A few days ago, Isildur asked me to write a guide about the economy. When I asked him what I should focus on, he told me to write about ?making ships, or even broader, such as how to be an economic overlord and rule with an iron fist.? But as I thought about it, there is nothing particularly special about being a shipwright as opposed to a weaponsmith. Nor is there anything particularly special about running a large business as opposed to being a solo. Instead, I believe what would be most helpful is sharing my ideas on how to have fun and make money as a producer/crafter, as opposed to making money as a smuggler, trader, grinder, or pvper. Each of those can be a fun and rewarding career, but this guide will focus on helping you get the most out of PotBS?s excellent crafting system by helping you learn what to produce, how to produce efficiently, and how to maximize your sales and profits.
What should I produce?
The first, and most important, step in being a successful producer is to identify a need. This is not the same as randomly picking a product. If you gain nothing else from this guide, remember this point ? the biggest mistake people make is failing to identify a need before they start producing. This means they suddenly have 1,000 oak logs that no one wants and they have to start lowering prices and finding other ways to sell the goods they never should have produced. You should never produce an item without knowing it will sell.
To find out what can sell, you have several resources. The first, and most simple, is to ask people you know what they would like to buy and have a hard time getting. You may have a friend who makes ammo and who always struggles to get enough black powder. You know he will buy it, so it?s a simple thing to work out a deal to supply black powder to meet his need. Another source is the marketplace forums, trade channel, or nation chat. See what type of things people ask for ? this gives you a pretty good idea of what the AH is failing to provide. Finally, pay very close attention to the AH. Watch what goods sell quickly and at high profits. Your ideal goal is to identify a product that can sell consistently high volume with fair profits. You do NOT want to attempt to price lower than someone else, nor do you want to produce oak logs on a market with 15,000 oak logs selling at near cost. This observation of demand will take a lot of work. It will change regularly. Keeping on top of demand will be the most time consuming and important thing you do. Do not neglect this, as this is where people force themselves into a situation where they have huge volumes of product selling at cost or below.
Note: Many people mistakenly believe the best way to ensure demand is to only produce final products. This is not the case. For example, compare the profit per hour in supplying black powder to Havana relative to making heavy round. There are many raw materials or simple goods that are undersupplied, generally because they are expensive (lingum, brass), low volume sales (granite, wood tar), or just a long sail away (sulfur, wine). Don?t neglect these goods while you consider ? ships and outfittings are not the best moneymakers per hour of labor by a long stretch.
Now that you have found a product you know is in demand, the next step is deciding where to produce. Consider the prevailing wind angles and shipping time, as well as taxes. If you are cash rich or are selling a high margin good, it may be worth it to you to pay higher taxes to reduce your shipping time. If you are in a low margin, high volume business, cost may be the most important thing. Also, be careful not to have more than 3 warehouses if you can avoid it. Generally, there is a clearly best option, but you should do your homework before you build. There have been many times where I have considered and rejected conventional wisdom of where to get some goods.
A related issue for some products is if you want to self supply your raw materials. Cutting out unprofitable steps in your system can be very worthwhile. There are pros and cons to both systems ? if you self supply, you need not worry about not having what you need or getting undercut. However, raw materials are consistently available in large quantities at near cost, meaning you may be able to earn more money by getting raw materials from the AH or a supplier. For example, I often hire FTers to make hulls for me. Hullmaking requires massive amounts of oak logs, large amounts of lumbermill labor, and a shipyard for assembly. Prospective hullmakers often look into the business, and concluded they cannot produce what I need because they would need at least 5 oak camps, 5 lumber mills, and a large shipyard (3 lots) or more. This is true, but remember there is a virtually limitless supply of oak logs available at near cost in each nation?s noob economy ports (bartica, grenville, sisal). Hauling oak is a chore for most people ? they don?t have large enough ships, and so most people would rather sell it dirt cheap in a noob port then sell it at a large markup in a commerce center. A FTer could easily get a hauler, buy at near cost (8 or 9) and save several precious lots. Not needing to supply your own raw materials allows the hullmaker to have perhaps a shipyard, 6 mills, and a carpenter. Think of how much more money a person will make buying raw oak in a noob port, shipping it to a commerce center (Havana, SJ, or CDM), processing it to completed hulls, and also having a shipyard and a carpenter to sell consumables and outfittings on the side. While there is some risk in relying on the market exclusively, for goods like oak this risk is minimal. And you can always find a navy buddy to help you if needed ? he will be happy to have someone buy his labor, even at a minimal profit, just because its easy work for him.
Finally, remember there is no ?one true way? to production. One some servers, some products may do better than others. The market always changes, and what sells well today may not sell at all tomorrow. Be flexible enough to change.
Getting the goods out the door
Now that you have picked a product and set up to produce it, the next step is getting product out the door, or making consistent production runs without waste.
In most businesses, you will need to ship your product. When selecting a cargo hauler, you need to consider its cargo capacity (especially for high volume areas like woods, or large size items such as hulls), its OS speed, and if you need to go into pvp zones, its battle speed and stealth. OS speed is a hidden stat, but in general sloops > flutes > indiamen > galleons. I find that the best bulk haulers are the Dromendary (560 cargo, level 20, fair OS speed), the Stripped Migoine (900 cargo, level 30, fair OS speed), or the Sultan Flute (1150 cargo, level 41, excellent speed). Some people prefer galleons for their larger capacity and better instance speed. For low volume hauling, use a trader?s sloop (220 cargo, level 16) or its gimped stepsister, the MC sloop.
If you plan on avoiding combat completely, minimize the space your outfitting takes up. Many people use rig catharpins (which increase your OS close haul speed), delsie?s highly accurate charts (20% OS speed), the astrolobe (10% os speed), Discordant rigging (10% speed, battle and OS), or studding sails (up to 14% running speed). Each of these will help reduce OS shipping time. To be prudent, you should probably also bring a small amount of ammo or consumables just in case. If you plan on smuggling, you should rig for stealth and speed. This is a topic worth of a guide itself, but just generally maximize your speed, stealth, and bring adequate consumables, experts, and such to defend yourself. It?s a lot easier than you may ? nothing can catch a high level, prepared FTer who is determined to run.
If you buy off the AH, you need to know how much you can pay for the item and still be profitable. This is not the same as knowing what an item costs to produce. For example, if you produce iron ship fittings and can consistently sell them at 325 per, and you know your crafting fee, upkeep, and taxes are 31 per, you can pay a max of 147 per ingot and break even. You should also stay on top of market trends to take advantage of gluts.
How much inventory you keep is up to you. I personally avoid keeping inventory, except on the most problematic goods. The reason I do this is because I don?t like tying up large amounts of capital in half completed goods or AH listings. I try to have less than 10% of my net worth in AH listings or materials at any given time. Other people take the opposite approach, having large stocks of supplies that they picked up for low cost when available and use as needed, and keeping cash relatively low. Both methods work, its just whether you value having your money in your hands to use more often or having the lowest possible cost of supplies.
Likewise, realize time is money. Time saved shipping is time you can spend doing other things. Also, realize there is a point when trying to squeeze out a few more DB is no longer worth it. Your time has value ? don?t waste an hour sailing to bartica to have 2,000 DB on iron ingots when you could be doing something else more profitable with your time (either running missions or just enjoying yourself). Don?t be so cheap that you make the game a chore, and don?t forget the fact that you can always be earning money and having fun from pve or pvp.
Your window to produce and ship is 72 hours. If you wait longer than 72 hours, you waste labor, so plan on shipping and selling all your labor within that time if possible (not possible in all markets). But as I said earlier, production is the easy part ? the real challenge is finding the needs to fill; anyone can click produce.
The final section of this guide is maximizing profits. Much of the work in determining your profits is covered in the first two sections, notably, controlling your costs and selecting a product that will sell. However, here are some tips that may help you eke out those last few doubloons.
List to sell. Sometimes you can ninja in a listing lower than your competitors. For example, if the prevailing price of an iron ingot is 150, you may list at 146. This will mean you get the sales before those listing at 150, and there is little risk of getting found out (most people will bid in 5 DB increments, if that). Of course, there is the risk of someone finding your list price and costing profit, so don?t go overboard. Again, if you did your homework you know your goods will sell, this is just a way to make them sell quickly.
Create a localized monopoly. Think of this as the Wal-Mart strategy. In any given port, there is only so much demand for a good. For some goods (granite, sulfur, brass, lingum, etc), this is a pretty low amount. If you price low, consistently, and in high volume, other people will stop producing because there is no need. Now of course, if you attempt to rise prices they will come right back, but its very possible to capture most or all of the sales in a set market for a decent, but not extraordinary, price. This can give you steady work and profits. This is one of the few times where you should compete on price (needing to compete on price is generally a sign that you produced the wrong thing), but in this case you may want to price low to get other people to switch out of the market and then slowly bring the profits up, but not so high that they come back.
Avoid listing fees. Selling directly to a client avoids the 1% listing fee. On cheap products, who cares, but on a 100,000 ship that?s a free 1k. When you do several hundred thousand dollars of product a week, it adds up.
If necessary, use tax evasion. The FT/Rat skill is invaluable for producing in foreign ports. Almost required. Its worth making a FT alt and leveling it to 20 to get the economy skills if you must produce in a foreign port.
Carefully consider the use of FT advanced recipes or structures. Some are worth it, some are not. Sometimes you may want the labor, generally its cheaper and faster to buy it from someone else.
Leave some meat on the bone. Don?t gouge people, even on the AH. If you exploit someone, they won?t come back. Its better to get a lifetime of moderate profit sales than one gouge. If you gouge the AH, you will attract competitors. That?s fine if you don?t care and just want to pump and dump, but if you want to be in a business long term don?t charge too much. Plus, gouging can hurt your nation?s war effort.
If desperate, sell at cost or even below. If you simply cannot sell your product, its better to recoup some or all of your investment than have useless product sitting in your inventory. The cost you spent to produce the goods and build the structure is a sunk cost, so at least get what you can out of the product, even if it?s a loss to you. It happens to the best of us from time to time.
But by far the most important step, as outlined in section one, is to always stay on top of market trends and demand. Its far easier to sell something people want to buy than trying to convince people to buy something they don?t want.
That concludes my guide. The last bit of advice I have to aspiring producers is to have realistic goals. Not everyone will become a multimillionaire, nor is that a good standard of success. Don?t think of production as a source of income. Instead, think of production as trading your labor in lots a,b,c for someone else?s labor in buildings x,y,z so you each get what you need. For each DB you earn from the AH, someone lost a DB. Knowing this, don?t expect to get wealthy from the production ? some people will, but the majority of the world will not. Set the goal to meet your consumption needs without losing money. Any extra money you make on top of that is a bonus, but the goal of production is first and foremost to give everyone what they need to play the game. If you manage that, you are a successful producer.
Enjoy, and I hope this helps.