Wednesday, 1 October 2014

Financial Report - September 2014

Financial report for the month of September 2014 (last month).

I make virtually all of my ISK buying and reselling faction/deadspace mods, ships, skill-books and implants with an army of 24 traders covering 19 regions in most of empire space (everywhere except Aridia and Solitude). All my traders are also Blockade Runner pilots, capable of doing their own transport (mostly on autopilot).

This month was my lowest profit in over a year. I only made 16 billion in September.

But I hardly spent any time trading this month, only about 6 hours in total and most of that on one weekend. Expenses were a bit higher than usual this month too. In addition to regular monthly expenses of about 12 billion I donated 5 billion to Mordus Angels and spent roughly 1.5 billion on pirate tags for data center turnins.


Current net worth is 754 billion with roughly half in cash and market escrow. Most of the rest is in sell orders and recently acquired assets I haven't gotten around to posting for sale yet. Very little is in assets I don't intend to sell soon, maybe 5 billion worth of ships and fittings I keep for my own use.

Saturday, 27 September 2014

Faction and Corporation Standings Affect on Broker Fees

When working with high volume low margin items a small difference in broker fees can make a large difference in profits. The theoretical lowest possible broker fee is 0.1875% which requires standings of 10 with both the faction and the corporation that owns the station. On Jita (by far the largest market hub in the game) which I'm going to use as an example that's Caldari State (faction) and Caldari Navy (corporation).

But how many players actually have 10 and 10 (or even close) standings? Probably not very many. It's probably better to consider 0.25% (which requires 9 and 9 standings) as the lowest possible broker fee.

Paying the broker fee twice (once for the buy order and once for the sell order) it costs 0.50% in broker fees + 0.75% tax = 1.25% total cost to buy and resell anything. Actually a bit less than that assuming you buy for a bit less than you sell for.

The vast majority of competitors aren't going to have anywhere near those standings or quite that low a broker fee anyhow. A somewhat higher and far more realistically achievable broker fee of 0.30% is possible with standings of 3 Caldari State and 8 Caldari Navy.

That comes out to 0.75% tax + 2 x 0.30% broker fees for a total cost of 1.35%. Only 0.10% higher than with the much harder to get 9 and 9 standings.

With no standings (0 and 0) you pay 0.75% tax + 2 x 0.75% broker fees for a total cost of 2.25%.

I'm going to use those total cost numbers, 1.25%, 1.35% and 2.25%, throughout the rest of this article.

The following is a current real example of how broker fees affect profits on a high priced, high volume, low margin item (PLEX) on the busy Jita market.


The above screenshot was taken just after 7:00 am server time on the 24th of Sept 2014.

The lowest sell order at the time was 785 million and the highest buy order 781 million. Obviously there's no profit to be made buying and reselling PLEX with only 4 million markup. In fact you'd be taking a loss of over 5 million even with perfect standings (10 and 10) for the lowest theoretically possible taxes and fees.

However there are only 6 PLEX in the lowest sell order. The next lowest is 10 million higher and there are plenty more available incrementally higher. It's more realistic to consider the sell price to be 795 million. That's a markup of 14 million which is still unprofitable with 2.25% taxes and fees but is profitable with reduced broker fees lowering the total cost.

Working with a 14 mil markup on a 781 mil buy price for a 795 mil sell price

At 2.25%  you'd pay 17.8875 mil taxes and fees and lose 3.8875 mil
At 1.35% you'd pay 10.7325 mil taxes and fees and make 3.2675 mil
At 1.25% you'd pay 9.9375 mil taxes fees and make 4.0625 mil

That's a 24% increase in profit going from 3.2675 mil at 1.35% to 4.0675 mil at 1.25%.

However, even at 1.25% cost it's still a very slim profit margin of less than half of 1 percent. You'd have to sell a lot of PLEX to make very much total profit at such a low margin. But it still is profitable so you don't have to back off when someone tries to dominate a market and bully everyone else out with low margins.

Then again, PLEX are a high priced (currently in the 750-800 million range), high volume (moving 2500+ per day on Jita) item. If you can buy and sell 100 a day (4% of Jita daily volume) for a profit of 4 million each that'd be 400 million a day and far more than that when margins are higher.

That's with a very small markup though and a really tight margin even for PLEX.

Assuming you aren't overpaying on buy orders you can usually buy and resell PLEX within a reasonable amount of time with a less aggressive 20 mil markup.

With a 20 mil markup on a 780 mil buy price for a 800 mil sell price

At 2.25% taxes and fees would be 18 mil for a profit of 2 mil per PLEX
At 1.35% taxes and fees would be 10.7325 mil for a profit of 9.2675 mil per PLEX
At 1.25% taxes and fees would be 9.9375 mil for a profit of 10.0625 mil per PLEX

Moving 100 a day that'd be

200 million profit
926.75 million profit
1.0625 billion profit

Note with the higher markup going from 1.35% to 1.25% only increases profit by about 8.5% rather than the 24% we saw with a 14 mil markup.

Thursday, 25 September 2014

Bulk Purchasing Update

Updated the Bulk Purchasing page today.

- Raised prices on a number of items including most of the T2/T3 ships I buy.
- Lowered minimum stack sizes on many items.
- Made big changes to acceptable delivery locations.
- Added Orvolle to the delivery location list.

Of particular note is provided my minimum stack sizes are met I'll now accept delivery anywhere in contiguous hi sec. Also there's a list of 27 stations (at least one in each contiguous hi sec region) where I'll accept delivery of smaller stacks too (even singles).

Tuesday, 23 September 2014

Grinding Jita Broker Fees Down

As promised in yesterday's post here's a followup post detailing how I plan on grinding standings for better broker fees on Jita.


With 0 standings I currently pay a total of 2.25% in taxes and fees (0.75% tax + 2 x 0.75% broker fee) to buy and sell every item I deal in. Taxes are already as low as they can get so the only way to lower my costs is to grind standings for lower broker fees.

Here's a link to a handy Broker Fees Chart

As can be seen in the above chart Faction Standing has a greater effect on broker fees than corporation standing.

I'd like to get total costs (taxes and fees) down to 1.5% or less. I can't lower taxes any further than 0.75% so that just leaves broker fees. Getting broker fees down to 0.55 (before skills modification) or better will do it.

With Broker Relations V that'd be 0.55 x 0.75 = 0.4125% saving me 0.75 - 0.4125 =  0.3375% on every broker fee. Since I pay the Broker Fee twice (once for the buy order and once for the sell order) that would save me a total of 2 x 0.3375 = 0.675% on every item I buy and resell.

Total cost to buy and sell an item would then be 0.75 (tax on the sale) + 0.675 (broker fees) = 1.425% or 0.825% lower than the 2.25% it costs me now with 0 standings.

On Jita 4-4 Caldari Navy Assembly Plant, the standings required to lower broker fees are the Caldari State faction and the Caldari Navy corporation.

To meet my goal of a before skills fee of 0.55 or less I'll need Caldari State at 3 and Caldari Navy at 8. That should be fairly easy to do. If I can get Caldari State 6, the before skills broker fee would be 0.40 modified by Broker Relations to 0.30 for a total cost of 1.35% in taxes and fees, saving me 0.90% and giving me increased profits, especially on low margin items.

Social skills


Several social skills are useful for the standings grind but there's only one that really matters.

Social - The only skill that really matters. Social gives 5% additional standing on every standing gain. It's applied at the time the gain is made and has no effect on prior gains. Training Social all the way to V before doing anything else means the standings grind will go faster (25% faster than without Social and 5% faster than with Social IV).

Connections - Not absolutely necessary since it has no effect on base standings but still handy to have as it modifies base standings allowing access to better agents sooner. The sooner you can talk to higher level agents the faster the grind will go.

Diplomacy - 4% Modifier per level to effective standing towards hostile Agents. Not really necessary but all that Caldari faction means you get derived negative standing with the opposing Gallente and Minmatar factions and their corporations. Diplomacy helps to alleviate that.

Distribution Connections - A moderately expensive book that does nothing to help with standings gains but does give 5% more Loyalty Points per mission. Not at all necessary but what the hey, might as well train it to IV and earn 20% extra LP while grinding.

Negotiation - Again not at all necessary but might as well train it to IV for 20% extra pay too.

The Plan

- Caldari State Standings -


1. Train Social V before doing anything else to maximize standings gains and finish the grind sooner.

2. Start training Connections IV. No need to wait for it to finish since it just modifies base standings for things like agent access and unlike Social has no effect whatsoever on actual standings gains.

3. Do the Caldari Data Center missions. I can buy the necessary Guristas tags (important distinction, that's just plain Guristas, not Dread Guristas) anytime as long as I don't trade any in until after training Social V.

Ahtulaima Data Center

Tillen Matsu and Hosiwo Onima: Courier missions.
Vaktan Sido: x3 Guristas Copper Tag.

Saikanen Data Center

Autaris Pia and Nakkito Ihadechi: Courier missions.
Rokuza Taman: x3 Guristas Copper Tag.

Kamokor Data Center

Korhonomi Oti and Pomari Maara: Courier missions.
Peeta Waikon: x3 Guristas Copper Tag.
Ollen Alulama: x20 Guristas Bronze Tag.
Ichmari Obesa: x20 Guristas Silver Tag.
Kui Hisken: x20 Guristas Brass Tag.
Tojawara Saziras: x20 Guristas Palladium Tag.
Oko Alo: x20 Guristas Gold Tag.
Isu Jokaga: x20 Guristas Electrum Tag.
Ruupas Vonni: x20 Guristas Crystal Tag.
Ozunoa Poskat: x20 Guristas Platinum Tag.
Kanouchi Hisama: x20 Guristas Diamond Tag.

Completing all of the Caldari Data Center missions requires 9 Guristas Copper Tags and 20 of each other tag.

See how high base unmodified standings are at this point. I haven't bothered figuring it out but I'm expecting somewhere between 2 and 3. Hopeful Connections IV will modify base standings enough to access the agents in order but I might have to grind some Distribution missions to help with that.

4. Maybe (strike that) for sure do the Amarr Data Center missions too. Since the Amarr are allies of the Caldari their missions give some Caldari standing too. If I'm interpreting the numbers right (more Amarr missions + larger bonuses and assuming I get half as much Caldari standing) it looks like Amarr DC missions should be worth nearly as much Caldari State standing as Caldari DC missions. I've been told derived standings cap at 7.0 so if I'll need to do Amarr missions while Caldari State standing is still well under 7.0.

5. Do distribution missions for Caldari agents like the so-called Circle Agents. Most distribution missions don't require combat and can be done while AFK.

6. Maybe do the Sisters of Eve epic arc. Though the SoE epic arc does require combat, it grants a lot of faction too and might be worth bringing a dps character along to help with it.

Grind away until Caldari State standings are high enough to make me happy. 8 would be awesome, 6 would be nice but I probably won't have the stomach for grinding that much. I would like to get at least 5 but I have a hunch I'll wind up settling for 3 or 4.

- Caldari Navy Standings -


This part is easy. Since corporation standings can be shared with anyone in fleet, I'll probably just pay a standings grinding service to do it for me. Besides paying a fee, about all I'll have to do is log in, fleet up with the grinder and go AFK.

The service I'm considering using for this is TSCA (The Standings Correction Agency). They charge 2.75 billion for 0 to 8 standing with any corporation. They have a very good reputation with anecdotal evidence suggesting they can get 0-8 done in as little as just 1 week

A bit expensive to be sure but it's a one time (per character) sunk cost I can easily afford. I've lost more than that on a typo.

Progress to date

I started buying Guristas tags with buy orders a few days ago and already have enough to complete several of the missions including the first ones.

I have about 3 days left to finish training Social V before I can start turning tags in.

I've also trained Connections III, Distribution Connections III, Negotiation III, and will train all of them to IV after the all important Social V is done.

Monday, 22 September 2014

Grinding Standings for Lower Broker Fees

In the past I've always eschewed grinding standings to lower broker fees. It's not really necessary unless you're a big player playing the low margin, high volume game on the main hubs.

The thing is in certain markets I am a big player working the high volume, low margin segment of the market.

It's always nice to log in to something like this


That's 44 Sisters Core Probe Launchers purchased at a decent price in about a day and a half. I'll probably wind up selling them for an average of around 40 million each. Or I could do a quick flip and resell them all very quickly right where they are for around 37 mil each (give or take a mil or so either way depending on how the competition reacts).

The nice part about the quick flip is while I'd be cutting the profit per item by at least half, I'd get the ISK back quickly to reinvest and I'd probably buy a whole lot more sooner. If I can buy more than twice as many in the same timeframe then that's more profitable.

The catch is the longer I do that, the tighter the margins become. Eventually it gets to the point it's not really worth the time it takes anymore. That's were faction and corps standings come into play.

With maxed skills in Accounting and Broker Relations but 0 faction/corp standings I pay 0.75% (3/4ths of 1 percent) tax on every sale and I pay 0.75% broker fees on both buy and sell orders (IOW, I pay the broker fee twice, once to buy and once to sell). That's a total cost of 0.75 + 0.75 + 0.75 = 2.25% or actually a bit less assuming I buy for less than I sell for. To keep the math simple I work with 2%, anything much over 2% is profitable, anything around 2% is break even (or close enough it doesn't matter) and anything under 2% is unprofitable.

Faction standings and standings with the corporation that owns the station can lower broker fees a further half a percent from 0.75% to 0.25% making the total cost 0.25 +0.25 + 0.75 = 1.25% or a full 1% lower total cost.

Now if I'm paying 35 mil (as above) and reselling for 40 mil, that's 5 mil profit before taxes and fees or about 14% profit. With roughly 750k (simple math not an exact number) in taxes and fees that leaves about 4.25 mil in profit or about 12.14% profit. Not too shabby.

Grinding standings for 1.25% costs would change that to around 500k cost or 250k more profit. for a total profit per item of about 4.5 mil or 12.8%. A total increase of about 0.64%, not a whole lot. I make 40+ billion a month and though I can't say for certain what my average profit margins are, 12% is probably pretty close. Increasing those profits by 0.64% per item across the board would result in a 0.64 / 12.8 = 5% increase in profits for about 2+ billion in additional profits. Hardly worth the effort required to grind standings considering I'd have to grind standings on 25 traders to realize the full 2 billion.

However that's with good profit margins.

If my average markup is only 5%, after taxes and fees profits work out to 5 - 2.25 = 2.75% with 0 standings and 5 - 1.25 =  3.75% with high standings. In that case profits would increase by 3.75 / 2.75 = 1.366... or roughly 36.6% higher. Now that's looking a lot better, more than 1/3 increased profits. If my average profit now was only 2.75% for 40 bil in total profits then grinding the standing for 1.25% taxes and fees would increase my profits to 40 x 1.36 = 56 bil.

That's an increase of 16 bil per month, I'd still have to grind standings on 25 characters to realize all of it. 16 bil / 25 = 640 mil per character. Still not a whole lot but some characters do more business than others. It'd probably be good for more than a billion a month on several which might make it worth grinding standings on them. Plus I could do more volume at lower markup and still make some profit, particularly on Jita.

The lower the markup the larger increase that extra 1% is going to generate. With a profit margin of 3.25% before taxes and fees that only leaves 1% profit after taxes, chopping another 1% off cost would increase profit from 1% to 2% for a 100% increase in profit. Of course volumes would have to have to be much higher than they need to be at 12% to make up for the lower profit per item.

I'm going to try it on my main Jita trader. I probably won't grind enough to reduce costs from 2.25% all the way down to 1.25% but I can probably get total costs down around 1.5% without too much grinding. If it works out well I might start grinding standings on as many as 5 or 6 other traders too.

I'll follow up soon with another post laying out just exactly how I plan to grind those faction and corporation standings.

Saturday, 20 September 2014

Basic Skills Training for Blockade Runners

As you may have noticed if you follow this blog much, I really like Blockade Runners. Blockade Runners are awesome, they're small, fast, agile, can warp while cloaked and cannot be cargo scanned, all of which makes them fantastic for hauling valuable not too bulky cargo around quickly and in relative safety.

Technically speaking you can get into a BR with just under 1 month of training. But that's just to sit in it, to fit and fly it half decently you need closer to 2 months worth of skills.

The following is the basic BR training plan I follow on all my alts.

The training time near the bottom of this post is for a new character with the default attribute map, no implants and no skills pre-trained except social I and contracting I. Of course you can lower training time with implants and attribute remaps.

Minmatar Industrial I - V
Industry I - V
Transport Ships I


The above are the 3 skills you must have just to sit in a blockade runner. They take 29 days, 15 hours and 56 minutes to train. I fly Prowlers so I train Minmatar Industrial, naturally if you want to fly a different flavor of BR you'd have to train the applicable racial industrial ship skill for that ship.

Transport Ships II - III
CPU Management IV
Cloaking I - IV
Power Grid Management IV


These 4 skills are pretty much essential too. You need Cloaking IV to fit a Covert Ops Cloaking Device and if you're flying a BR without a covert cloak you need to have your head checked. CPU Management IV is a prereq for Cloaking, you'll need Transport Ships III for the 20% per level reduction to cloaking devices CPU requirement and you'll have problems fitting your BR properly unless you have Power Grid Management IV too.

The rest are what I consider bare minimum skills to fit and fly a BR half decently. While you can get by with even lower skills and you could even skip some of them altogether, I wouldn't recommend either. It only takes another 10 days to train them all anyhow.

Hull Upgrades I - II
Capacitor Management I - III
Capacitor Systems Operation I - III
Electronics Upgrades I - III
Energy Grid Upgrades I - III
Acceleration Control I - III
Evasive Maneuvering I - III
Afterburner I - III
High Speed Maneuvering I - III
Warp Drive Operation I - III
Mechanics III
Jury Rigging I - III
Astronautics Rigging I - III
Shield Management I - III
Shield Operation I - III
Shield Upgrades I - III
Tactical Shield Manipulation I - IV


23 unique skills, 68 skill levels; Total time: 49 days, 2 hours, 2 minutes, 28 seconds; Cost: 35,305,500
N.B. Skill costs are based on CCP's database and are indicative only

This is just a basic training plan. After it's finished if you're going to use your BR very much I highly recommend training every skill in the plan to at least IV and several to V. Evasive Maneuvering, Navigation (which isn't in the basic plan since you start with Navigation III anyhow) and Warp Drive Operation should be the first skills trained to V. In fact after completing the basic plan I usually train Evasive Maneuvering IV and V before anything else because it's so important for fast align times.

Thursday, 18 September 2014

Crime and Punishment in Eve Online

Being a criminal is too easy. Besides being too easy, gate camping / station camping is about as lame as it gets. Conflict should be moved away from the gates and stations, out to the belts, moons and anomalies while travel between gates and stations (in hi sec anyhow) should be relatively safe.

After all you'd think the mighty empires of space would protect the trade routes that are the lifeblood of the economies that made them mighty. Gankers camping the station undock in Jita is comparable to fleets of pirates sitting right off the docks of London picking off merchant galleons in the 1700s or 1800s. Britain wouldn't tolerate it and neither should the Caldari.

There should be more meaningful consequences for ganking in hi sec. Like for starters losing docking privileges, having cargo confiscated when caught by police or in extreme cases involving the most hardened criminals (the ones with the worst security status) having other assets confiscated too.

That could all be done on a system by system and faction by faction basis based on both security status and faction standings. The lower the security status and/or faction standing the more severe and more widespread the repercussions.

It shouldn't be at all easy for gankers to repair faction standings either, especially not as more crimes have been committed and standings get lower. Once faction standing is low enough, they should be a free target for other players that increases their killer's standing with the same faction. Criminals with low standing should be kill on sight for faction police / concord who will see them (even when cloaked) if they go anywhere near a hi sec gate or station. Escaping police should be allowed but if they fire back on the police then concord comes.

The hard lines between hi, low and null should be more blurred too. For example as system security status gets lower the police (backed up by concord) would still protect the gates and stations but be less likely to respond to trouble out in the belts. Say 100% in 1.0, 80% in 0.7-0.9, 50% in 0.6 and 40% in 0.5.

As system security gets lower there'd be fewer police around too, it would take them longer to find a criminal, making it easier for criminals to evade them. And of course Concord would respond more slowly too, just like now.

It'd be nice if there was a chance (even a small one, perhaps requiring a high level of criminal activity) of concord responding to trouble on the other side of a hi to low/null gate too. And once there, they'd stick around for a while too. Setting up a camp at chokepoints like EC-P8R, Auenenen or Gondista would suddenly be just a little bit riskier.

Notes

1. This started out as a comment I made on another blog that I figured was worth fleshing out a bit more and making a post out of.

2. With one exception (the other side of hi to low/null gates) all of this would apply to hi sec and hi sec only. Low and null would be another story.