Tuesday 2 April 2013

Growing Profits

I made 13 billion in January and 13 billion again in February. For months I've just been coasting along perfectly happy pocketing 10 billion plus a month while putting in minimal time and effort to get there. My prices weren't very aggressive anymore, I wasn't increasing my escrow, I was spending less and less time working the market every month.

In fact I wasn't even really trying to grow my business anymore. It was already far more than sufficient for my needs and still growing almost effortlessly.

Then in March my profits rose to 23 billion (10 billion more) with only a slight increase in time and effort.

I increased my escrow substantially (by about 5 billion) and got very aggressive with pricing again too. A big chunk of the escrow increase was in buy orders on Jita. In the first half of the month my order posting/updating frequency picked up slightly (mostly due to increasing escrow). In the last half of the month I slowed down again.

I moved a lot more stock between regions with courier contracts than normal. That's because profit margins on Jita were terrible, the increased escrow and aggressive pricing meant I bought a lot more stock (especially on Jita) than usual. I moved surplus stock in 1 billion isk lots all over the place to take advantage of better prices elsewhere.

I also started selling more stock (including several of those surplus lots) on secondary hubs. Sales are slower on the smaller hubs but profits are higher and there aren't nearly as many overly obsessive competitors (bots and no-lifers) so that's been working out well. In fact many of my highest profit sales were on secondary hubs for high volume always in demand items that nobody else was selling in the area (in some cases market history showed no sales at all in the entire region for the last year).

I attribute most of this month's increased profits to the increase in escrow, particularly in the mods and implants markets. Order posting/updating frequency, courier contracts and secondary hub sales were certainly factors too though all that was driven by the escrow increase, aggressive pricing and resulting high stock levels.

I've just been coasting along sitting on too much cash and not putting enough into escrow for several months now. I want to increase my escrow by at least another 20 billion over the next few weeks. With all my traders (except the 2 new ones) having Margin Trading V, 20 billion more in escrow translates into roughly 100 billion more in buy orders. If I pick the right items to pump that ISK into it should lead to another big increase in total profits.

One of the new traders will start taking over the Jita implant business from the current mods and implants trader in 11 days (when he gets Margin Trading V). Once that happens my capitalization, diversification and coverage in both the mods and implants markets on Jita will increase substantially. The new trader should double my implants business within 1 month and quadruple it in 2 - 3 months. Freeing up the implant orders on the current mods and implants trader means he'll be able to concentrate only on mods, diversify into more mods and sink more ISK into them too.

I've also dropped a bunch of lower value items on all my traders (except the 2 new ones which don't have the skills to trade seriously yet). Items with impressively high profit margins but less impressive total profits (especially when taking the time and effort involved into consideration). Mostly T1 modules, cheap skill-books and some other things that go for under 5 million per. This freed up 40-60 orders on each of my traders that I'll be able to use for other more valuable items now.

The not so shocking truth is I did pretty much the same as always except I was a little more disciplined  about sticking to the plan and not just coasting. I spent a little more time making sure I raised my escrow and I got back to setting prices aggressively again.


  1. This is very impressive. How much time do you spend hauling goods and adjusting market orders?

    1. About hour a day on average. Some days it's a couple hours, other days it's only a half hour or none at all.

      The hauling is mostly done afk and only on a few characters. So a character might be online for an hour or more but I'm only at the keyboard for a few minutes.

      Also big loads between regions are almost all couriered.

  2. Jita velocity has really increased. It seems to be much higher pop than it used to be, I've seen 2100, 2200 in Local. I think - just like real life - the supermarket is taking market share away from the corner shops.

    Of course velocity slims margins.

    1. "Of course velocity slims margins."

      Exactly. Margins on Jita are extremely tight on most of my items lately. That's why I did so many courier contracts last month.

    2. BTW, it's not just Jita. Traffic and volume has increased just about everywhere. Making a rough guess going off "pilots docked and active" stats I'd say it's around 20%.

  3. Oh and another reason why your profits might be going up. New Navy ships. Really nice revisions to the Navy cruisers and new Navy Battlecruisers.

    Now the supply of LP is fairly inelastic so if people who play for LP have the sense to hoard them until the shiny new ships arrive we'll see a shortage of implants entering the market.

    It's a good time for you to stock up as much as you can.

    1. I generally don't stock up. Sure you can make a little more on a per item basis by holding on to things but you'll usually make more by NOT holding onto it. Instead of holding for a month or more, just sell it for a small profit immediately, reinvest the profits and make that small profit many times over.

      Of course once you get big enough you can't really invest most of your isk profitably then it makes sense to play long term trends and stockpile. I don't think I'm there yet though I might be close.

      Having said that I do have a small stock of 100 or so Genolution implants (both types) I've been watching the price go up on. I would have bought a lot more than that if I'd had spare cash sitting around to put into long term investment. Also sometimes I'll snap up a bunch of something that's had a big recent price drop and hold on to it for a while waiting for the price to rebound too.