Tobold's Blog
Wednesday, February 04, 2009
How to make gold in World of Warcraft

There are quite a number of blogs I've linked to in the past that cover various aspects of WoW economics, including various tips on how to get rich quick in that virtual world. In this post I'll just take a top level view, and sort the various ways of earning gold into three categories, listing the advantages and disadvantages of the various methods.

The first category is "flipping". That is you buy something from the auction house, and sell it on the same auction house later for a higher price. The big advantage of that method is that it doesn't require any level or character skill, you can do it with a level 1 bank alt. The only thing you need is starting capital. The disadvantage is that you need to correctly identify which items are cheap and could be resold for a higher price. There are addons like Auctioneer to help you with that, but you better know what you are doing, or you might lose your capital instead of making money. Especially in Wrath of the Lich King prices for everything have been pretty much dropping since day 1 of the expansion, so something posted at a price that might have looked cheap last month might well be overpriced today. Nevertheless there are always people wanting to get rid of something fast, and posting it cheap. And depending on how much starting capital you have, and are willing to risk, you can make a rather large fortune in a short time. Or lose one. Your success might also depend on how many other people are trying exactly the same thing at the same time. A good method for experts, but maybe not the thing you'd want to start with if you never followed AH prices.

The second category is "crafting". Again you buy something from the auction house, but then you transform it into something else before selling it at a profit. Again you need some knowledge or addon to track AH prices, because not every transformation creates value. Some players are willing to lose money on crafting something, just to earn the skill point, so it is totally possible that lets say frostweave bags sell for less than the cost of the frostweave cloth and infinite dust needed to make them. How profitable a transformation is depends often on how rare the recipe is you are doing. Recipes with a long cooldown or recipes that are difficult to get hold of generally produce better profits, because there are less people doing the same thing. On the high end of this category is crafting epics, which usually takes very expensive materials and results in very expensive epics. Risky stuff, because usually there are quite a lot of crafters that can make those epics, but some shy away due to the high initial capital investment. If you're selling the only crafted epic of that type, profits can be quite nice, but if there are ten of them on the AH, you might be forced to either wait a long time or lose money on a quick sale. A disadvantage of making money by crafting is that you need a high-level character with a high skill in that craft to maximize profits. Getting your level high might be something you already did anyway, but getting your crafting skill up usually costs you a lot of time and/or money.

The third category is "farming". This is the most basic form of making gold in WoW, you go out into the world and gather stuff. That could be done by gathering ore or herbs with a gathering skill, or by killing specific monster for specific loot. Cloth used to be something easily farmed and sold, but nowadays you get a much reduced result on the highest level cloth if you aren't a tailor yourself. But then you can still farm things like eternals, from killing various elementals (or gather them with engineering). Again you need a high level (and possibly high gathering skill) for maximum profit. You *can* farm low-level materials and get more money for them nowadays than 4 years ago, but the materials you can only gather at high level are usually more profitable. Farming is not necessarily the fastest way to riches, but usually it is the safest. You can't lose money unless you try to farm monsters that repeatedly kill you. So whatever you gather will be worth something, although of course the more people who farm the same stuff as you, the lower your profit. Drops in prices mean you earn less, not that you lose some investment. And if prices for items you can farm drop far too low, you can move to the special sub-category of farming daily quests, which pretty much have a fixed income for close to fixed amount of time spent.

Which of the three methods you prefer is totally up to your personal preferences. Do whatever works for you, some people can be rather judgmental on the issue. You'll hear everything from "farming is for idiots" to "flipping is immoral". But in the end it's all just time spent in a video game resulting in a virtual reward. Just go for maximum fun.
The fourth category is known as "RMT", where you turn your wages from your real life job into instant piles of virtual gold, and live like a baron on a hill.

The fifth, and final, category is called "haxxoring" whereby you either set up bots to farm for you or send your keyloggers into the wild internets. Only then can you reap your...

What? Oh yeah, sure, let's all pretend it doesn't exist :/
When you manage to mix the three types together is when you really make a killing.
In that case 6th category is questing and daily quests :P 7th category is get your spouse to send you some.
In support of spinksville, questing (at level 80) is in fact nicely lucrative. I'm sure a master auction house player can make three times as much per hour as I do.. but I enjoy the questing enough that I'm happy to quest.
What daily quests do you complete to make money? I've been experimenting with how much can be made in an hour of daily quests, what kind of numbers have you been seeing?
I'd have a fourth: direct gold farming. Dailies are a huge source of gold and so may be worth doing even after exalted. Just finishing up the quests in Northrend gave thousands of gold and was far more interesting than farming ore and far less risky than flipping or crafting. Before the nerfs, old world raid bosses were a decent bit of gold, not huge, but enough to pay for repairs and maybe some light consumables.

In fact, gold farming is the only method of getting gold that really increases the gold supply. Farming mats and selling will almost always be through the AH, so that's a significant piece of gold removed every sale. Flipping is pretty much the same. Even crafting is likely to be done through the AH or with mats from the AH.
Yeah, I mentioned farming daily quests as sub-category of farming. But the dailies I do are usually those for reputation, and I don't really count how much gold they earn me. But I'd say 100 gold per hour with dailies should be easy enough to achieve.

On RMT or botting, of course I'm aware they exist, but didn't include them in the post for the same reason that "rob a bank" doesn't turn up as advice in the Financial Times. Especially botting is quite likely to get you banned. Gold *buying* as opposed to gold selling appears to be relatively safe, I rarely hear any stories of the buyers getting banned, but I wouldn't rely on that. And really, in WotLK making gold is so easy, why would you even *want* to buy it for real money?
As a way to start getting the "g" flowing especially at lower levels, farming isn't that bad. Told my RL friend to sell her herbs that she collects that she doesn't use to level up her alchemy, and she just hit over 1k gold after 3 weeks of this. She's a casual player.

Once you get a stable amount of starting money find ways to make money. I have several little startups that made money fast initially, but has tapered off. I'm still making money, and it's really about finding what your server is lacking. My biggest annoyance is how many people have leatherworking after their Raid Leaders told them to switch for drums and they never switched out. /sigh
A variation of flipping is speculation. Every major content patch changes value on certain items by introducing new recipes and the like. I've made plenty of gold by watching patch notes and stockpiling certain materials. Gold can be made off other speculators, as word gets out and spreads on blogs the price will peak before the patch and drop afterwards as everyone dumps their stockpile onto the market. With any speculation there's a risk that other factors may offset the anticipated demand resulting in no rise in prices and possibly a drop as everyone dumps stock on the market.
EVE Tobold, EVE!

EVE has a real economy where you can buy or sell from/to any player in the game and you can make, buy or sell every single item in the game. If you don't want to risk being ganked just create a low skill player park him in Jita and start playing the market. You can make a million (or a billion) without ever leaving the space station.
In honor of the current (real world) economic issues, here's an idea:

Borrow some items from another player, than create a fincnaial instrument called a "gear backed security", that you sell to some alts, than use those alts as collateral for "path futures", where you buy and sell financial instruments whose price is based on the likelihood of certain nerfs, buffs, or other changes arriving in a patch. (there are a number of other financial instruments based on the price of shards, inscriptions, and such, I don't really understand them, but they are excellent at making money.)
It might be worth bringing up the idea of "Opportunity Cost." Many players insist on farming their own mats, when they could make money faster through other means (speculating / crafting) and buying the mats on the AH. They either don't know any better, or they feel it's more rewarding to do all the work themselves. I guess in the end you should do whatever is the most fun to you, but people should be educated on faster / more efficient options.
Well, about "opportunity cost". I accept that when you are saying that somebody could have sold the mats he gathered instead of crafting something from them, if you don't count skill point gains. On the "opportunity cost" of farming the matters are less clear, because spending time in a game isn't necessarily a "cost". Maybe you enjoy lets say spending an hour fishing, just for the fun, or peace and quiet of it. Then even if another activity that you like less would have made you more gold in that hour, fishing might still have been your best choice.

In virtual worlds economic theory isn't always equal to real world economic theory. We are paying Blizzard money to be allowed to spend time in the game, so it's hard to argue that this time spent in game is work, and thus an opportunity cost.
Two Words: "Patch Notes"

Patch Notes are a like a license to print money. Blizzard is TELLING YOU in advance what is going to happen and you can buy/sell based on that decision. For example, Frozen Orbs got added to LW leg armor recipes as a mat. An enterprising LW could make 20 leg enchants (~2000g) prior to the patch and sell them off over the next few weeks post-patch for 3500g. A "flipper" knows that the price of Frozen Orbs is going to go up (since demand will be increasing) and supply decreasing as less people do Heroics.

I fall into the "flipper" category I suppose and I'm averaging about 500g per day with maybe 30 minutes invested. But patch notes are where I make the big money.
On Opportunity Cost:

If people enjoy items for crafting, that's great. What bugs me though is when people go out and farm because they are cheap and don't want to buy materials, so by farming for them for "free", they believe they are saving money (and making more at the end of the day).

I saw it a lot when people wanted to level inscription - they would spend hours doing laps for Peacebloom instead of just buying it from the AH in the weeks leading up to the patch, because they didn't want to pay a few gold for Peacebloom. But even at inflated prices, it was better to buy than farm. Say it cost something crazy like 10g/stack on the AH. Let's say in an hour you could farm up 3 stacks (just a stab in the dark). So you've "saved" yourself 30g - but effectively it means you have been farming at a rate of 30g/hr...... yikes. Instead, they could have done their QD dailies in the same time and made hundreds of gold, bought a whole bunch of Peacebloom, and had 200g left over. But they couldn't see that.

Levelling cooking is another great example. Sure it stings to pay 10g for a stack of meat, but I bet you could make 10g much faster doing something else in the time it takes for you to find and kill enough animals to get that meat - and that doesn't even take into consideration the travel time involved to go from place to place to get each type of meat required, or waiting around for respawns. So many people don't get this!

Like I said - if you enjoy riding around picking flowers, or fishing all over the world to level your cooking, that's fine - that's how you enjoy the game. I enjoy herbalism and fishing, and I know I could probably buy my consumables for less, but I get satisfaction out of supplying my own. If that's what you like to do, there is nothing wrong with that. Rather, it's when people do it purely because they think they're saving money, spending an hour fishing for smallfish when they could go buy a stack for 75s - that's what bugs me :P
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