Art of Undercutting

Article taken from http://justmytwocopper.blogspot.com

Undercutting is an art form in its own right. Some players undercut by 1 copper, others by 10-50% of the original price. Some use the Quick Auction addon which you can find detailed in this thread on the JMTC forums.

Many of you are probably wondering, well what does Markco do? Does he play the 1 copper fiasco and sit at his computer for hours waiting to be undercut so that he can return the favor? Does he always stick to a 10% reduction of price, hoping to infuriate his competition? Does he enjoy talking in the third person?

I'd have to say no to all three of those questions.

What I do is gauge supply and demand. Price is merely the bow with which I play the perverbial auction house violin. Undercutting is a powerful tool which will always negatively effect the price of an item. By being wise about how much and how many items you undercut with you can keep the price from dropping too drastically, or you can send it into the stinking pits of the earth, dragging your competetition down with you.

A normal undercut is what I like to refer to as a 5% cut in which I am selling one or two items and want them to be the best deal when I think they are going to sell rather quickly. A severe undercut is when I want to drive off competetition and force both the auctioneers and then buyers to grab my goods. I find that the latter is far more profitable because 1. people will not undercut someone who drastically goes below their profitable price range and 2. you're now appealing to another market entirely: your fellow auctioneers.

Take armor vellum III's for example, I can sell these for 2 gold each and still make a minimum profit. So I post three hundred of them for 2.5 gold each on any given day and every single one will sell in 24 hours. The next morning I wake up and there are my armor vellum III's sitting pretty and being sold for 500% markup from what I was selling them at. In comes another 300 armor vellum III's for the auctioneers and buyers to pick up. I make oodles and oodles of cash and the people buying me out relist for oodles and oodles of cash. I win, they win, and the consumers win. What's more, no one else has the cahonies to do the same, and if they do I will simply run the price into the break even point which I know they can't compete with. That's my favorite way to undercut.

Keep in mind that undercutting drastically effects supply and demand. If you want your goods to sell quickly and efficiently then do not preform a small undercut with so many items that supply gets too far ahead of the demand for the item. You'll be stuck with items that quickly become undercut and never sell. Remember that undercutting is an artform, so don't go in there wildly waving giant paint brushes while drawing stick figures on a torn canvas.