Making gold in WoW

This post has both observations from my experience and an ask for help.  So hopefully everyone can find something useful regardless of their experience in WoW gold-making.

When I first stumbled upon Gevlon’s blog, I was very impressed (I still am).  Not so much by the amount of gold he could make per week, but by the fact that he managed to turn glyph selling into a system that can generate large sum of gold with minimal effort.  In addition as others mentioned in comments to his posts, this system is easily reproducible (even if not everyone can make the same sum per week).  However, there was one thing that bothered me.  Week after week Gevlon was making the same 10-15k.  He was making it when he had 30k and he was making it when he had 130k.  This seemed odd.  In real world if my wealth goes up, so does my income.  I can put extra money in the bank to earn interest, I can buy stocks or mutual funds, I can invest in other areas.  Surely, there must be a way to do the same in WoW.  So I started an investigative project.  I looked into various ways to make gold in WoW and came up with a very short list:

• Manual Labor.   This category includes running around herbing or mining and selling proceeds on the AH.  It also includes grinding mobs for drops or coin as well as doing quests.  If you only have a few hours per week to do this, you won’t get rich (but you won’t be poor either). However, this is extremely time-inefficient and doesn’t scale much – you won’t be able to mine/herb/quest more just because you have more gold.
• Using a crafting profession.  Of all the crafting professions, I think four are worth looking at as far as money-making goes: Inscription, Alchemy, JC and Enchanting.  Depending on your server economy, if you control the markets, you should be able to get around 8-10k per week from inscription and 6-8k from alchemy.  JC and enchanting can get you 3-5k each.  If you set up your production pipeline for these professions, you can get very good return on your time.  You can also scale this to a point, but once you’ve saturated the market, there is no room for growth.
• Playing AH.  This is basically buying stuff off the AH and reselling it for profit.  My original thinking was that this should be the most scalable method since clearly the more gold I have the more I can buy. 

So these were my assumptions when I started the experiment.  Since I believed that playing AH was the most scalable way to make gold, I started with it.  I moved 1k to an alt and started to resell cheap items from the AH.  I set up auctioneer’s snatch list so I didn’t have to spend too much time searching manually and the gold just poured into my mailbox.  It was extremely easy at first.  I hit 4.5k by the end of the first week and as I predicted the more gold I had, the more I could make per day.  However, it didn’t last too long.  Once I hit about 30-40k, it became very hard to spend it all on items to resell in a reasonable timeframe.  At that point in order to keep the return on my total wealth constant as I got richer, I had to spend more time at the AH and I didn’t like this much.  So the next step was diversification into crafting professions.  I leveled all four mentioned above (inscription, alchemy, jc and enchanting) and life was good again for some time.  So now I’m getting close to 100k and while I can definitely squeeze a bit more out of my crafting professions, I’m not sure I can get a lot more.

And this is where I want to ask the readers to see if you can come up with additional ways for me too keep scaling the gold making.  If you have any ideas, please let me know.

Stockpiling

So let’s say one of your favorite items is usually trading between 25 and 32g.  You used to buy it around 25 and resell it around 30 making roughly 20%.  Now suppose it dropped down in price to 20.  What do you do? You buy it all of course.  You know it’s going to go up to 25-30 in a few days and you’ll make a nice profit.  You relist some of it for 27, but nobody buys it.  Undercutters come in and it is back down to 20.  What do you do now?  Do you keep buying it at 20? A lot of people will tell you of course you should buy more. Well, I don’t think so.  It might be a great deal or it might be a bad investment.  How do you know which one it is?  I use the following guidelines to help me make a decision:

• Do I understand why the item dropped in price? This one is easy.  If I can tell why the price dropped, I can figure out if/when it will go back up.  The bad part is that it is never easy to figure out the right answer to this question.
• How much of it do I already have and how long will it take me to sell it?  If the demand for this item is about 500 per week and I have 50, I’m sitting pretty good and if I think the item will rebound, I’ll keep buying it.  If on the other hand I have 5000, it would be a good idea to stop.  I don’t want to hold up that much inventory.  I try to have all my gold generate me income and try to turn it around in under a week if I can (meaning I aim to resell what I’ve bought within a week).  I know I can easily get around 20% return on my investment (and usually more) so for me to hold anything for longer than 2 weeks, I would require at least double the usual return.
• What percentage of my total wealth is invested in it? Remember when you were a kid and your grandparents told you not to put all your eggs in one basket? Well it applies here as well.  You don’t want to have a large portion of your gold invested in a singe item.  It might be hard to do when you are just starting and only have a few gold, but once you are above 10-20k, you should follow this rule.  The percentage you should aim for is what makes you comfortable.  I never go above 10% if I don’t understand why the price dropped and 15% if I know the price will go up shortly.  Why only 15% if I know it should go back up? This is what makes me comfortable – anything more and I’m not sure I’m willing to take the risk and lose my hard-earned capital.
• Do I have a plan B if the drop in price is permanent? This is also a very important question.  If the item is something like Frost Lotus, I can either resell it or turn it into flasks.  So I have a plan B.  If it’s something that I have no use for (like something that is only used to level a profession), I will be very reluctant to stock up on it because I don’t want to end up with a stockpile of junk that nobody wants to buy at the prices that would be profitable for me.

I know some people would disagree with me on this.  If you are one of them, feel free to leave a comment.