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Tax efficiency - increase profitability (discounts)Follow

#1 Oct 05 2010 at 8:39 PM Rating: Excellent
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I thought I'd point out a few observations and tips for people in-game about how bazaar taxes work and how buyers and sellers can work together to maximise gil efficiency per transaction.

Clearly, there is a bazaar tax of 10% based on sale price. E.g. I sell ridiculous overpriced gear (Bronze Haubergeon for say 100k, seriously "underpriced" as I understand the Wutai economy) in my bazaar. Upon sale, I suffer tax of 10% or 10k, leaving me with 90k after tax.

Contrast this with a direct trade: I sell at 100k, I pocket the 10% or 10k tax savings.

Buyers

Bottom line: feel free to negotiate a direct trade of anywhere between 90%-100% of the bazaar price (although your discount on purchase diminishes the closer you get to the bazaar price).

In fact, the vendor is likely to want to sell you the product slightly cheaper because a) their after-tax return is greater than if they did a bazaar sale, and b) they are interested in clearing a bazaar slot, and turnover for vendors is important when maximising profit.

On direct trade, your maximum discount is an 11% decrease in the cost of an item per direct trade (assuming you transact at a price equal to 90% of the bazaar price).

You could also try negotiating the price using raw materials relevant to that crafter's discipline to lower the gil price (you offload useless items from inventory).

Vendors

Bottom line: you can increase your after-tax profit by accepting a lower direct trade price anywhere between 90%-100% of the bazaar price. You can also build goodwill with customers who know what you sell and understand that you are open to negotiations.

On direct trade, your maximum upside is an 11% increase in after-tax profitability per direct trade (assuming you transact at a price equal to 90% of your bazaar price).

Effectively, apart from the time to take an item down in the bazaar and execute the trade, the vendor is no worse off financially for trading directly with the customer.

Alternatively, if you are offered ingredients, having an understanding of their cost will help you work out if you can use the materials to generate surplus ingredients for future profitable syntheses.

Conclusion

Everybody is better off by trading directly. People rarely bite when it comes to trying to sell a product, so feel free to negotiate with them, because by doing so, you're actually increasing the benefits to both yourself and the counterparty.

Edits for clarity

Some posters have mentioned that retainer bazaar sales attract a 5% tax. Notwithstanding, you can't negotiate with an NPC or leave it messages, therefore you are stuck paying the vendor's price and hence a tax inefficiency arises. Therefore, my conclusion still stands that the most efficient means of sale is direct trade (unless the 5% also applies to actual characters standing in market wards, in which case they're probably AFK anyway).

Edited, Oct 6th 2010 1:09pm by Dik

Edited, Oct 6th 2010 1:11pm by Dik

Edited, Oct 6th 2010 1:13pm by Dik
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#2 Oct 05 2010 at 8:43 PM Rating: Good
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OK great post, but how do you know what the "bazaar price" is in order to barter at 90-100%.

EDIT: My "bazaar price" is the first freaking one that I can finally find..

Edited, Oct 5th 2010 10:43pm by Ravlow
#3 Oct 06 2010 at 5:58 AM Rating: Decent
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Like all markets with imperfect information symmetry between buyers and sellers, obviously you have to work as hard as you can (cost-benefit analysis) to determine what you think is a reasonable price.

If you want to shortcut the process of checking a multitude of bazaars to determine the market value, you could estimate the price based on some kind of formula such as:

f(price) = (cost of raw materials + crystal costs) + markup to account for failed synthesis risk and time spent to source the raw materials +/- adjustment for supply availability +/- adjustment for how fast you think the average person can generate gil per hour

Obviously there will be other variables that will come into play, but if you think about these things at a basic minimum, you shouldn't need to check every bazaar to work it out. It's not a science because it's imprecise - the market will move.
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#4 Oct 06 2010 at 6:02 AM Rating: Decent
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Ravlow wrote:
OK great post, but how do you know what the "bazaar price" is in order to barter at 90-100%.

EDIT: My "bazaar price" is the first freaking one that I can finally find..

Edited, Oct 5th 2010 10:43pm by Ravlow


Specifically in response, a buyer will automatically know what the bazaar price is because that's what somebody put the item for in their bazaar. Multiply the listed price by 90% and there's the vendor's lowest acceptable price (assuming the vendor wants to maintain profitability equal to simply selling through their bazaar).

If you're talking about market value of an item, obviously this is subjective - nobody can say what their "market price" of an item is because there will be different factors driving why you perceive an item to have a certain value. This is where my above post comes into play as to what price a vendor should set their product at.
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#5 Oct 06 2010 at 6:04 AM Rating: Good
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last i checked bazaar tax was only 5%

or is that just cause i do 90% of my bazaaring in market wards
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#6 Oct 06 2010 at 6:32 AM Rating: Good
Galkaholics wrote:
last i checked bazaar tax was only 5%

or is that just cause i do 90% of my bazaaring in market wards


Yes, it's only 5% in the market wards, but 10% everywhere else.
#7 Oct 06 2010 at 6:48 AM Rating: Good
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ahh that explains alot id always get blank faced when people in linkshell talked abt 10% id just reply "its only 5% for me lol" followed by many "wtf how and or why. do you only have to pay 5% and we have to pay 10" followed by my usual responce "iunno"
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FFXI 75rdm 75 war 37 blm 37whm 56mnk 32 blu (Temporarily Retired)

FFXIV Rabanastre: Lolita Conplex deleted. misfits ls used me gave em all my stuff being a good guildie then they riddiculed me til i quit.. stay away from

#8 Oct 06 2010 at 9:28 AM Rating: Good
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Doesn't work:

1. Trade interface is sluggish, throw in the lag and you're doomed. Bazaar is more convenient, because at the very least only the customer will have to deal with it.
2. I don't play 24/7/365. I just dump my stuff in my retainer in the market ward and next day they are all gone. Be smart, sell what will sell, not a Marmot Meat at 100k.
3. Language barrier, auto-translating sucks.
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#9 Oct 06 2010 at 1:24 PM Rating: Decent
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Khornette wrote:
Doesn't work:

1. Trade interface is sluggish, throw in the lag and you're doomed. Bazaar is more convenient, because at the very least only the customer will have to deal with it.
2. I don't play 24/7/365. I just dump my stuff in my retainer in the market ward and next day they are all gone. Be smart, sell what will sell, not a Marmot Meat at 100k.
3. Language barrier, auto-translating sucks.


1. Optimistically, trade lag won't always exist. It's too big an assumption to say that people won't trade via bazaar because of it. The real traders/crafters don't care what extra few seconds are wasted - they want to free up a bazaar slot and they want to generate profit. Of course, for small ticket items, it may not be worth bothering the vendor to haggle a 1k discount, but when the taxes start adding up on multiple purchases, it makes sense to spend a few moments to get something done more efficiently.

2. It can't be that hard to transact internationally either: <Bazaar> <Item> #[insert number or name if in autotranslate], <lower the price> <please>? [insert price] ok?
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#10 Oct 06 2010 at 4:52 PM Rating: Good
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Trade lag doesn't always exist, true. But the interface is sluggish nonetheless. Besides, I've been selling for something like 500k-600k per day now and mostly through the market ward, still I haven't been hit by the tax system that much. If you understand the tax system is there for gil sink to preserve the economy, then why don't you happily do your part? And I also don't have all days to go around selling and haggling stuff and most people don't either. People selling 1m+ per day also use the Bazaar/Market Ward system, really, less hassle. Like I've said, if you think smart and sell smart, your item in Retainer will be gone very quick. I've never advertised my retainer, I've just put her in some decently populated market ward and she will always have my item sold in less than 24 hours.
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#11 Oct 06 2010 at 6:53 PM Rating: Decent
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Khornette wrote:
Trade lag doesn't always exist, true. But the interface is sluggish nonetheless. Besides, I've been selling for something like 500k-600k per day now and mostly through the market ward, still I haven't been hit by the tax system that much. If you understand the tax system is there for gil sink to preserve the economy, then why don't you happily do your part? And I also don't have all days to go around selling and haggling stuff and most people don't either. People selling 1m+ per day also use the Bazaar/Market Ward system, really, less hassle. Like I've said, if you think smart and sell smart, your item in Retainer will be gone very quick. I've never advertised my retainer, I've just put her in some decently populated market ward and she will always have my item sold in less than 24 hours.


If you're selling something for 'like 500k-600k' you obviously are wealthy enough in-game not to care about the tax on a 600k bazaar (30k tax if in market ward, 60k outside). Good for you, you're making a ton of profit on the mark-up (even after-tax) but most of us can't make 60k so easily to waste on your 600k items in bazaar.

Your argument about gil sinks is kind of flawed too - I could simply reply by adding that an AH with a higher tax rate could achieve the same function of moderating inflation, but that doesn't prove that I should transact through a system which subsidises the vendor's profits at the cost of the buyer. In fact, slugging a huge markup on items in your bazaar is adding to the problem of inflation, the tax is an afterthought designed to eliminate part of that markup.

In a barter economy, much of the need for gil should disappear (although the developers' goals aren't really crystallising when people turnover gil via farming/leves fairly readily).

Anyway, I digress, it's a market economy so you can sell how you like. If you don't want to trade, that's fine, it just means that if your competitor offers the same item and is willing to negotiate, you can expect to lose sales.

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