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Saturday, March 21, 2015

Linear Dependencies - Calculating Materials Costs

Part 1 - The Update.

As you've noticed, I've been kind of absent lately.  The show took a hiatus in early December, and the blog has been silent as well.  I caught up with Kathroman and Selltacular back in January to guest on their podcast, The Gold Exchange, but I due to some miscommunication, I wasn't able to get my part recorded - and we never got a new session scheduled to make up for that.

Back in December I got a call from a job I'd applied to back in October, and after a long story, I got the job and packed up me & the wife and moved across the country.  I also managed to finish up a project at my last job that ended in the FDA Approval of a drug called Cresemba.  That was a cool experience that I'm pretty proud to be a part of.

Moving... is a pain.  But I'm happy to be in the Raleigh-Durham area and out of Chicago.  As a New Orleans native, 7 years of Chicago winters were just too much for me.  It was time to move on.  As you can expect, new gigs and new digs have vacuumed up a fair bit of my free time.  That's the paradox of podcasting / blogging - it actually takes time and effort to produce quality content.  At the same time, youve gotta also have time to play the game you're making content for so that actually have content to produce.

That's the trouble I've always had as I got into winter - I lose interest in WoW and start tinkering with other things. And that breaks up any continuity I have going with the content I make.  As I told my bud Zerohour (s/o to my homie), if I make it through this winter spring, it'll be the first time in 4 years of playing that I stuck with WoW.  My first year I managed it, but never again after that.  Which is weird to think I've been playing this game for longer than my first marriage lasted, but I will say that WoW is a lot cheaper and less frustrating by orders of magnitude.

But I'm not a die-hard like Zerohour is.  The main reason I still play is that after years of wandering around servers and guilds and servers (I've yakked before about the awesome guild I was in that broke up after the GM quit - miss you, Alex), I've finally found a really cool guild.  I'm an officer and a raid leader for the Subvictor guild on Uldum, with my fellow Wind Trader, Gissa.  I've always enjoyed leading a casual raid (a lot more than just being in one - I'm sure that means something, but I don't worry much about it anymore).  Every Thursday and Friday night, no matter how much or how little time I've spent with WoW that week, me and the LNWS raid team (we nicknamed it "Put it on Gissa's Tab" because of the repair bills) kill bosses and grab loot and have fun.

Raiding has been one of the greatest joys and biggest improvements to the game in recent years.  The addition of cross-server raiding, LFR, and Flex tech have really bolstered casual guilds.  And for all the ambivalence I have with the current profession system, the gearing path is diverse enough to keep progression interesting no matter what level your raid is at.  No more huge brick walls.

But - that's the short of why I'm still here, but you haven't seen or heard much from me.  Except on Twitter.  I can't seem to keep my damned mouth shut there.  For every gripe I throw on social media, it seems there's 5 or 6 cool things that happen that I keep to myself.  So I come off as a grump.  But, hahah - whatever, right?

Part 2 - Is there an Actual Blog Post Here?

Yes (deadpan).  There is.  Which wasn't really something I planned, but just came up.  I'm not real keen on where goldmaking is at, but there are still some cool niches that opened up in patch 6.1.  I don't like talking about them publicly too much, because, unlike the shuffle, they can be saturated without a lot of effort.  And, even though I don't have an active stream or GoFundMe campaign or a Workout Partner (s/o to my homie), some of the stuff I say still gets heard and acted upon - so there's things that I'll regularly keep to myself.  What I do still like to talk about are the ideas and tools available for you folks to do what guys like Zerohour and I and others do - to explore and find those sweet spots in your server's economy for yourselves.

Because goldmaking never stays the same for long.  And as soon as Mr. Popularity cashes in on the latest hip new tip and broadcasts it to the faithful, it usually collapses under its own weight on the majority of servers.  You've gotta be careful - there are plenty of ways to make good gold - but they're not the same across all servers.  So there's a lot of this stuff that you just gotta be able to sort out for yourself.

Today, I want to talk about calculating materials costs in the latest patch.  This seems like a simple idea, but it can get a bit complicated in certain situations.  If you're and enchanter, do you add up your mats costs based on the market value of crystals?  The market value of shards that you use to transmute?  The cost of the dust that you feed into your work orders? If so, do you have the right follower assigned for the extra procs?  Is your profession level high enough for max yield (mine isn't on several toons as I've re-tooled them into more profitable professions)?  Or did you trade in your Garrison Resources at the trading post for that dust?  What did you trade to get those GR?

It's not simple, but there are ways to think about it.  The title of this post is a cool thing that I encounter on a fairly regular basis.  Linear Dependencies come up in my line of work when I try to model a response on covariates that are highly correlated to the point that you can write an equation that relates one to another.  Like, if I try to mathematically figure out if folks are likely to go to McDonald's based on factors that are both related - like whether they like cheeseburgers and whether they like french fries.  When that happens, it's kinda hard to tell whether folks will hit McD's bc they like the fries or the burgers.  At least without asking them.

The problem is that the accounting between the effect of fries and the effect of burgers is something we can't tease out without more information because so many people like both - they're hihgly correlated, and so their effects on hitting McD's can be confounded and are hard to tease apart.  That's a quick, simplistic example of a Linear Dependency.

Now replace McD's with mats cost of a crystal and burgers and fries with Dust and Shards.  They both make crystals via different means.  Now, because of the rate of CDs and WOs, we have an idea of the ratio at which each is made, but what about Rush Orders?  What about the conversion of dust into shards (sure it's not profitable on most servers now, but as is often the case, the impossible of today becomes the gold mine of tomorrow).  The math isn't impossible, but it can be more than simple to keep up with.

Of course, if you're feeling like a proper smartass, you're thinking, "Who gives a damn, Stede?  Either way is cheaper than buying raw crystals, and if enchants don't show a profit over the crystals, then I just sell the crystals themselves - donezos, man - screw math!"  And yeah, you're right.  If that's all it is to you, then stop reading, go level 11 Level 100 toons that are LW/BS or LW/Scribe and max your garrison every day - maxing is a straightforward thought exercise in WoD: he with the most alts, wins.

But since alts are easier & more enjoyable to level than ever in WoD, I've a suspicion that most folks have hit the maximum number of toons / garrisons that they can reasonably sustain every day.  And questions become not, "Can I make more gold by doing X?" but rather, "How much more gold can I make with X?" - because often enough, we're deciding whether it's worth time that could be spent on other things.  Of course, that's just an example - it has its flaws.

Here's the question I'm actually leading into:

There are a lot of pretty integral materials in WoD now that cannot be bought off the Auction House.  The interplay that soulbound CD materials have with Primal Spirits became a LOT more interesting in patch 6.1 with the addition of the profession traders.  Before, primals were a closed loop between gathering and the original primal trader that sits on your garrison near the tower.  But with the addition of the travelling profession trader to your Town Hall, you can now buy primals with Ore, Herbs, Leather, Fur, or Dust.  In addition, you can also create soulbound CD mats off cooldown using a Primal.  The mats are less efficient than your daily cooldowns, but there are plenty of applications where that inefficiency can still turn a profit.  It's no secret that even at the prices of Valor Boots (2-3k), base level epics can turn a decent profit.  And in any case where supply is not oversaturating demand (something that's not always easy to discern unless you've got a good feel for the market) and the profit potential is there, it can be a good move to continue crafting using off-CD methods.

Now, before I get too carried away, I want to go back and acknowledge a fundamental point that our token smartass reminded me of while drafting this post.  The cost of anything is what you give up to get it.  In the case of Primals bought off the trader, this can be a lot of things.  So it depends on which of those things you choose to use.  Of course, in WoW, we don't really want Primals or ore or bloods or whatchamacallits.  We want gold.  Glorious filthy, stinky, dirty gold.  That other stuff is a means to that end.  Gold.

So, if we're a smartass - which is my hope that you'll all one day become so that one day you can teach me all the secrets of goldmaking - then we realize that every time we get dust, ore, leather, herbs, or fur, it has a base value - we can just sell it outright on the AH.  The AH price is what I call the market value.  If nothing else, that is the cost in gold of what raw mats cost you.  So now, if you use Blackrock Ore to buy Primals because you don't have a JC and you hit your mine every day and have 4 stacks of the stuff just sitting in your bags and Blackrock Ore is 2g each on the AH, then your cost for a Primal from the Ore Trader is 1 Primal = 5 Ore x 2g each.  That's 10g.

Of course, like I said, primals don't really do much on their own - they're soulbound, and to cash them out, you've gotta make them into something else.  You can trade 50 of them for a Savage Blood - though that would mean you paid 500g for a Savage Blood.  You could also create a soulbound CD mat - like a war paint or a truesteel ingot.  But then you have to figure out your cost there, too.  A war paint is 4 pigments and a Primal.  I get about 2.5 pigments per mill, or 100 per stack of 200 herbs (I think - just using round numbers for the sake of argument here).  So if herbs are sitting at 1g each, then the pigments are ~2g each.

4 pigments x 2g each + 10g for a Primal gives us a War Paint that cost us 18g to make.  We can make 100 at that price for 1800g and make a crafted staff.  Which should turn us a decent profit - in a lot of places, we could double that money on the AH.  Now, let's remember - you've only got so much Blackrock ore in your bags - we said 4 stacks, right?  And on the AH, there may only be 2 or 3 stacks at 2g each - the rest may be 2.5g or 3g.  It may not be profitable to buy those.  Always remember that these aren't eternal fonts, Ponce - as you suck up supply, the cost of materials will increase, so keep that in mind.

That's one example - we just traded in Blackrock Ore to make double our money on a crafted staff - even though the profit isn't as big as it would be if we just waited on our daily cooldowns - if we didn't have any other staves posted on the AH, then hey - profit is profit!  Why not, right?  But what if we had extra furs?  extra herbs?  What if we were the patient, stealthy, lying in wait to pounce at the right moment type?  You know, like the greatest class in the game - the Rogue.

Then you could look at all of the options - herbs, ore, dust, fur, leather - and figure out which one lets you buy primals for the cheapest price.  Let's say it was herbs.  They end up cheaper than BRO.  So instead of trading all our extra BRO, we sell it.  We use the gold to buy more herbs, and then we use the herbs to buy cheaper Primals, and increase our margins on staves - or whatever we wanna make.  Heck, if you get your costs of Primals down low enough like this, you could even just trade it for bloods and sell em raw and turn a bit of a profit.

This is why having a spreadsheet, however simple, is a boon in WoD patch 6.1.  Because there are a lot of options available to you.  And once you've got it setup, you can literally punch in just a handful of numbers and find the best one to use at a glance.  Heck, if you set one up using my Sandbox (Tools page - like is in the sidebar at the top), then you don't even have to punch in the prices every time - you can setup the spreadsheet and then it will import prices with the click of a single button.

Agility reigns supreme in 6.1, now that all the professions have these ties that bind them - like Primals.  It's also a rogue's base stat.  No coincidence.  Pallies - just bubble and hearth TFO, this is real talk here - best class in the game that ever was - the Rogue.

Ahem - but while there are many ways to turn an honest coin, optimizing that coin for max profit, or lowest time commitment, or even just your personal playstyle, often requires some math.  With the right tools, and the right frame of perspective, though, that process can be shortened substantially.

With that, you should be able to have a good starting point to go forth and explore your server's market and make some gold.  Myself, I find the exploring part to be one of the more fun aspects of goldmaking, and I hope you will too.  Really, I do.  I probably won't be able to move another staff for weeks, so you better make some gold with this =|