Auctioneering 101: How to Win an Undercutting Battle
Dec 4th, 2007 by tyson
You return to the game after a break, sure that you’ll see the “new mail” icon on the screen, a new sale, dollar signs for you. Hmm, no mail icon. A mystery to be solved. Why didn’t it sell? It was perfect, a good price, and highly in demand, and certainly by now it should have. So you check the auction house and confirm that yes, it’s still there. You do a search for that item and darn it! Someone has undercutted you and theirs hasn’t sold yet either!
Well you know the reason yours didn’t sell, don’t you. But now that two are up, especially at reasonable prices, the market feels safer and takes its time. No rush for either. What do you do?
Wait, it gets worse. You decide, like Pierre, “I don’t care.” You’re just going to wait it out. When you come back, no mail icon, and now there’s a third, barely undercutting the 2nd. It’s become war, you think. For this one item, I’m going to win. But now what do you do?
Here are the main strategies you can employ in an undercutting battle, like in this example:
- Wait it out: this first one I don’t recommend. You know that others are going to sell… eventually. But what is it I’ve been trying to communicate throughout this blog? Keep your money actively working for you. When it’s sitting as the most expensive on a heap of cheaper items, it’s not going to sell. Try a more proactive approach.
- Wait it out with a twist: now this one comes highly recommended in a few cases where it’s you vs. 1 or 2 others. Instead of waiting it out, actually give the buyers more incentive to buy your competitors’ items! Huh? That’s right, get theirs off the market in a hurry and make it so that yours is the only one up. How do you accomplish this? By putting your item up for a ridiculous price, but not so far out of reality or reason that people will only think that you are crazy. Example: you have an item that you believe is worth about 60g. You perhaps bought it at 40g hoping to make a pretty nice profit, and it’s now up for 59g 45s (that’s my trademark price… the 45s
). Well some schmuk (a smart schmuk maybe but since he’s working your territory, a schmuk nonetheless) comes along and posts his for 55g. Then another comes along and posts one for 53g. Ouch, you’ve been the victim of an undercutting war. - Buyout the competition: here’s a common plan as well. If you’ve got an undercutting battle on your hands, if there are only one to a few of the competition and you’re pretty sure that the item isn’t going to be resold by more, at least in the near future due to its relative rarity… buyout the competition, but only if these conditions are true: a) you can resell them one at a time at either a slight profit given what you bought them for, b) a slight loss, but only if the original you had up can guarantee you a profit that offsets the loss by a significant margin, and c) if you’re pretty sure that you won’t be seeing the item up again from someone else. When you buyout the competition, be sure to only put one up at a time, else people will see this as a safety and not purchase as quickly. This is more true on higher priced items. Low priced items like profession materials or those with low relative profit can be put up in pairs or more, especially if the item is in constant demand.
So let’s turn that into your favor. Put your item back up for around 95g. Now suddenly both of the others seem sort of reasonable, and they will go faster. This works especially well when there’s just one other item. Then, when they’re sold, in the likely case yours still hasn’t sold yet, you resell yours back for 59g, the original price. That’s called purchase incentive.
With #2 and #3, be careful to keep in mind the AH’s deposit fee. So in #2, you’re posting three times to make the sale (once before you had competition, once at the artificially higher price, and once at the final price). With lower profit margin items, multiple AH deposit fees can turn a small profit into a small loss. Same story with buying out competiton and reposting.
Excellent point! With high cost / level items, it’s very important to price it right to sell, and not to have to repost it over and over. Also for low level items, when someone undercuts you on your market takeover. The AH fee can wipe away any profit, but no worries. The way I work is to buy items with enough profit potential to cut out any loss even on reposts. It might limit my overall amount I can make but micromanaging isn’t for me anyway, as I’ve mentioned time and again.
One rule which may even be a law… anyone know? It seems to me that the tighter your budget or competition, the more important micromanaging becomes. Therefore, I may be shooting myself in the foot here. If everyone becomes saavy, I’ll have to start if I want to keep an edge. Anyway, we adapt. Thanks for the comment P.