Friday, December 23, 2011

Buy it Low or High? Sell it low or high? Profit margin? (Part 1 or 3)

Hello, in these series I will take you around the big dilemma of most bot owners, how high to buy or how cheap to sell. I will explain each one of them and, in the last part, how I've dealt with it on my own bots. Todays topic will be all about buying prices, the advantages, disadvantages, risks and opportunities with each of them.

Buying low:

This sounds like the best option for most new bot owners, the chance of buying cheaply and sell it back at a low price making a quick easy profit sounds great but is not always the best thing to do.

Advantages: Higher profit margin per trade.

Disadvantages: Not attracting to sellers (no suppliers). Costumers that sell to you might feel scammed, not come back, or even spread the word on "how bad" your bot is.
Small / limited collection, not attracting regular buyers.

Risks: None/minimal risk of card value becoming higher than what you paid for it but likely loss of reputation due to the low buying prices.

Buying high:

Bot owners that set higher buy prices look mostly to make sure their regular costumers never need to look at other bots for their needs, having everything in stock, allowing sometimes to sell cards for more than other bots.

Advantages: Higher stock available to sell. Your supplying costumers will come back and recommend your bots to other drafters etc.

Disadvantages: Lower profit margin / possibility to buy cards at a higher value than other bots are selling.

Risks: A sudden card value drop will result in costumers taking advantage of your high buy prices almost instantly, resulting in big losses.

Opportunities: Cards can also go up in value very quickly (as i reviewed before in my fluctuation article). Before Worlds2011 I had 8 Inferno Titan that I've bought for 2.5 each, Hoping to sell for 2.75 (I was buying higher than most bots). On end of the world tournament I was able to sell all 8 of them quickly at a sell price around 9 Event tickets each, resulting in a big profit that I wouldn't get if I was buying cheaply.

On the next part I will be guiding you on the advantages and disadvantages of selling prices.

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