Lower the Marketplace Tax

[sF_Guardian]

RatShit  got thwo MW`s by just trading 1 armor around.
Making profit is pretty easy if you calculate the values
well and you`re patient.

Tax is very fine as it is, any change would make it just worse.
And gold sink also works as intended.

[PhigNewtenz]

http://en.wikipedia.org/wiki/Deflation#Deflationary_spiral

A deflationary spiral is a situation where decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to further decreases in price.

We just need to be sure that we didn't start something that will wreck the in-game economy. Yes prices have fallen by roughly thirty to forty percent. What if they keep falling, so much so that people lose the motivation to retire and get loom points? Then experienced players will be able to snap up whole sets of heirloomed items, and level themselves to 33+. How will that help new players?

I understand the need for gold sinks in an artificial economy, but I'm concerned that we may be shrinking the money supply too much. Just as central banks can set interest rates to control inflation/deflation, the cRPG developers can set the tax rate to keep this economy stable. I'm sure they'll arrest this fall before it goes too far.

Lower the tax to 2%

[Leshma]

What if they keep falling, so much so that people lose the motivation to retire and get loom points?

In that case loompoint price will go up because there's few of them on the market.

And most people will never stop to retire, especially with this new loom points awards for lvl 31+.

If prices of looms drop to their ORIGINAL values of 100-300k, that will just mean that gold is very scarce and that people need it to finance their builds which aren't balanced with upkeep in mind.

Currently, it's way too easy to farm gold because of multiplicator system which awards everyone in pretty much the same way (valor for winners fixed some of that). If they make it so that gold can be earned only if you play well, which means that you have to wear good items (unless you're Fallen_Wayynee), than gold value will go up and heirlooms will be cheaper because upkeep will mean something after a long time.

And yes, I have nearly 20 mil gold in the bank.

And yes, I'm waiting for lower prices to happen to buy plenty of loomed items.

Will that happen? Maybe.

Can you blame for trying to earn more than I deserve? No you can't, because I made a strategy investing in gold, based on my predictions. Same as rich people do irl. And just like IRL this is a long term strategy. It involved months and months of planning and executing the whole thing.

It's your own problem you didn't do anything similar.

[Turboflex]

This guy just sold a +3 for the value of way OVER 3 loompoints and he is crying about how unfair the tax is? unbelievable

[GuiKa]

This guy just sold a +3 for the value of way OVER 3 loompoints and he is crying about how unfair the tax is? unbelievable

And who bought it ? XD

[PhigNewtenz]

And yes, I have nearly 20 mil gold in the bank.

And yes, I'm waiting for lower prices to happen to buy plenty of loomed items.

Will that happen? Maybe.

Can you blame for trying to earn more than I deserve? No you can't, because I made a strategy investing in gold, based on my predictions. Same as rich people do irl. And just like IRL this is a long term strategy. It involved months and months of planning and executing the whole thing.

It's your own problem you didn't do anything similar.

Well, there you go. Leshma has solved the problem! All everyone has to do is:

• Have a lot of capital in heirlooms and gold to begin with. (Everyone having above average wealth doesn't make mathematical sense)
• Sell it all when prices are high. (Wouldn't work if everyone did it; prices would crash instantly because no one would be buying)
• Wait for prices to fall. (Effectively betting against everyone who kept their heirlooms to, oh I don't know, use them? Also, who would these people be that are trading at falling prices, if everyone had pulled a Leshma and already sold all of their heirlooms?)
• ??? (This is the part where you would have to spend time thinking existentially about how steps one through three, though impossible, happened)
• Profit. (Nope)

This isn't a formula for market success by all, it's a strategy for rich-get-richer, Scrooge McDuck-esque snobbishness that does nothing to help cRPG prosper.

I'd like to see the marketplace be an interesting addition to the community that fairly benefits all players.

• Stable prices are predictable and fair.
• Inflation penalizes holding gold, but not holding heirlooms (which can be done by anyone, even by newer players while using their few heirlooms in-game) so it is also fair.
• Deflation penalizes holding heirlooms, but not holding gold (which can only be done by rich people who can sell their extra heirlooms, sit on the gold, and still have some heirlooms to use in game) so it is unfair.

Reducing the market transaction tax rate is only one approach (not even close to the best in my opinion) to curbing deflation, but it could work and it is the topic of this thread. In that context, I support it.

[Zanze]

Cheaper value of just about everything makes...just about everything but gold more readily available. So wouldn't noobs have less of a hard time gathering the cash to buy them? At least, I find it is easier to save up 300k than it is to save up 700k. As loom point quantities drop due to the low price, the remaining few will raise there price and probably fluctuate between 350-450. People will continue to retire because for many, it funds their cav-only gens or they simply want more loompoints for the sake of versatility, who knows. Just because famous player X or famous player Y states they wont retire anymore because boohoo life sucks, doesn't mean the people who you never hear from will stop retiring.

It is easily possible to make good money in the marketplace and once you get the right chips to do so, it simply becomes a waiting game for that one deal that will bring you a step closer to money. Yes it is technically a "rich get richer" strategy, but you know how it starts? A single loompoint. Not that long ago I saw a pretty darn effective +2 item up for 1 loompoint and 40,000 gold. Using 20k equipment as my base I was able to make almost 100,000 just by leveling from 1 to 25ish.

So all it takes is for one person to sit back, make a plan on how they will join the market economy and follow it. None of that buy item X for 15,000 and never use it. Or use it constantly at a net loss of gold. I've posted in a few threads asking about how to make money in this game and i've had to answer the same question more than once, be it by PM or in the forums itself.

If you plan to cav, you cannot plan to make money.
If you plan to use the most expensive gear, you cannot make money.

Again, I'll repeat. If you want to join the market, if you want to make gold in this game. Play smart. You don't need 65 armor in order to play the game effectively, learn how to avoid bad situations or learn how to stop getting hit so much. You don't need an expensive weapon to do good either. 1extra cut damage is not worth 4,000 gold.

[PhigNewtenz]

Awesome post Zanze. I think we agree on a lot of points here.

Cheaper value of just about everything makes...just about everything but gold more readily available. So wouldn't noobs have less of a hard time gathering the cash to buy them? At least, I find it is easier to save up 300k than it is to save up 700k. As loom point quantities drop due to the low price, the remaining few will raise there price and probably fluctuate between 350-450. People will continue to retire because for many, it funds their cav-only gens or they simply want more loompoints for the sake of versatility, who knows. Just because famous player X or famous player Y states they wont retire anymore because boohoo life sucks, doesn't mean the people who you never hear from will stop retiring.

I agree completely. Like most dynamic systems, the current one will stabilize eventually ('stability' will involve some variation up and down, but the trend will level off). I am also pretty sure that without changes it will stabilize at lower prices than the ones we currently see. I think this is a GOOD thing. If you think I've said otherwise (I actually didn't say anything on the topic) it's probably because you've confused the process of deflation with the result of deflation. Low prices are good. The process of falling prices (deflation) is bad. I don't think that we can arbitrarily set them lower, so to avoid the pain of them falling I think we're better off where we are.


As to your other points, I agree that it is possible to make money in this market no matter how much you have to start with. I do a fair amount of trading my self, and that would still be possible without a deflationary trend. Your advice about 'playing smart' is spot on. It took me a while to learn it, but now I always try to buy reasonably priced armor and weapons and I enjoy much more financial success.


One comment:

Using 20k equipment as my base I was able to make almost 100,000 just by leveling from 1 to 25ish.

I see statements like these all the time and they are pretty obvious exaggerations (when talking about battle and siege). Obvious because the math is easy to check and doesn't support the claim:

• Level 1 to level 25: 1584752 XP
• Level 1 to level 25: between 1585 (gen 1) and 1093 (gen 16+) ticks
• Level 1 to level 25: between 79250 and 54650 gross gold income
• Level 1 to level 25: between 37824 and 26083 gold expense for repairs*
• Level 1 to level 25: between 41426 and 28567 net gold income

*Assumes 20k equipment cost, 0.07 repair cost to item cost ratio, 0.0375 break chance per tick, 2.2x average multiplier. We can start a separate topic if you want to know more about these calculations and numbers. I use similar ones often and have found them to be fairly accurate.

As you can see, running around naked and weaponless to level 25 wouldn't get you anywhere near 100k (and would certainly get you banned!). With repairs on 20k equipment you'll be losing about half your income to repairs (depends on what type of equipment, your proficiency, round length, your win rate, etc.) so 40k is a much more realistic estimate of your earnings (if you're a low gen, lower if you're high gen) than 100k (which is impossible). I would expect you to hit 100k somewhere between levels 29 and 30.




Back to topic: Lower transaction taxes to decrease the gold sink and stabilize the market.

[Kafein]

Either that, or split the tax between both parties. 2.5% fee for both.

You really did not think that through, did you ?

Btw, as this is probably considered non-trivial by many :

The repartition of the nominal tax between the buyer and the seller has no effect on the effective burden of the tax. The most inelastic (aka not sensitive to price changes) party will pay the bigger share of the tax, no matter from who the money happens to be physically taken from.

As an example, our current system takes the tax from the seller's pocket (at least when someone makes a "sell" offer). That means that the seller is getting less than what he asks. But he still wants to get as much money as possible. So the tax makes his price go higher, in order to get at least part of the difference between the price he had before and what he would get without increasing the prices.

If the buyer was paying the tax, we wouldn't see a difference. Only the nominal prices of the items would be different. But what would the seller get would be the same.

[Bjord]

You really did not think that through, did you ?

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[Kafein]

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Well yeah, see the above post

EDIT : quoting for thread readability :

The repartition of the nominal tax between the buyer and the seller has no effect on the effective burden of the tax. The most inelastic (aka not sensitive to price changes) party will pay the bigger share of the tax, no matter from who the money happens to be physically taken from.

As an example, our current system takes the tax from the seller's pocket (at least when someone makes a "sell" offer). That means that the seller is getting less than what he asks. But he still wants to get as much money as possible. So the tax makes his price go higher, in order to get at least part of the difference between the price he had before and what he would get without increasing the prices.

If the buyer was paying the tax, we wouldn't see a difference. Only the nominal prices of the items would be different. But what would the seller get would be the same.

[Bjord]

I get what you're saying, you're saying that it doesn't make a difference. Yet it does. You think it's as easily solved as selling for 105% of the planned offer. But in reality, people become more reluctant to buy something if I did this.. When I set my prices, I have two things in mind: profit and attractivity of price. I want to indulge the potential buyer's consideration, as well as my own profit. It's very tricky to find even ground when I lose a lot of money in those pure gols trades. Anyway, I'm getting a large booth now regardless so I coule care less about the tax.

Still, the point of the goldsink is to remove a portion of the money in circulation to balance the money that is generated every minute(including repairs). In this sense, it doesn't matter for two shits if both parties pay the tax or only one. It is just a simple alteration, and that is why I proposed it. I actually prefer the 2% tax proposition, but somehow I feel that is going beyond for what devs might consider. Now, all they have to do is split the tax between seller and buyer.

[Kafein]

I get what you're saying, you're saying that it doesn't make a difference. Yet it does. You think it's as easily solved as selling for 105% of the planned offer. But in reality, people become less reluctant to buy something if I did this.. When I set my prices, I have two things in mind: profit and attractivity of price. I want to indulge the potential buyer's consideration, as well as my own profit. It's very tricky to find even ground when I lose a lot of money in those pure gols trades. Anyway, I'm getting a large booth now regardless so I coule care less about the tax.

Still, the point of the goldsink is to remove a portion of the money in circulation to balance the money that is generated every minute(including repairs). In this sense, it doesn't matter for two shits if both parties pay the tax or only one. It is just a simple alteration, and that is why I proposed it. I actually prefer the 2% tax proposition, but somehow I feel that is going beyond for what devs might consider. Now, all they have to do is split the tax between seller and buyer.

Say the price before the tax was 100%, and the tax requires sellers to pay 5% of the transaction gold.

Now as a seller you have to put 105% as your nominal price to get the same amount of money per item as you did before. However, if you did that, that would imply the whole tax would be paid by the buyer. That's not very fair. Except in extreme cases like drugs (zero or very low elasticity, the buyer will accept any price), the buyer is a little bit elastic. Elastic means if you make him pay more, he will buy you less items than what he used to buy. When the demand elasticity is superior to 1, a 5% increase in price will reduce the sales volume by more than 5%, which means increasing the price will decrease the seller's profits. When the elasticity of the demand is inferior to 1, increasing the price increases the profits.

The sellers thus have to find out more or less how is the demand curve, and accept to pay a part of the tax, in order to maximize their profits.

If our buyers were heirloom addicts, sellers could very well just up their prices by 5% because buyers would buy anyway. On the other hand, if nobody is interested in heirlooms, and many sellers are competing, it's very important to keep your price low and sell as many items as possible.

Here's an image to describe my thoughts :

(click to show/hide)

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Even though all of this is (probably badly explained) hard facts, the psychological impact of the prices buyers see is important because they react to them by comparing them to earlier prices, but that's not economy.

[Zanze]

I see statements like these all the time and they are pretty obvious exaggerations (when talking about battle and siege). Obvious because the math is easy to check and doesn't support the claim:
...

Yeah, it is an exaggeration. I don't really keep tabs saying I started gen X with Y gold and say by level Z I made blah blah blah. But it gets the point across somewhat well. It felt like 100k to me tho xD

Anyways, glad someone else sees eye to eye with me. We now need to spread the insight.

Edit: After later review, I find it completely possible I could have made near 100,000 gold in 1-25. According to the new lovely progress bar I made ~33,000 gold in 618,000 experience on the 15th.

[Stormcrow]

just add all the taxes paid to the lottery to avoid a gold sink and have a formula so those who pay alot of tax in a week get free lotto tickets.

example: 50000 gold in tax = 50 tickets