Tobold's Blog
Friday, December 28, 2007
Limitations of Auctioneer

Inspired by Og I downloaded and installed Auctioneer, a famous addon to watch World of Warcraft auction house prices. That is I first downloaded the AuctioneerAdvancedSuite, pressed a wrong button on it, got spammed with "this is cheap, do you want to buy it" message boxes which I couldn't turn off, and then uninstalled it again. Then I installed the AuctioneerClassicSuite, which was much less confusing. I think I'll just use it for a while and see what comes out. But although I haven't used it much yet, I'm already more aware of its limitations than many regular user, due to previous knowledge of economics and how the WoW AH works.

Auctioneer overestimates prices: This is inevitable, because Auctioneer doesn't have data on actual sales, it only has data on for what prices people put up items for auction. If nobody buys something overpriced, the buyout price still shows up in Auctioneer, and because the auction goes on until it expires, everybody on the server using Auctioneer will probably register the price. Cheap or underpriced items will be bought much quicker, and not everyone will see them, because the auctions last much shorter. On average the prices recorded by Auctioneer are too high.

Averages hide variations over time: World of Warcraft items undergo cyclical price fluctuations. If you watch prices on every day of the week, you'll notice that items aren't worth the same during the week (especially on patch day) as they are during the weekend. During the christmas event small eggs (needed to bake cookies for a christmas quest) suddenly go up strongly in price. Other one-time events change prices too, for example prices for gems skyrocketed with the latest patch, because people got lots of socketable arena season 1 gear for honor points. Auctioneer can store high and low prices, but won't tell you at what times prices are usually higher.

If everybody would use Auctioneer, you couldn't profit from it any more: Auctioneer can help you to buy things cheap and "flip" them, selling them at a profit. But that only works because some people sell goods for cheap, because they don't know what they are worth. If you sell something frequently traded, like lets say Runecloth, it is easy to see for how much other people are currently selling it and then undercut them. But if you want to sell some green item, the "Dastardly Dagger of the Duck", chances are that when you sell it there are no other identical pieces for sale. Thus people usually accept the proposed bid price (which is 50% over vendor price) and then post a buyout price somewhat higher. That has nothing to do with the market value of the items. Traders know that for example the same item "of the eagle" (+sta and +int) sells for more than "of the gorilla" (+str and +int), although the bid price WoW suggests will be the same. The profit comes from many people being not well informed, and thus selling items too cheap. If everyone had good information on previous prices, "flipping" would be much harder. Note that other games, e.g. Pirates of the Burning Sea, give price information on the average sales price of every item over the last 30 days.

I can see the interest in making quick virtual bucks by flipping items on the WoW auction house, but that business isn't for me. I don't see myself camping the AH for profit instead of adventuring. Not that I don't enjoy trading, but in WoW trading isn't the most fun part of the game. I'd rather do my trading in PotBS, where it is much more fun and the adventuring is less good than WoW.
I’ve flipped before and made a lot of gold but now I only use Auctioneer to tell me if the item is worth selling or I will disenchant it or see if an item is overpriced (in AH or Trade Channel).
I've being using Auctioneer for almost a year in its various upgrades and it has made me a ton of money through savy use and trend tracking of prices of materials over time. Through Auctioneer passive tracking of items I can know just how rare or easily available an item is thus I can tell if I will decide to buy or try and find the item myself.

Best I can say Auctioneer takes time for a first time user to build up its historical data of items over time. When I first started using Auctioneer the first time or a major upgrade change I usually run it I'd complete scan AH for a few weeks to get the data I need. The price historical data is whats important to me for that is what I use to see pricing trends. That makes me tons of money on pricing for items I often buy, sell or track for speculation reselling. I don't always use auctioneer recommended price for anything. I use my own common sense of what I feel the average price should be based on all the high and low price data in Auctioneer.
Pretty much the reason I gave up on making money off the AH. I played the AH early on in WoW and was able to buy a ton of toys for my characters. If I had really played it hardcore, I would be sitting on a lot more cash... err if didn't spend it. Casually, back in the day, I was making a slaying off 30 minutes a day on the AH.

Now a days, the AH is so littered with "flippers" that it really is starting to destroy the point of an AH. Honestly, we are nearing the point that the AH will be dominated by a single cartel on some servers and they will set prices that everyone has to accept.

It is just a bad system and there is more reason than ever for Blizzard to swap to a Blind Auction House.
Auctioneer is definitely not a simple mod. You need to learn what all the information is that's being displayed and how features (like Appraiser and Bottomscanner in the Advanced suite) actually work. Finally, you need to do a bit of scanning so you have some worthwhile pricing data to work against. Unlike a lot of mods, just turning it on and following its recommendations is usually a costly mistake.

Once you get a handle on it, it's very powerful -- though you still have to be skeptical about "deals" it finds with uncommon items.

But even if you never get too far into the intricacies of the AH economy, you may still find Auctioneer invaluable for a few casual-friendly features:

- vendor pricing - Auctioneer adds the vendor purchase price to the tooltip description for most items, so you can see how much an item is worth if you just sold it to an NPC vendor. That's incredibly valuable all by itself. If you're going to sell or buy something at the AH, it's good to know what it could have been sold to a vendor for. I can't count the number of times I've seen items in the AH listed at less than their vendor price (since there the AH takes a cut of every sale, even posting at vendor price is a small loss for the seller). This is also really helpful when you complete a quest where none of the rewards are particularly useful to you (if you're not an enchanter, compare the vendor price of each item and pick the one that sells for the most).

- Per item pricing for stacks -- I have a love/hate relationship with Auctioneer Advanced. It's still not done and some of the UI is annoying, but there are some great features to recommend that version. One of my favorite is its ability to show you the per item price for goods sold in stacks. That will let you see instantly whether 6 motes of fire for 17g49s is a better deal than 4 for 12g15s or 1 for 2g95s.

Good luck (and never sell your netherweave cloth for less than 3g -- that's the vendor value if you just turn it into heavy netherweave bandages).

Happy holidays.
Try this:
Take a single Wool Cloth and set a enormous buyout. Something like 1k gold. Then, monitor the Wool prices over the next day. Something tells me they will be much higher than before ;)
I belong to the camp who strongly believes that a vibrant economy with people who buy low and sell high (flipping) as you call it benefits everybody - increasing avilability of needed items and ultimately resulting in more realistic prices for all.

Information is vital for an efficent market and auctioneer is an attempt to collate that information. Unfortunately its dependence on asking prices is fundamentaly flawed and prone to manipulation. It still works though and people have made fortunes in WOW gold using it.

It used to be possible to use auctioneer to scam the AH - I wonder if that has been stopped? If you list an obscure item many times for a silly high price - auctioneer will start to believe that that is the realistic price of the item. Once you have laid the trap you then list the item for a lower (but still outrageous price) and sell it to some unsuspecting auctioneer user who thinks they are making a killing.
I know a few very serious AH players who don't believe Auctioneer is very useful, for some of the reasons you mention. It's too much of an attempted wizard and not enough of an analysis tool for me.

Have you looked at WoWEcon? I haven't, much, but I believe it's much more of a statistical analysis tool and less of an automated broker.
Thanks for the great post and link, Tobold.

Auctioneer can be very frustrating and the Advanced version is a bit a of a beast. I think your experience is a very common one. It's one of the reasons why I started my blog - to help demystify the add-on, the experience and give tips on how to make extra gold no matter what style you play.

I've used your post as a springboard for a writeup on the Ledger. It would have been a monster comment and I was worried about your disk quota (even Google has its limits). You can get to it here...

Good stuff this blog.

Og's Ledger
I flipped in EQ and hated it, but it was a necessity. I specialized in trade skill components. I'm sure armorers on Torvo despised me )
I've lost gold on Auctioneer; I've made gold on Auctioneer. In the end, you need to think that it's only a TOOL to help you do your job faster: it's NOT a tool to do your job FOR you!

So, with that in mind, use and abuse auctioneer but with caution!
Just to comment on what Kis said: I'm fairly sure that the coders of Auctioneer added code to ignore outliers.

They'd be pretty stupid to just do a simple arithmetic mean, wouldn't they? :)
To the poster above: That is exactly how it used to be.

I don't know if it's still the case but before TBC, the Goldsellers used to put up runcloth for 99g in the AH. Of course nobody bought these stacks on purpose, but the auctioneer average price rose. That way, the Goldsellers and everybody who just let Auctioneer think for them, put up runecloth stacks for let's say 2g50s instead of regular buyouts of about 1g50s, for instance. Auctioneer told them, that this is the new average price...

What scares me more is that the average WoW player does not recognize the 99g offers as price manipulation and started bragging about the stupid people who cannot really believer that someone will buy at that price...
I've never used Auctioneer.

But I've played the AH over the last few months for certain specific and carefully-chosen endgame items and turned ~60g into several thousand gold. I've found a few hot deals, and I've miscalculated a few times, but those spikes even out. However, it takes some investment capital, time and patience, and you need to enjoy such enterprises or it's just not worth it. I continue to play the AH because I need the gold for cover the cost of gems and enchants on gear upgrades. But it's kind of like the daily quests; I'm not chained to the AH. I do what I want with my WoW time.
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