those born into power by shifting the money (and therefore the power) to those who had some cash. Enough with the history lesson, let’s get on to how you can take advantage of this with the whole force of more than 150 years of history behind you.

Normally we just buy low and sell high. It works best when you spread your offerings (and by default, purchases) out over a LOT of different types of things. By far my favorite is mats. Mats make up the majority of the profitable items anyway and only a pro should deal with Items – the market for those things is just too volatile.

When it comes to mats you are making a grave mistake if you try to deal too much with Northrend stuff. I know this sounds counter-intuitive, but think about it for a minute. Most folks who farm are going to do so at level 80. This means that when enough of them are out there herbing and mining Sholazar that there is going to be a huge influx of high end mats into the market, thereby depressing the prices for those items.

Everyone else is rushing to GET to level 80 and not stopping to farm along the way. You see, the way you know exactly what to sell is to project what everyone in the market is doing and then do whatever they are not doing. Everyone wants 25 stacks of Titanium ore right now before the patch. When the patch hits, prices will triple, but there will be soooooo much of it around that it will drop again rather sharply once all the Jewelcrafters get sick of prospecting at 15 gold a turn for those new rare epic gems (that won’t hold a price either if you know anything about the gems market).

So – what WE do to make gold hand over fist day in and day out without having to rely on hoarding and market spikes is very simple. Instead of Titanium (which you think everyone wants) you need to control the Mithril and Thorium markets. Instead of Arctic fur, you need to make sure you have a stranglehold on the Medium and light leather markets.

You see, all those guys leveling new toons and alts skip trade skills on the way to 80 (almost everyone does). Then, when they hit 80 they want to powerlevel two (or even four if you count cooking and first aid) trade skills all the way to 400+ in a few hours. This is where you get rich. Not on Titanium, not on Lichbloom, not on Borean leathers – it’s the low level stuff that has the best supply/demand ratio.

In other words, the amount of time it takes to get those things compared to the profit margin for selling them is often higher than the Northrend mats. You can get 20 stacks of light leather in the time it takes to get 5 or 10 heavy Borean. Because listing fees for low level mats are almost nothing, you can post them over and over again for almost any price you like and they WILL SELL.

These holes in the supply end of your market become apparent when YOU try to do what everyone ELSE is doing. I was working up Alchemy, Tailoring and Leatherworking on my DK bankers last week and there were 36 light leather and 13 Stranglekelp on the AH. That was all there was, and I needed maybe five or ten times that much. Since I have a lot of gold I could care less what the prices were, I would have bought them all and not even thought twice about it.

You see, there is no such thing as a “fair price.” Fair is in the eye of the beholder. When I want to powerlevel a profession I’ll pay 20 gold a stack for peacebloom if that’s all there is. It will still cost me a lot less gold if I pay Northrend mat prices for starting area mats because it requires so much less to get skill points out of that stuff.

If YOU don’t like the high prices for entry level stuff go farm some yourself. Use what you need and sell the rest – probably to me (and I’ll jack the price up to where supply equals demand and make the bucks off of your effort). That’s how a free market works.

If you know how people want to behave or how they ARE behaving in relationship to any market you can find what their need is and fill it. This situation showed me that there was a HUGE need for light leather, medium leather, Mithril, Thorium, and about a half dozen other things. It became obvious that there was no one on the server farming mats between the levels of 15-50, but hundreds of guys supplying Northrend stuff. Low supply and steady demand (demand for mats is almost always steady) means big profits if you can fill the gaps.

I still didn’t farm, but I told a few people I would pay them twice the market rate for every stack they could get their hands on. Now the AH has just enough mats at a price I set that I make far more out of the low end mats. And since I control the supply, I set the price. Every now and again some nut posts a few stacks at doofy prices and I happily buy him out and pop them right back up at the proper price.

The proper price is always the price where the supply curve meets the demand curve and establishes an equilibrium.

Item level has absolutely nothing to do with it. If there are 400 stacks of Titanium and a demand for 200, the price is at least two times too high. If there are 2 stacks of Liferoot and demand for 20 stacks, the price is 10 times too low. It makes no difference if the price for Earthroot eventually passes that of the price for the Titanium. Supply above demand lowers prices, demand above supply raises them.

So look for these types of things in your market, and be sure you’re looking in the right spots. If you must farm, look for the things most people skip (normally in the 150-300 skill range in most gathering professions) and pretty soon you’ll be raking it in with both hands and just laughing when everyone else is taking a beating on those highly volatile high end mats – while you vacation in Stranglethorn off your earnings from the lowbie stuff.