Pricing for Crafted Items

Lyken and I had an interesting discussion about crafted items the other night, and I was curious to see what everyone else thought about these two points.

People buying 1000+ crafted items often request a volume discount. While that works fine in real life, I think the opposite is true in Illyriad. If you want to equip an army, then 537 pikes isn't going to achieve your goal. There is significant additional value to being able to equip a large division or entire army. There is also a convenience factor because the buyer doesn't have to assemble the arsenal piece-by-piece in Centrum. Therefore, I think a block of 10000 pikes is more valuable per unit than 537 pikes.

I have also received offers where the buyer added up the current component cost, +10% for my profit. I see three logical errors with this method. First, Centrum prices can vary wildly in infrequently traded commodities. Second, there is an opportunity cost to crafting, because your Blacksmith 20 could be producing regular swords and chainmail instead of Reinforced Chainmail. Your profit needs to compensate you for that missed revenue as well. There is also the opportunity cost to having several specialized crafting buildings to accelerate crafting. Third, and most importantly, I believe that rare resource supply massively outstrips processing capacity. Collecting is almost always much faster than crafting. There are a few notable exceptions--elemental salts come to mind--but it wouldn't surprise me to learn that there is 25x more Iceheart in inventories than can be processed into crafted items. In that situation, the input material is worth far less than the finished product.

Given that crafted items should also cost less than their utility cost (generally based on upkeep), I believe that there are only a few items worth making in large volumes. Those items are worth more than their component costs, cost less than their advantage vs. upkeep, and are worth more (not less) in significant quantities.

KP, the process of arriving at a price is part of a transaction. As a trader I am interested in mutually beneficial transactions, and preferably a stable series of transactions over time.

As long as their are no other sellers you can price at whatever you want.  If you put up a price and no one buys it then you will have to lower the price till someone does.  What 'effort' or 'opportunity' that it cost you to make the item has no bearing on how useful it is to others.  

DeathDealer89 wrote: What 'effort' or 'opportunity' that it cost you to make the item has no bearing on how useful it is to others.

Opportunity cost doesn't affect advantage, but it does affect your minimum asking price. As I originally said:

I believe that there are only a few items worth making in large volumes. Those items are worth more than their component costs, cost less than their advantage vs. upkeep, and are worth more (not less) in significant quantities.

Advantage > upkeep. That's why a buyer would be interested in buying.

Profit > (Materials + Opportunity Cost). That's why a crafter would be interested in selling.

I believe the majority of items fail this test. If you can't find a price range where both of these are true, then there is no transaction. Additionally, I proposed that (non-commander) crafted items were only really useful in large quantities, and thus worth more in large blocks.

abstract, I think collusion would be difficult because everyone can craft. Only Silversteel seems sufficiently valuable and limited in supply to form a cartel. Even then, its usefulness is restricted by the availability of elemental salts, and the unwillingness of players to risk losing super-expensive items.