Setting a Price for Iron and Copper Ore

As an exercise, I decided to try to figure out a fair price for iron and copper.

I decided to base my calculations on my own experience mining at Etceter Crag Mines.
In my case I would return when I had mined 100 copper and 100 iron ore, which at level 99 Mining Proficiency and level 90 Meticulous Collection takes around two hours. A more typical miner would possibly only gather around 100 ore in the same time, so I'll use that as my standard: 50 ore / hour. They would probably not spend more than an hour mining, so I'll assume a one hour mining session.

The first expense is getting to the mine. What is the value placed on traversing the Crag Foothills to get to the mine entrance? I decided to use the value that the game places on traversing Eastreach Gap: 1,500g.
So 1,500g / 50 ore gives an access cost of 30g per ore. That is conservative, because Crag Foothills are considerably more difficult to get through than Eastreach Gap (it is an extensive 5 skull scene).

The second problem is placing a value on an hour of mining. I based my assessment on opportunity cost - how much gold could I make if I spent that hour doing something else instead? I headed to my favourite scrap collection spot and spent 10 minutes battling skellies. Here is the result:

Corpse wax x 63*
Long Bow x 7
Rusty Sword x 6
Rusty Two Handed Sword x 12
Triangle Shield x 6

Value of loot after selling at Owl's Head: 1,365g

* Dang. Forgot to count the ectoplasmic residue.

That rate of return is of course not sustainable over an hour, so assuming conservatively half that rate of return and multiplying by 6 to bring it up to an hour, we get an opportunity cost over one hour of 4,095. Dividing by 50 gives a value per ore of 81.9g. Adding the previously calculated 30g/ore access cost brings that to 111.9g/ore.

Now, anyone can go out and farm skellies. Not everyone can maintain their sanity (*wibble*) while spending hours in a mine, or tolerate the excrutiatingly slow skilling process required to reach a point where mining is tolerable. That places a restriction on supply. So, to allow for that I think a 50% markup is justified. That brings us to around 168g/ore.

I am interested in what others think. Have I miscalculated? Forgotten something?

Comments are welcome.

EDIT: Since it is possible to get to the mine as a ghost, and there is an ankh located conveniently outside the mine entrance, we can ignore the 30g/ore access cost, bringing the price down to 138g/ore.

 

Good job! It will be interesting to where prices eventually gravitate towards.

Cypher Black

 

Very good job thinking this out and putting some value to time in game my only issue is this part of the calculation...

Getting paid for something you could have done instead seems an unreasonable cost to pass on... Does a farmer add that to his cost when he is selling tomatoes? "I could be in a doctor's office charging $100 per hour 5 days a week for 8 hours a day... It takes 6 weeks to grow a good tomatoes... do the math and add that cost to my tomato price."
These ore/cotton/hide are the raw materials to produce all the armor and weapons in game, if we start with too high of a price at the bottom, basic armor is going to go for 10's of 1000s of gold. Basic vendor armor isn't more than 500g a piece. Basic Player armor should be a bit more because it gives few more benefits. Advance armor that needs all the rare drops and the time to master the skill should much higher...

We really need to see how the Devs plan on balancing the economy or inflation is going to be a real big issue in this game.

 

The markup seems reasonable to me. I would imagine that most serious crafters will have access to ore mined by friends/guildmates in trade. If you have to buy mine quickly then the demand is high and supply is low. I could see it becoming even more expensive.

 

@StoneLeet

I take your point, however while not everyone can realistically hang up a shingle and be a doctor, anyone with competent adventurer skills (Chris Spears defines this as level 40) can farm skellies. Basically the opportunity cost is the vendor saying "I don't have to do this. I'm not a charity. I could make more gold killing skellies. If you want me to keep supplying you you'll have to make it worth at least as much to me as the readily available alternatives."

To me that seems reasonable. However if I am wrong then others are free to sell their ore more cheaply.

 

Four things I would add:

The economy won't work like a pure market-driven economy. Opportunity costs don't matter as much. People will not necessarily leave their chosen profession for a more profitable one. It is why, thank God, we still have teachers, who get paid nowhere near the actual value of their services. Some people in SotA will want to be miners because that is what they want to be, no matter how lucrative other options are.

Second, the only real out-of-pocket costs are the costs for degraded equipment to fight your way to the mines and then pick all that rock. In some cases, players will be able to get these to almost 0. Therefore, there will be real pressure to keep lowering prices.

The only thing I can imagine that will keep prices from hitting the floor is if the supply is truly limited, and this is still very hard to judge despite the excellent stats you gave on the time involved.

Crafting still seems too easy, even taking into account the XP bonus. I mean, we have people crafting epic sets of armor a week into the game? Would that such achievements were more rare so that there were true masters whose work was sought and in limited supply.

 

It is a nice calculation but as a crafter I look on the end price. For me as a tamer I could never buy an ore for 168g if I want to sell the pets at a good price. for one binding I would need 4 ore for an ingot + coal \ 2 because we get 2 bindings out of one ingot. That would make 338g for an binding. If I add the same way silver and leather I would come to a cost of at least 1k, I guess even more 1,5k. For an average good pet I need around 5 collars + a whistle. that would make a basic cost of 10k for a normal pet like large spider without getting anything. So I had to the price for a spider around 15k. I haven't calculated in all the skilling which should never play a role in those prices.

So from my point of view I would never pay more than 100g per ore.

 

Interestingly it is well within Portalarium's power to adjust the above price by lowering the opportunity cost - the return on killing skellies. Also the 30g/ore access cost was a bit cheeky since you can currently ghost your way to the mine entrance where an ankh has been conveniently placed*.

That already brings the price down to 138g/ore.

Intense competition would no doubt see some vendors imposing a markup of under 50%, leading to even lower prices.

*If they ever remove that ankh then expect the price of iron and copper to rise significantly.

 

You only need two ore for an ingot if you combine the ore with scrap metal. Go farm some skellies.

 

I like your calculations Womby - I don't see why that couldn't be applied across the board for all resources that people are out there gathering. I think your numbers are quite reasonable too. It's not just for resources, people who do not spend the time gathering and crafting just don't appreciate the true cost of time and effort that goes into gathering all the materials it takes to make good gear.

Coming from a recent traumatizing experience of spending hours and hours gathering materials to craft a good bow, only to cry when I found all the material stats had changed and instead of holding a cool bow with 10% dmg incr/20% dmg incr - I had a piece of junk that had +0 dmg resist/+5% crit... something, I dont know 'cause i was crying by then, lol. Anyway - point is, I could have spent all that time looting, and made TONS more gold, then been able to buy a bow someone else had spent hours and hours on. Right now that bow is going to be selling for far cheaper than it ought to sell for , I guarantee.

 

if I'm a crafter I don't go out. And if I buy them from the vendor it won't become cheaper. I buy the stuff to save time. If I go out than I could also mine on my own.

 

If you use four ore per ingot because you "don't go out", you may have difficulty competing with others who do go out and are able to combine two ore with scrap (which is almost free).
You could of course place a work order for scrap, and lower your costs that way. You would need to pay more than people would get at Owl's Head (OH is currently offering the best prices for rusty swords, etc.).

 

It might be premature to make a determination right now especially when zone and stuck feature will be taken away. Once they implement loot tier based on mob difficulty, the way people making money will change as well.

While doing some calculation per your approach will help price determination for a "fair equivalent", but it may be much simpler to YOLO the price and increase/decrease it based on the demand from other players at the time.

For example, beetle carapace is hard to find, people might want it for crafting the ICBM long bow, but maybe not so much now after the ninja patch. I mean I would personally pay up to 3k each before, but now.. meh I don't want them anymore.

 

The big question for me is, why should I pay that much if I can get it cheaper if I do it myself. If I get out to get the scrap, than I can also go out to mine. Raw materials are not that hard to get like a good armor.

 

Supply & demand seems to be the key factor missing.

 

Getting scrap is really easy, and can be quite interesting. Mining is a boring, frustrating and soul destroying waste of time with a long, drawn out levelling process before you reach a level that makes it tolerable.

 

True. It remains to be seen how that will play out.

There are probably quite a few people like me who only mine so they can acquire the raw materials to level up their production skills and make their own weapons and armour. I'll only sell stuff if I need money for something specific that I absolutely cannot make for myself - the rest of the time I'll be stockpiling raw materials as a hedge against inflation.

 

In an economy, the price will be set at what eventually the item will sell at. The seller does not have the luxury of setting the price. If he wants to sell something (anything), then the price he offers will always tend to the highest price he can get someone to fork over some cash. He does not really have a choice. There will be no selling or if you will, economic activity, if the exchange does not occur. What it really comes down to is how much value we put on our time. If no one will buy ore at a price that reflects the value we set based on our time to obtain it, and we value our time too much, then no one will buy the ore and you will have to search for some other source of cash or reduce your price. There are so many other factors in setting price..... One might be that you have a super rare obsidian monster smasher sword you want to sell on the same vendor. Setting a price on ore at a really low price will draw customers to your vendor where they will see other profitable items and perhaps buy them. Yes, you will be selling ore at much less than the time cost, but the choice you made nets you some cash for the ore sold at a big loss plus the over-inflated sword price netting a gain.

 

I looked just into the BMC pricelist and they sell the ore for 150g. I think for raw material you have to make the profit over the mass.

 

Is that the R25 price list? I already adjusted my calculation to remove the access cost here, bringing the price down to 138g.