Tobold's Blog: WoW gold inflation

Thursday, February 09, 2006

WoW gold inflation

When you surf the internet for World of Warcraft related information, you can see them everywhere: Google ads for World of Warcraft gold. It seems nobody cares that it isn't allowed to buy or sell gold in WoW according to the terms of service. And it also seems that Blizzard in spite of occasional loud proclamations of another 1,000 cheaters banned isn't really doing anything against the big gold traders, like for example sue them. Anyway, yesterday one of these little Google ads struck my eye, offering "crazy prices, $53 for 1,000 gold". Wow, hadn't realized how cheap WoW gold has become. That explains why even the most stupid purple items on the AH sell for 500 gold.

If I remember correctly, the first of these WoW gold sales, over a year ago, had an "exchange rate" of about 1$ for 1 gold piece. Now the value of the gold piece seems to have gone down to 5 cents, although it probably is still a bit higher on the younger servers. That is a pretty bad rate of inflation, of far over 1000%.

Now lots of people have already written about the bad effect of gold farming on the WoW game economy. But I was wondering about the real world economic effects. How many gold pieces can you reliably make per hour in World of Warcraft? I don't think you can earn much more than 30 gold per hour (even if some other Google ads promise to sell you the secret of making 50 gold per hour for $9.95). At 5 cents per gold piece, that is only $1.50 per hour. Assuming that half of that goes to the gold trading company, and half to the gold farmer, you end up with less than a dollar per hour. The average wage for a factory worker in China is already 40 cents per hours, and a young person skilled in using computers can probably earn a lot more. Employees in an Indian call center earn entry-level wages of $2 to $3 per hour. Manufacturing wages in Mexico are about $1.50 per hour. Earning your wages by farming gold in WoW simply isn't all that great a way to make money any more.

Then there is market saturation. At these rates, there can't be all that many repeat sales. Spend $100 on 2000 gold, and you can buy yourself an epic mount, all the bag slots in your bank, 16-slot bags everywhere, the materials and recipes to skill up a tradeskill of your choice from 0 to 300, a complete set of blue gear, and you'll still have gold left over. The only thing you could still possibly spend money on would be purple items, but there simply aren't many interesting purple bind-on-equip items. For example I use a blue one-handed sword from a Scholomance quest, and have never seen any better sword on offer in the AH. There are better weapons, but they are all bind-on-pickup, and thus not available for gold or dollars.

So unlike real-world inflation, which can go on forever, I predict that World of Warcraft gold inflation is going to hit rock bottom and stop. I don't think we will ever see 1,000 gold sold for $20, because that sum simply wouldn't pay for the computer, internet access, WoW game and subscription, and the work hours needed to farm 1,000 gold. Remember we are talking about professional gold farming here, people have to deliver the gold every day, they can't rely on getting lucky and finding ultra-rare purple stuff.
- posted by Tobold @ 7:58 AM Permanent Link

Comments:

Well, Your right about chinese labor. Because I am pretty sure those gold companies arn't hiring american labor to farm the gold for them. They are hiring chinese labor to farm that gold and 40cents an hour is probably pretty good money to them to sit in front a of a computer and play video games.

# posted by

Anonymous : 9/2/06 23:10

Just to correct anon, but most gold farming "sweat shops" are run in other asian and euro countries like Romania or India.

As far as inflation never ending... about 3 years ago now I was playing Ultima Online and selling gold was something I dabbled in. It was a set $12 per 1 million gold in UO.

Looking at eBay its about $5 a million now.

I think it just slows down when we start getting into the cents per gold range.

I bet we see a pick up with the expansion :)

NOTE: I have not and do not dabble in the gold or eBay scene anymore outside of selling off used MMO accounts.

# posted by

heartlessgamer : 10/2/06 05:09

Selling off used MMO accounts? Now that is something I would never do. I *did* buy stuff like a house in UO or SWG currency on EBay, but I never sold anything.

One reason is that I am never sure whether some day I might want to come back to a game. But the more important reason is that my character has made a name for himself, developed a social network, and I would hate to see a jerk running around with my name, with people having played with me wondering why the heck my personality changed. In a way the characters on my old MMO accounts are a part of me, and I couldn't possibly sell them.

# posted by

Tobold : 10/2/06 09:06

40 cents per hour is *not* good money to anyone for sitting in front of a computer and playing video games. Even if you worked 2,500 hours per year, you'd only earn $1,000 per year. China has a GDP per capita of $6,200, which is 7 times less than the USA, but that still means that with just $1,000 per year you are dirt poor by local standards. That is like telling somebody in the US that $7,000 per year is good money.

A Chinese who is able to play WoW efficiently has enough computer skills to find a much better job in the hot Chinese economy. A job which unlike a WoW sweat shop would also give him additional benefits like social security.

# posted by

Tobold : 10/2/06 09:14

To be honest its not hard to make more than 30g per hour. I make nearly 200g in under 4hrs if i really push myself. The easiest and largest payouts are the supply and demand on the AH. I just pay attention to what is needed by other players and I farm the items and sell them. I can even undercut the market and still turn that kinda of profit. Any player can accomplish this if they just push themselves.

# posted by

Anonymous : 30/5/06 21:59

It is not just the Chinese that sell the gold. There is going to be a constant inflationary pressure from the legit characters running around mobbing and flooding the market with gold and goods. For example as the % of the population that is lvl 60 increases the frequency and cost of purple items should go down.

# posted by

Anonymous : 30/8/06 06:06

You'd be suprised how much gold prices are actually going up. I sometimes keep tabs on the whole market for kicks, and in but a few months, I've seen the average for 1,000 gold to be about 50 US dollars, to the average being 120 US dollars. I know this still doesn't really sum up to a lot based off how long people have to work for it, but I just don't understand how people actually PAY that much for a virtual item that they're probably just going to spend the moment they get it. So that's a good 120 or more dollars gone in a split second on something not really worth it.

# posted by

Anonymous : 25/10/06 04:01

Ok, I know this has been up for a while, and I just found it; but that being said I have a few responses.

First even at only level 45 it was beyond easy for me to make 35 to 50 gold an hour, and I was taking it slow. So I would imagine that at level 70 100+ gold would be no sweat with the right tactics.

Second, it seems very easy to blame gold farmers for inflation in games. However, the reality of the situation is that in game economies are just as complex as real world economies. And inflation is drivin by many factors. The primary one being the players themselves. It is beyond easy to controll the auctionhouse, and "price fix" things to what you want them to be. And as long as players want to power level their tradeskills; items like stacks of cloth will continue to go up in price. I have also seen players team up to "price fix" items. In the real world things like this happen all the time and the rate of inflation is very predictable. One could argue that it is predictable in a game as well, it just opperates on a much faster time table (one that closely coencides with the time table of the game). It is really all very facinating to me; the way that an entire new for of economics has formed based on the relationship between real world and game wold economies.

# posted by

Anonymous : 6/7/07 04:35

A few points. Since the expansion, it is easy to get gold at the rate of 150g/hour with a level 70 gimped priest. That said, a skilled person could probably get higher than that. Also, there are programs that let you auto-fish and auto-farm monsters which have no labor costs at all. These programs are not detected by the game client (yet). This allows you to take a cheap pc and farm at around 150g/hour at the cost of electricity :)

In terms of money sinks.. the new epic flying mount costs 5000 gold and some enchants cost 100's of gold. The $50ish spent on 1000 gold doesn't really go that far anymore. The falling US dollar will also help keep the price of gold rising. I wonder which money supply is rising faster :)

# posted by

Anonymous : 24/7/07 10:33

I just wonder if WoW is sophisticated enough to maintain the item supply and player ratio or if items are simply generated according to a fixed timer. Like for example if say people on a particular server stopped producing items that requires copper ore but the program continues to spawn copper ore vanes for people to mine then there would be a surplus of copper ore and thus the price will drop. This is the same for other items like herbs or armor and stuff. If new items are continuously generated without any link to the population or the destruction rate of the items then eventually the price of everything will go down.

# posted by

Anonymous : 28/4/08 16:06

Gold continues to drop. 1k gold is 19.98 on a US server. Quite sad, I think it has to do with the economy being in a real bad state. Not many people are buying. So china is doing all they can to keep the masses buying.

On top of everything obviously most sites lie even before they have the gold. So its a race game for them before you cancel your order.

message me on aim at psxand1 to discuss.

# posted by

Vin : 7/6/08 03:46