A Doomed Economy?

[imstimpy]

Let me preface this by saying FFXI is my first MMORPG. As such, I have not been exposed to an artifical economy before. I have read through this thread and a few posts are relevant, but most deal with undercutting aren't quite what I was looking for.

Perhaps my view of this is wrong, and I do encourage people to add their opinion here, but as I've pushed leathercrafting up quite a ways it has become even more prevalent that the economy outlook for crafters is pretty abysmal.

Unless one is crafting consumables, one is crafting into a closed system where most pre-existing items have no way to get out. If one crafts consumables, they are "consumed" and are removed from the system. The balance of supply and demand maintains itself through its inherant nature. If one crafts non-consumables, like most things made in many crafts, one must now fight for one's share of the non-consumable market. The supply will continue to overpower the demand until a floor is reached where the influx of new items falls dramatically. In a real world, things break down, degrade, whatever, thus removing competition from the marketplace.

SE has partially addressed this problem through the addition of desynthesis recipes, recipes utilizing previously non-consumable items (ie: Haubergeon into Hauberk or Mercenary's Kyahan into Windurstian/Federation Kyahan), donation of equipment for regional influence (um, who would donate any of any worth for regional influence?), and RARE/EX items. It doesn't appear to have scratched the surface, however.

In an economy where one item was worth 10,000,000, it became 10 items worth 100,000 each, then 100 items worth 10,000 each, then 1,000 items worth 1,000 each etc. I understand that this is going to happen as an economy matures. However, the items aren't being removed in any significant way. The prices of all non-consumables are going to continue to fall. I have seen this with almost every single piece of equipment I purchased while leveling up my WAR; I bought it, used it, then had to sell it back at a loss.

This situation has been artificially delayed through the introduction of each release into a new market (JP PC, NA PC, NA PS2, EU ...). I say artificially because the problem is not corrected, but the market is merely expanded to prolong the inevitable. Demand goes up due to the increase in player population and prices take a temporary hike only to fall even lower afterwards.

Some can argue that some items have remained at a constant price and yes, some have. My explanation for that is it has either hit a floor where it has lost the interest of most to persue, or it is so rare that there has not yet been enough time to display the flawed nature of the economy. The Ridil, Juggernaut, and various other items are examples of this rarity.

I mentioned that I am a ways into leathercrafting because this is the only craft with which I have had time to research and experience the markets for the items. The other night I decided to investigate what I had to look forward to and I found out that there really isn't much. Most of the interesting items (you know, the ones you took up a craft in order to make) are selling for a little or considerably less than the cost of materials. Amemit Mantle, for instance, is selling for 60k while the Amemet Skin (needed for the recipe) is worth 100,000. Narasimha's Cesti costs 100,000 to make and sells for 80,000. Brigadine, while I don't have the exact figures, is also done at a loss. Black Coathardie (a considerable investment in time, effort, and gil in multiple crafts) barely breaks even. This leaves us with obscure items which have gone undiscovered by most crafters, consumables, or HQ items. Amemit Mantle +1 is worth 900,000, for example. The problem is the crafters see this as a huge profit and put out even more mantles at a loss hoping they land the big +1.

I will admit that some crafts are more susceptible to this than others. Some crafts can create non-consumables that are never sold by active players while others are concentrated into such a small market that they are always overpopulated by supply. The end-game market will continue to grow as time moves on, so there is a small amount of hope for the high level crafters. This does leave some of us waiting for SE to create items that will call for our craft.

I'm not asking for people to give up secrets as to what will bring them their gil in their craft, but just to discuss an idea that the FFXI economy is going to continue to become more and more flooded as time goes on. It really frustrates me when people make request an item from me and I reply "just go buy it at the AH, it is cheaper than what I can make it for". Is this how all MMORPG economies are or is it just a flaw in Square-Enix's implementation?

[Ipwnzuall!!!111]

A_men.

In short, the only encouraging hope I can offer you is this: some people quit the game unexpectedly, and leave none of their items to anyone. This may seem like a waste if you know the person, but it has the lovely effect of creating more demand for the item in the open market. As much as I cringe at the thought of someone deleting their account and taking their Peacock Charm with them, I have to admit that it is the fairest thing to do :/

I might have missed this if you mentioned it: the guild point system is another way in which SE gets rid of nonconsumables. Players trade in equipment for guild points which can be used to purchase the craft enhancing equipment, and the crystals which put your signature on the item. In the end, this has the nice effect of crafters destroying their own items, while rewarding them at the same time with RARE/EX equipment which will boost their craft.

While it's true that this will never break down Amemit Mantles and the like, it does help stabilize the low and middle level economy. So yes, in high levels, supply and demand will take over and the price of crafted high level items will crash unless SE determines some miraculous and fair way to remedy the problem. The only reasonable thing I can think of, though unlikely, is creating a new craft, or possibly implementing new items with new recipes that require new items to make that won't give already high level crafters a ridiculous advantage. In the end, however, without intervention, the value of high level crafts will crash. ;_;

[Kailo]

So can you explain to me why Sniper Rings have gone from 120k to 240k on Fenrir? People camp Stroper so damn much, and Leathercrafters get the Archers to make Snipers rather easily, and using your logic, Sniper prices would plunge, but damnit all to hell they haven't! I only wish non-consumable equipments would drop, but despite what you have realized, the crafters always raise the price on my server. What you're not looking at is the fact the the crafters themselves set the price. Losing money due to high supply and low demand? Stop making that item. Crafters won't continue to sell items at a loss if they aren't making profit, and so, in turn, the supply will decrease and increase prices. The only thing around this is the +1s, in which case it's your own doing. If you craft items and risk synthing at a loss without a +1, that's your choice, and you should take the concequences for it. But should you synth a +1, congratulations, you just made easy money. :spin:

This is just my view on it, using my own sense of logic. Take into consideration that all of the above are opinions, and are by no means 100% correct in all situations on every server.

[poweryoga]

people fail sniper rings, they fail other crafts, and maybe some crafters just quit. High level players quit, and the prices of archer rings keep going up because people can afford to pay that much more money.

[imstimpy]

I might have missed this if you mentioned it: the guild point system is another way in which SE gets rid of nonconsumables

As somebody mentioned in the other thread I referenced, the guild point system is flawed. They reward more points for more difficult recipes. I haven't been doing it long enough to be sure, but I haven't seen any overly expensive recipes posted for GP. The primary concern here is when you reach the finite number of GP needed for your craft. There are only three items attainable in this way and none are too far out of reach as far as GP is concerned. It does correct the low-mid level market so the problems have been partially corrected here.

but despite what you have realized, the crafters always raise the price on my server. What you're not looking at is the fact the the crafters themselves set the price.

Yes, the crafters set the prices. They do this based upon supply and demand as well as a desire to beat out the competition. Supply and demand is rather obvious. What you will find is that there are more impatient crafters than there are patient crafters. I have found on many occasions that setting my prices where I see proper will ALWAYS be undercut by somebody else who just wants to corner the market at a lower price. This also helps demonstrate the floor that I was talking about where people lose interest and the market recovers. Though this discussion partially revolves around that, I was trying to focus on the structure of the economy itself, not the free market.

Crafters won't continue to sell items at a loss if they aren't making profit

If you make 10 Amemit Mantles, with one being a +1, then sell that +1 at 900,000 and the other 9 at 60,000 (below cost), are you at a loss? No, you have just made 440,000. The market seems to encourage this sort of practice.

What happened on my server was the discovery of the Sniper's Rings through the first wave of NA (PC). The price jumped from 200,000 to 300,000-400,000. The next wave of NA (PS2) jumped it from 400,000-500,000. The demand spiked where the price went to 50,000 above the Archer's Rings. The supply caught up and surpassed the demand leaving Sniper's Rings selling at a small loss in the current market. At present, the market is sustaining 450,000 gil Archer's Rings and 475,000-525,000 gil Sniper's Rings fluctuating depending upon the market. This, of course, is going to vary on each server.

People camp Chymes because an Archer's Ring is a consumable item, retaining value as long as there are high level leather crafters using them. Using my logic, Sniper's Rings are a special case where they are often end-game so most people don't resell them. The supply is not continually repopulated by users selling off their old gear, so their value is retained; the rings are, for all intents and purposes, consumed. In addition, see the paragraph where I touch upon the continual introduction of new players prolonging, but not correcting the problem.

You are always going to find exceptions to the rule by looking at individual items, rather than everything in its entirety. Put Sniper's Rings aside and take a look at the fundamental concepts behind the FFXI economy. That is what I would like to discuss.

[Toede]

Good points, thats why i told people to raise crafting in food since its consumable.

I think the one thing you are forgetting is crafting and selling the items to NPCs. Most high level items you dont sell to NPCs, but some lower level items you do(and can make a profit doing it =) thats where i guess SE is trying to keep the market from being over crowed with some items?

[Macht]

That problem exists in many of the MMORPGs, it's a problem difficult to correct usually because of greedy players and bad practices that players will do if given the chance.

To remedy the problem with the non-consumables like armor and weapons, you'd have to give them a durability. When reached the item is either destroyed or becomes a broken version of itself not usable till it's fixed.

Even though this would give crafters more demand and open up their profit in the markets both methods become seriously flawed because of the players. Then the game faces a chance of having a huge loss in the average player playing it to a high level.

The reason is if you make the item become destroyed after it's durability is met, then the player has to buy this item again. In the end-game part of it the problem arrises that the high level crafters take advantage of this and start setting prices for the good items to a rediculously high number. Think Sniper Rings are bad right now, with this system they'll basically triple in price (Seen it happen playing MUDs with a system like this, sad to say once those MUDs did that they only survived for about 4 months till become almost empty off all players).

The other one with the item being a broken version of itself suffers the same result. Problem is now even if you made it were these items could be restored with a crafter of appropiate level they'll still take advantage of the other player and greed gets the better of them. So attempting to repair the item ends up having you pay the same price as what the item would be on sale for in the AH.

Again beneficial to the crafter but this design still ends up making players resentful or disliking the game because of it. That's were all the problem arrise trying to create a new loop so there is a cycling process, the best they can do usually results in stuff like already mentioned here.

I'm not saying that making these items break down overtime is completly impossible to do, just that finding a good balance that won't make the average player running for the nearest exit I've yet to see be done well enough.

Games like "Brave Fencer Mushashi" or "Dark Cloud" do well with these decays simply because there isn't a player on the other end trying to milk the other player out of as much money as they can. The other problem you have as well is money being pumped into the game by places that sell gil.

This ends up letting a player buy masses of ingredient items and crafting them at an idiotic loss that they'll sell back at undercut prices thinking they'll make a profit or just wanting some money back from this to push their crafting even higher.

The first problem you'd have to resolve before you can really try to advance the crafting worth is eliminating this outside source of money being placed it. If that is removed then it's possible if done carefully to create cycles with the non-consumables so they will be more profitable for a crafter.

[Ipwnzuall!!!111]

Well, in short, I believe the observation that you are making is the correct one: that the crafting system in FFXI is very much a pyramid scheme, which no matter how worked out, will eventually crash unless more crafters are introduced into the system. The main difference is that the products do have a degree of high demand outside of other crafters, even though they don't, as you say, break down. Instead they become obsolete.

The ability to raise multiple jobs also helps to delay this, which I forgot to point out. In theory, crafting will crash eventually despite it being continually delayed, and that's just the way it is.

Of course, theory does not always manifest itself into reality, so you'll just have to wait and see ;p

[Kailo]

Originally posted by imstimpy
If you make 10 Amemit Mantles, with one being a +1, then sell that +1 at 900,000 and the other 9 at 60,000 (below cost), are you at a loss? No, you have just made 440,000. The market seems to encourage this sort of practice.

In that case...if you were a smart crafter who wanted to avoid losing profit due to some of the systems flaws, wouldn't you avoid the flawed items? Take the Amemit Mantle you used in your example...for an example. You can make a sizable profit out of nowhere an in a generally small amount of time by investing gil and crafting Amemit Mantles and praying for a +1. If you lost gil in crafting other items, then don't craft them and avoid losing that money. The only thing you can do for yourself is to craft items that you can make money off of. Generally speaking, the money is in the +1s. If you had a streak of bad luck and failed synths or didn't come out with a +1, then that's just it, bad luck. It happens to farmers and NM campers also (no drop, wasted time). +1s generally solve the problem of guaranteed profit loss in crafting.

The fact of the matter is that crafters invest gil into synths, making easy money by risking some. Crafters won't have to work hard and spend a lot of time hunting and farming mob upon mob. They just invest cash and hope they make more, which is a pretty simple method, so of course it has its downsides (failures and no +1). IMHO the system is not flawed, but just not easy. If crafters could make a profit 100% of the time by investing money they are guarenteed to get back, then there wouldn't really be a use in farming or NMs, would there? You'd be able to make profit easier by crafting, and nobody would bother with the other methods (ie, even if you didn't get a +1, you'd still make a profit). It just so happens that crafters loose money and farmers/NM campers lose time.

[Xuande]

After reading previous threads, I was really shocked to find this one (for the most part) very intelligent.

First I'd like to state that my post will be nothing more than low key rant. I don't expect this to change anything, nor any of my suggestions to be taken seriously by anyone in control to actually change anything. This is simply for discussion.

The first and foremost flaw, as I see it, in the FFXI market is that it is intentional. "End-game" gamers, most likely those who try to engage in high level crafting, make up a relatively small proportion of square's FFXI userbase. So it can be said that square's target market is the "middle class" user, the one who doesn't play to an obscene amount and doesn't have that much gil to spend. Since this game revolves around real money well before it revolves around gil, this market is what square targets the games enjoyability factor towards.

Now, consider yourself in this bracket for a moment (if you're not). Consider your equipment, some of it which you may prize very well. Now consider that you couldn't afford 90% of it because its actually selling for what its really worth. And god forbid, the portions you can afford be durable goods that either need repairing or break entirely. A bit too much of reality for a fantasy game eh?

The way I see it, the market was designed this way to keep average Joe playing the game (and keep square's wallet full). SO, thats flaw #1. The way I see it anyway. And I don't see it about to be changed.

Other flaws are just devices to make flaw #1 work. For instance, items are too easily sellable.

Let's say you want a video game, so you head on over to Bestbuy. When you get to the video game aisle, do you see Bestbuy's games, and then see 100 other people waiting in line to sell their used game to you? No.

If they could some how make it so only guilders have access to use AH while reselling goods could only be accomplished through bazar, (or something similar), I think it would essentially elliminate all crafting problems except undercutting. And I don't really care to talk about undercutting because that's another subject entirely, and I do it myself.

But, such a system also makes equipment a heavy investment as your easily exchangables have suddenly become consumables. So neither do I see this as a very effective remedy nor as a remedy I would even want to see.

Another flaw is that items are not being made to be made, but made for skilling up. If a crafter wanted to make a ring to sell it, he wouldn't. There is no point. So the large majority of guilding can be called reasearch and development.

Unlike normal R&D, FFXI's utilizes items that are actually sold on the market, which is a horrible horrible idea. And well done. The only suggestion I can make for this is to make more recipes that make ingredients for other recipes (thus, consumables). In many guild paths, it can't be helped to eventually (multiple times) make non-consumable goods. If there was an alternative, people wishing to skill up could choose that path while people who actually wanted to make an item to sell for profit could choose the non-consumable. This solution also eliminates everything aside from undercutting. Of course, it also increases the price of non-consumables which joe won't be liking very much.

The flaw that items have no durability has already been summed up pretty much. Adding durability, utilizing crafters for repair, etc, all seem to take the enjoyability factor away from average joe and more towards the exclusive end-game gamer.

With regard to how making money in this market with +1's, even +1's are a so called "artificial" fix. Though it may take longer than the games lifespan to happen, HQ items will eventually become so saturated that guilders will probably make minimal profit, if any, on them. Of course amemit+1 and other such end-game items will always be profitable, but the lower level things in particular will eventually reach the cost of their ingredients or less (depending on market saturation and demand for the item). I have personally made an HQ item (lv45 recipe) that turned out to be selling for less than what it cost me to make it. At which point I just sold it to an NPC out of spite.

One final note: undercutting can be taken advantage of. Many many items are sold for prices for LESS than what you can sell them for to an NPC! Particularly high level magic spells, and equipment from BC40 are always worth looking through for some greedy inpatient idiot who thinks he can manipulate the market when infact it just manipulated him. Keep an eye out for people buying multiple copies of a rare item (can only have one). It's a sure sign that that item is worth more to sell it to an NPC for some quick cash.

[Brennon]

What sounds like an easy solution, give each item a new stat on it, durability. I'm thinking of the durability of items in Morrowind, for example.

This will please crafters, and will likely piss of people who aren't crafters, but it *will* balance the economy, and fix some of those problems. It will also give crafters something else to do, namely, fix broken items. (for a price of course).

Perhaps, it will even encourage more people to start crafting.

IMO, with durability implemented into all usable items, the market problems will at least *somewhat* be solved.

This coming from a gambler who just tried to synth 3 amemet mantles on asura (the skins are 150k each on asura right now) and getting 0 HQ's (hq price 700k, normal price 25k). Soo, 400k loss basically. Oh well, it's just a game. I know i should have waited until lvl 90 lol.

[Lmnop]

perhaps a durability system where +1 items are "invulnerable?" Also, NM drops and maybe even generic high level synths. No one wants their Scorpion Harness to rot away, and it better not require another damned claw to fix.

[Xephoid]

I think

the main balancing force behind durable goods is that people quite and people join. People who quit will often just close their account, everything gone with that. People join create more demand for it.

Also, keep in mind that at some point, the price of the goods become low enough that a high level crafter can de-syn and make a profit out of it. For example, the silver hairpins, people make this stuff, when it sells for 800 gil in the AH, I can de-syn it and get a silver ingot that sells for 2K. Boom, I doubled my money.

[Xuande]

Re: I think

Originally posted by Xephoid
Also, keep in mind that at some point, the price of the goods become low enough that a high level crafter can de-syn and make a profit out of it. For example, the silver hairpins, people make this stuff, when it sells for 800 gil in the AH, I can de-syn it and get a silver ingot that sells for 2K. Boom, I doubled my money.

Unfortunately even at a high skill level, desynthing still breaks a lot more than normal synthing. If they made desynthing easier as your skill increased above the recipe, it might be a decent fix.

[Xephoid]

desyn

moghancement helps. You can make good money doing de-syn. In fact it's almost the only way to make money in smithing lol.