Friday, 13 April 2012

Icons and Vendors

Oh boy, icons again!  Vendor prices have changed and that should change our evaluation of the worth of icons.  This time instead of whether we should be carrying them around - a question made irrelevant by free access to homes - I'll talk about the value you can extract from your icons in terms of currants and whether there is a good reason to be acquiring icons at this point.
In my previous posts discussing icons (Icons!, Icon Update) I compared tithing to icons and revering them to eating food on a currant by currant basis, and I mention two methods for determining the rate at which you can normally convert currants into energy.  The first is buying food from the auction house, the second is by selling food you could have eaten yourself to a vendor.

In light of new vendor prices and the imagination change we are going to see some substantial fluctuation in auction house prices in the short term.  Until those stabilize, analysis can only really be done on the vendor method.

Something I glossed over in my earlier analysis was the relationship between the vendor sell value of food and the currant value of an icon.  If you've read that analysis then you will have noticed that the currant per day value of icons dropped when the vendor price dropped.

There is actually a very intuitive result.  If food is worth less money when you sell it, then you are more inclined to simply eat it instead of selling.  Since we are basing the calculation off of selling food, it just makes sense that it becomes less and less favourable the less money we get for the food.

On the other hand, the less we can sell things to the vendor for, the less money there is being created in the world.  Video game economics can be a little weird, but in this case they are just like real world economics: money obeys the laws of supply and demand like anything else.  More money means the price of money goes down - or the price of everything goes up (inflation).  Less money means the price of money goes up - or the price of everything goes down (deflation).

So the same force that is making our icons less valuable in terms of currants per day is making the value we are extracting from our icons more valuable.

Calculating Icon Value in Currants
First, let's talk about the declining value of icons.  In reality, there hasn't been much of a decline at this point.  The tool vendor is still buying meat, milk and sparkly at 8, 6 and 6 currants respectively.  Diamonds dropping to 1500 matters somewhat, but it's not a tremendous change in the overall economy.

But we'll do some simple calculations on the declining value of icons ignoring rounding.  I previously based many of my calculations on a sell value of 70% because that's what I most often sold at.  What is a reasonable value to use now?  We'll stick with the assumption that I am walking around gathering animal goods in the northern areas so I do not go near special vendors like Tool or Meal vendors, Helga or Uncle Friendly.  Looking at my numbers from yesterday, that means my best sell value is Alchemical Goods Vendors who will pay me 63% of list value.

Let's remind ourselves of the numbers.  Tithing costs 121 + (level - 20) * 33 currants.  It gives you an average of four reveres and a typical revere averages 50% of the tithe cost.  However, the revere immediately after the tithe is 50% larger, so we really get one 75% revere and three 50% reveres for each tithe, for a total of 225%.  We are, therefore, paying 0.444 currants per energy.

If we got those currants by selling food then we could have instead simply eaten them and gotten 154% of the currant value in energy, so our icon produced 146% of it's tithe value over the tithe cycle, or 36.5% of it's tithe value in energy per day.

But instead of energy produced, let's look at icons as machines that make currants.  I know this sounds a little odd because currants are the one thing icons won't give you.  But if you wanted that energy from the reveres anyway then you would have had to get it some other way if the icon wasn't giving it to you, which would mean paying for it either by buying food or by eating food you could have sold.  So instead of converting the currants we spent on the tithe to energy to see how much energy we netted, we'll convert the energy we got from the reveres to currants to see how many currants we netted.

In order to get 225% of our tithe value in energy we'd need to eat 22.5% of our tithe value in meat.  Since we are not eating that meat we will sell it to the vendor and get 146.25% of our tithe value in currants, which is a profit of 46.25% per tithe cycle or 11.6% per game day.

If we were still selling at 70% then this would have been 14.4% of our tithe value per day in currants earned.  So it's a pretty big drop off.

But what about the inflation/deflation I mentioned earlier?  In order to understand the effect of vendor prices on the value of money, we need to know where money comes from.  In real life, money mostly comes from central banks who wish it into existence.  In Glitch, money can come from a variety of sources.

1) Selling things to vendors
2) Quoins
3) One time events (levels, quests, badges)
4) Special recurring events (the Rube, winning games and races)

You'll notice I didn't put selling things to other players on the list.  This is because that doesn't create new money in the system.  It moves money from one player to another, but the total amount of money that exists in the world stays the same.  If you use the auction house or the mail you have to pay a fee and the total amount of money in the world actual decreases.

So of these sources, where does most of the money come from?  I think it is safe to say it doesn't come from one time events.  I seem to recall level 60 giving a sizable chunk of currants, over 20,000 if I recall correctly, but while that is a nice one time bonus, it is sort of like finding $50 on the ground.  You feel pretty good about it today but an economist examining it in the course of your entire life would not think much of it.

Events like races and the Rube are also trivial sources of money.  A very good Rube trade might make you a couple of thousand, but considering how often that happens it barely registers.

Quoins can produce a reasonable amount of money if you typically collect them from the Ancestral Lands.  If you focus on currant quoins and max out in the Ancestral Lands every day you might easily get four to five times your maximum energy in currants per game day.  Of course not that many people are so diligent.

So selling things to vendors probably makes up the bulk of the currants created in the game.  From my own time animal grinding I'd say 50k an hour is a reasonable estimate of what you can make just running around gathering and vendoring at 70%, so lets say 70k an hour in list value.  Of course, like the quoins, few people are going to be dedicated enough to really do this for hour on end.

Still, if you are mid-level, say around level 40 with 1490 energy, then you could be making about 6k quoins in half an hour or around 25k in vendor goods.  The quoin grinding also produces vendor goods since you are in the ancestral lands, but we'll set that aside for now.

Through this incredibly mediocre analysis, let's say about 80% of the currants in the game come from selling things to vendors and about 20% come from other sources.  We can test the sensitivity of this later.

Money has the handy property of being incredibly elastic in terms of price.  When the supply of money increases, the value of money drops proportionally, when it decreases the value of money increases proportionally.  This is because money is never scarce and is the definition of liquid.

So, if the price we are all selling at drops from 70% to 65%, what does that mean for the value of money?  Well, it will take time for the economy to adjust, but the amount of money being produced will drop by around 6.7%.  That means that the price of everything will decrease by about 6.7%, which means you can buy 7.1% more stuff for your money.

So the decrease in the value of icons is mitigated by an increase the value of the currants they produce.  Instead of getting 14.4% of tithe value in March 2012 currants we are getting 11.6% of tithe value in April 2012 currants, the equivalent of 12.4% in March 2012 currants.

So, with lines representing the values for the tool vendor and other vendors, here is the value of your icons in constant currants as vendor prices drop:

I stop at 0.45 because below 0.444 icons stop making you money and start costing you money to use.

Return on Investment
So based on that, here is another chart on the value of icons.  It shows how many real life months you would have to play to make your money back from buying an icon.  It assumes playing during 1 game day on weekdays and 2 game days on weekends and uses the current going rate of 30k for an icon.  If you play more or less you can alter appropriately.  For example, if you play only 2 game days a week instead of 9 then you can multiply the result shown by nine halves.

You'll notice that some of the lines go off the top, I thought that giving a picture that let you see where it crossed the 12 month mark was more important than showing that it goes to 40 months at the extreme end.

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