Example of Floor Price

[Acorn_Letourneau]

As titled, can some provide an example step by step. Thank you

[Shipwreck_Jones]

Not sure what you’re talking about. Can you elaborate?

[QuakeGod]

There’s no such thing as a price floor in EVE. There is no institution to set or regulate minimum prices in EVE. Players can sell any item they want for any price they want. If they want to greatly undervalue their market goods just so they can undercut the next guy, even if it will mean a net loss, they will do it.

[Anderson_Geten]

First that’s for ONE possible setting : for several possible settings, you need to choose the best one.

A floor price is what is okay for you to sell at, meaning that taking everything into account, going for that item manufacturing and selling is acceptable at this price

Since we are in industry, we are talking about bps. Assuming T1 :

if you take your item, the bp that produce your item, first you need to check if you use BPC or BPO. BPO can be better than bpc because you can do several days of building, but bpc are more readily available.

bpo price

First you check the price of the bp. if it’s BPO , then the price should be 0/0 (NPC) price + research price. Research price is based on

• the amount of time and money it takes to research it (different per BPO),
• the actual values of ME and TE,
• what you consider acceptable as isk/h of researching slot, of course reduced by the skills+structure+ipmplants,
• and finally the cost index of the research area, of course reduced by structure., and increased by tax

example : a bpo costs 1M, has a base research time of 1000s, and base research cost of 1k isk. I have one researched 8/10 . I value my research time to 1M/h(after reduction, which is very high) and my cost index to 1%(after reduction and tax)
The research points of the bpo are 2.38^8+2.38^(10/2)-2 = ±1104 research points (points value varies with bp).
So the total time to research it was 1104×1000s, and the cost associated with that research time is 1104×1000/3600 = 3k.
The base job cost is 1104×1000, so costs you ×1/100 = 11k isk.
total cost of bpo should be 1M+3k+11k = 1.014M
With a 10/20 it’s a bit more of course.

Now that you know your bpo price, you need to know after how many years you want it reimbursed. in my case it’s 365 days, so each s of using it is added a bpo investment cost of bpo_price/365/24/3600 . What this means, is that ONE run of that bpo should be added a cost based on its duration for the bpo investment.

Example : I evaluated the value of a bpo to 1B isk, and building an item requires 1D of manufacturing. Therefore, the part of the price that is related to bp investment should be 1000/365 = 2.74 M . Just from the BPO the floor price should be at least 2.74M.

Of course you also need materials for a job

Material prices

The materials are the things that are consumed when starting a job . Basically : either you PRODUCE them, and thus the price is the price of not selling them, or you PURCHASE them, and then the price is the price of buying them.

In both cases, you must decide if you value at SO, at BO, or a mix of those and your average acquisition/sale value.

If you are producer, each item should have given you its value, minus tax, and minus hauling cost. eg if an item can be sold 1k isk at jita BO, is 1m³, and I pay 50isk/m³, 2% tax to selling things, that means using this item costs me 1000 * (100-2)/100 -50 = 9750 isk.

if you are consumer, then if that item is 1k2 isk at jita, same volume and hauling cost, it costs you 1200+50 = 1250 isk to use it.

Now for each item, you must multiply that cost by the quantity required for the job. Sum them up, it gives material cost of the job.

Installation cost

Here it’s pretty easy, you need to get the EIV of the item, the system cost index, the manufacturing tax, the job duration, and your manufacturing hourly price.
An item that has EIV 10M, on a 1% system index, with 10% tax, lasts 1D, and you pay yourself 1M/Day for manufacturing line : installation = 10M ×(100+1×(1+10/100) )/100 + 1M/1M = basically 11.11M

Tax, margin, broker.

If you sell an item for a price p, you will have to pay a percentage (t+b) as broker and tax. So in order to actually receive p, you have to multiply that price by 100/(100-b-t)
tax should be ±2%, and broker ±3% (I considered 6% just to be sure) ; then relist fee, depending on how active you are, can go from 0%(no relist), to 4.5% (6 relists). If you make more than 6 relists, that means you were too greedy or the market is unusable, or fell for the relist stupidity.
basically you can go to a total of 10% broker fee + tax, and really that’s very conservative (you could go 6% it would still be good, most my items sell without a single relist)

So, for eg 10% broker+tax, you must multiply your price by 100/(100-10) = 1/0.9=1.11 I think.

Then you also need a margin, otherwise you are just getting benefit from the manufacturing slots and that’s very low. eg if you want 10% margin, just like before you must multiply your price by 1/0.9 . This margin should only be applied to what COST you actually money : so bp if those are bpcs, material if you are a consumer, job installation cost part that is related to system cost. (but since actually that should be the only relevant part most of the time, no big deal)

I chose this way because it allows me to relist orders several times, and avoid having to cut people. Cut me if you like, if you seed 1-item offers all the time in the end when my offers sell I will have a nice margin wrt the time invested, you won’t.

floor price example

eg if I am consumer of the material, and the job costs 10M of material, 1M5 in installation from tax, 500k from installation from duration, 1M in bpo investment, and I have 10% broker+tax, and 5% margin, then the floor price should be
[(10+1.5)/0.95+0.5+1]/0.9 = 15.12M

How to use this ?

It’s up to you. Really, there is no optimal strategy, because there are several intertwined control loops in the game, so anything optimal will be abused and prone to outclass by another heuristics.

Here is my strategy (keep some values secret though) : I have the floor price, but also a base quantity q , and a split factor s. Typically q is a multiple of the volume that is sold per day, and s depends on the amount of orders I have, and the offers I can accept to invest in.

Let’s say q is 10, and s is 3. the floor quantity fq is then 10/3 = 3. So every day I try to set more orders. For this, I look at sell orders for that item, I remove the fq lowest prices of them, and check if remaining lowest price (rlp) is above floor price. if true, I place fq items on sell at price (rlp+fp)/2 . This of course means that I will cut myself if yesterday’s offers are not sold. If I don’t have items to sell, instead I will relist the highest price offer to that value instead. If I don’t have items and have less than s offers set, then I start manufacturing more (typically by batches of q items).

if lrp is higher than floor price, I just skip that item : not worth even looking at the prices, relisting, manufacturing.

Ho, and I do that for EVERY item in the game. Not caps and not bases because more difficult to produce though. Actually not poses because I had bad heuristics first so that was a quickfix , but maybe I should build them now… I mean I have almost every T1 bpo in the game so…

Complex manufacturing costs

eg you are doing invention, or building standup modules that require base modules, or meta capital modules.

Then you just aggregate the values of all the intermediate jobs : the cost of materials for final job is the sum of the costs of material, multiplied by the requirement of items and divied by the production of items

eg if I need 1000 items of type A to build a B, and 300 to build 2 items C, then the material price of ONE C is 150 000 A, and the installation cost is 150 times the installation cost of a B.

[Do_Little]

Floor price is mostly relevant to producers. It’s the price below which you choose not to sell. As @Anderson_Geten suggests, you need to include your material costs, research/invention costs, production costs, transport costs and market costs - then add whatever profit margin you’re comfortable with.

If the market cycle crosses your floor price you can build it profitably. Traders are generally working the buy/sell spread and don’t particularly care what it actually costs to build an item.