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.

10 comments:

  1. You can try evernus to calculate profits with different standings. It's on http://evernus.com

    ReplyDelete
    Replies
    1. From the evernus website

      "Evernus supports In-Game Browser integration for even faster updating of your orders. Simply copy the link using “Copy IGB link” position from the “Tools” menu and paste it into the IGB.

      Each order in the Evernus IGB page can be clicked to open the corresponding item market window. Also, you can click on previous/next order buttons to quickly scan through all your orders.

      Note: IGB imposes a minimum 1 second delay between openings of the market window. If you click on the buttons faster, some of your clicks will be ignored."

      Could be a problem with that, sounds to me like that breaks the ToS.

      Other than that, it looks interesting, I'll have to check it out.

      Delete
    2. It installed on my 32 bit Win XP but it won't run. The error message says "evernus is not a valid win32 application."

      Delete
    3. Windows XP is too old, unfortunately. Windows 7 is the minimum (although it has been launched on Vista as well by someone). If you have the option, try the 64bit version.
      And it doesn't break the tos. This has been discussed on the forums.

      Delete
  2. With your fleet of BR pilots I assume distribution missions are more viable as combat missions for you (also looking at skill requirements).
    Another assumption is that you only need standings with station owning corp and won't go for the entire faction (requiring storyline missions)?

    1. train some social skills.
    Depending on corp/faction if applicable
    2. https://wiki.eveonline.com/en/wiki/Career_Agents
    3. https://wiki.eveonline.com/en/wiki/Circle_Agents
    4. https://wiki.eveonline.com/en/wiki/Data_Centers

    For corp standings it's possible to fleet up and share rewards. You can even pay someone to grind standings for your characters. Looking at your hourly income that might not be a bad choice.

    ReplyDelete
    Replies
    1. Unfortunately faction standing is the more important one, it has a bigger effect on broker fees than standing with the corporation that owns the station. I wish it was the other way around.

      Delete
  3. 1) Buy dog tags and drop off at data centers:
    http://www.thonky.com/eve-online-guide/dog-tags/

    2) Run the COSMOS missions:
    http://www.hb3.info/cosmos/minmatar/cosmos_minmatar.html
    http://www.hb3.info/cosmos/gallente/cosmos_gallente.html
    http://www.hb3.info/cosmos/caldari/cosmos_caldari.html
    http://www.hb3.info/cosmos/amarr/cosmos_amarr.html

    3) Do datacore research with R&D agents. They will each give you a *very* trivial mission each day, and after 16 such missions, you'll get a storyline mission, which will boost your faction standings. With 5 R&D agents per toon, this amounts to about 10 storyline missions per month. This has the added bonus of earning you a bunch of datacores, which you can use for invention, or just sell on market.

    ReplyDelete
  4. Do Amarr first - you get Caldari State standings via the derived standings mechanic from them, but that's capped at 7.00 (reference: http://www.newedenlibrary.net/eon/faction_standings.shtml - what you can gain is just a matter of how much the factions like each other), so you want to maximize what you can get from that so that all your Caldari specific grinding goes into raising it as high as possible. If you're already at 7.00 or higher, Amarr doesn't really do you any good.

    My preferred means of grinding standings is thus:

    -Amarr COSMOS, Data Centers, Epic Arc and FW to 7.00 Caldari State or completion (whichever comes first) in any order you prefer. In Kenobanala you'll have a choice of five agents for one particular stage. Be sure to select Nuo Tuotura - he is a Caldari Navy agent, and he awards 13.14% standing for Caldari Navy.
    -Caldari stuff. ALL the Caldari stuff. COSMOS (including the lowsec stuff - finish it all and you get Michi's implant, which is worth 1.25-1.5b isk and will more than pay for all the items you have to buy), FW, data centers, Epic Arc. The Epic Arc can also be completed once every three months, so it's a nice way to continue polishing your standings. The SOE arc, on the other hand, takes far too long to be worthwhile for the standings it gives you.

    All of that starting from 0 on all factions will get you in the 9.2-9.5 Caldari State range, along with 7.0 or so to Caldari Navy. Don't forget to do the COSMOS BPC turn-ins - the frigate is at 9.1, Cruiser at 9.5 and Battleship at 9.9, if I recall.

    All of that can be completed in a well fit Tengu, though the last room of the last Amarr COSMOS mission will eat you alive if you're not prepared - something like six webs, six scrams and eight target painters. Still doable, just have to turn and burn the other way while you kill them. Needless to say, though, this is why I like to buy Tengu pilots if I happen to need a new market alt.

    ReplyDelete
    Replies
    1. I did not realize derived standings were capped at 7. That's something to consider but it's still high enough I shouldn't have to worry about it (at least not for the more important faction standing).

      Don't forget I'm doing this on a market trading alt (and probably several more if it works out well on the first one). While my trade alts do have good nav and fitting skills for flying Prowlers they're not combat pilots. Flying Tengus is out of the question.

      Delete
    2. Indeed. Requirement of extensive combat is definitely the downside. If only CCP would revamp standings so there were other ways to get them...

      Delete