The imminent arrival of the Grand Exchange has set me thinking about how the Runescape economy actually works....

 

 

 

Many people will claim that you can earn x gp/hr with a certain skill. I'm going to use nature runes as an example but it could be anything, iron bars to knives, flax to bowstrings or even cutting yews. For instance 300k/hr is widely held as a figure for nat rcing. So that's 1000 nats an hour at 300ea is it? Only if you'd mined your own pure ess and that would take ages. So it must mean buying pure ess...

 

And then selling the nats... How long is this buying and selling process going to take though?

 

 

 

I've spent hours trying to offload my hard crafted nats or trying to buy pure ess at a "reasonable" price. Hours I could have spent runecrafting more nats! If you spend the time in the bank alching or fletching you can still be making xp, but it would be more profitable to be out there runecrafting, or smithing, or woodcutting rather than stuck in a bank. I've found that its actually better to buy high and sell low to get a quick sale! Sometimes even paying 10gp higher than average, or selling for 10gp lower will mean people jumping to sell/buy.

 

 

 

Its hard to predict what effect The Grand Exchange will have on this phenomenon. It will allow market prices to better reflect supply and demand. If there is a glut of product on the market prices will drop as buyers can choose the cheapest price. However, if a resource is in short supply prices will be pushed up as vendors find they can demand more for an item.

 

 

 

Please comment on your experiences, and what you think the most profitable items will be...

I won't guess which the most profitable item will be since I don't think that I'm such a great expert on the RS economy that I would be able to guess that. But I can share some of my personal experiences.

 

What you have stated in your post I think is very true, at least in some cases. Time is money, and if you don't get a chance to buy something for a low price for what you think is a reasonable price, you should offer more money to get a faster trade. This way you can have more time to do another, second trade, which will give you more profit.

 

And this is what the GE will give merchanters; More time. Now the merchanters can put up their items while they can do something else, like training for example.

 

This is why I think that the GE is a great idea, and why I can't wait for it to come out :D

But will this help merchanters? Merchanting relies on buying low and selling high. I think the Grand Exchange will encourage a more even price reducing the oppportunities for merchants. However, I think this is covered by another topic on General Discussion. I was thinking more on the effect on RS producers.

Lets look at the Grand Exchange in this way with an item always in demand-Blood Runes. Letssay a lot of players put up Blood Runes for their regular price. But a merchanter buy sall these and post for lets say, 20 gp more each. The merchanter has a large supply of Blood Runes to sell in the GE. Other people sell some more blood runes, but eventually the merchants will be the last ones left. So this isn't bad for merchanting, just a different way.

Most gp/hr rates are very deciving and quite incorrect. Take hunting red chins.

 

 

 

If someone were to give you a gp/hr rate for them it would likely be based solely on how many they catch an hour. This dosent take into account that it can take 2-3 minutes of trap setting for your catch rate to go full bore (you catch less the round or two for your traps while you set them up), and for hunter it forgets something else important. SELL TIME. Even if I could catch 100k red chuinchompas an hour, I wouldnt have made ANY money untill I sell them. And sellign them can be a pain in teh butt. Thats why I like this new update. I wil take a hit to profits that will be compensated fro by eliminatign most of the sell time.

 

 

 

I like your Nat example. It nicely shows that most gp/hr rates are actualy single skill production rates (ie: just the rcing, not the ess mining, or just the cooking and not the preperation) wil the quantity per hour substituted for an approximate item value. 90k gp/hr (for nats, I know not realistic but the numbers easy) means basicly that at 300ea, you would be crafting 300 nats an hour.

I doubt much will change. Merchants will keep offering their items high and "normal" will still sell their products a little lower (same goes for buying). Maybe some people will try to sell high, but that may depends on how it works. If your offer stays at the Grand Exchange while being logged out, maybe more people will stop selling low and buying, just wait 24 hours until someone did your deal. But I doubt that'll happen a lot.

 

What I think probably will happen is a bigger supply of obscure items (TT items anyone?). There is hardly any demand for them and not many people want to stand in world an hour for 300K. But there is no need for that with GE.

 

To everyone says merchants will be able to get a monopoly. Think again; thee market is huge, not anywhere near WOW, which is server bound. And most of the items are pretty acquired pretty easily, so if the price will shoot up (because of the monopoly) a lot of people will try to get that item, which'll lower the price.

You raise a lot of valid points, which are mostly due to the majority of RS players not understanding economic principles. It really has little to do with the Exchange as it affects all of the game.

 

 

 

Interesting that you started this thread, because I'm writing up an article that goes into many of these same issues.

 

 

 

A few specific points...

 

 

 

 

Many people will claim that you can earn x gp/hr with a certain skill. I'm going to use nature runes as an example but it could be anything, iron bars to knives, flax to bowstrings or even cutting yews. For instance 300k/hr is widely held as a figure for nat rcing. So that's 1000 nats an hour at 300ea is it? Only if you'd mined your own pure ess and that would take ages. So it must mean buying pure ess...

 

 

Most players don't understand this simple economic equation:

 

 

 

Activity Profit = Value of Output - (Cost of Inputs + Cost of Production)

 

 

 

Furthermore, this applies to each stage of production. Thus, the profit in making nats, for example, is as follows:

 

 

 

Runecrafting Profit = Value of Nats - (Cost of Essence + Cost of Runecrafting)

 

 

 

Some people will counter this by saying that the ess is "free" if they get it themselves so they get the "full 300 gp profit". Wrong. If you mine the ess yourself, the profit from runecrafting is the same, you just get an extra profit from mining.

 

 

 

This is also the same issue that causes people to think that certain skills are "great moneymakers" when they are anything but. For example, some people think that they "make lots of money" by fletching bows and alching them, but they don't -- at best they make a tiny profit, and often they lose money.

 

 

I've spent hours trying to offload my hard crafted nats or trying to buy pure ess at a "reasonable" price. Hours I could have spent runecrafting more nats! If you spend the time in the bank alching or fletching you can still be making xp, but it would be more profitable to be out there runecrafting, or smithing, or woodcutting rather than stuck in a bank. I've found that its actually better to buy high and sell low to get a quick sale!

 

 

Absolutely true. You're smart, because you understand that time is money. Most players do not.

 

 

 

In the same vein, when figuring out the profit per hour of an activity, one should use conservative values that mean the items could be sold quickly. For example, saying that you can make X amount of gold per hour cutting yews but valuing the yews at 380 each is not realistic, because it will take forever to sell them at that price.

 

 

 

The same thing applies to items that are hard to sell. For example, people fight monsters that drop rune scimitars and say they are "worth 25k each in World 1". Sure, but do YOU want to go to that cesspool and stand around for half an hour selling them? I sure don't!

 

 

Its hard to predict what effect The Grand Exchange will have on this phenomenon. It will allow market prices to better reflect supply and demand. If there is a glut of product on the market prices will drop as buyers can choose the cheapest price. However, if a resource is in short supply prices will be pushed up as vendors find they can demand more for an item.

 

 

The devil is entirely in the details. There is no way to know what impact it will have until we understand exactly how it works.

 

 

 

Even small variations in how it is implemented could have a HUGE impact on how much it is used.

Just as a further example of what I said above. I constantly see people say things like this: "I mine my own ess, make my own nats, pick flax and spin it into bowstrings, and cut my own yews. So when I make my yew longs and alch them, I get 768 profit! Fletching and alching is an awesome money maker!"

 

 

 

That's entirely wrong, unless you are only taking it from the perspective of someone who refuses to participate in the market by buying from and selling to others. Here's how the activities above really break out, using values of 100 for flax, 200 for bowstrings, 370 for yew logs, 625 for yew longs, 100 for ess and 290 for nats.

 

 

 

Picking flax = 100 gold profit

 

Spinning a bowstring = 100 gold profit

 

Cutting yew long = 370 gold profit

 

Making yew longbow = 55 gold profit (625 minus 100+100+370)

 

 

 

Mining ess = 100 gold profit

 

Runecrafting = 190 gold profit

 

 

 

Alching yew longbow = 147 gold LOSS (768 minus 625+290)

 

 

 

 

 

Taking time into account, the only real moneymakers in this process are cutting the logs and crafting the nats.

What about monopolising? ... what if a someone who is extremely rich decides to become the sole trader of something ... say black masks. They could hang around in the grand exchange all day buying every single black mask that appears before anyone else gets a chance to buy it. Then put the price up and resell to anyone that wants one. Previously if you wanted something you could jump around from bank to bank, world to world until you found someone selling at a decent price. I'm not sure if this is a bad thing or a good thing. Personally i can't wait for the grand exchange, in fact im quite excited :D

There were a couple theories that I found interesting that have been suggested on many threads on the affect the GE will have.

 

 

 

First, the GE will most likely not make the forums obsolete. Rather, if there is no selling tax involved, they will balance eachother out. An equal amount of people will use the forums as well as the GE.

 

 

 

If there is tax, and a small percentage, I could see this being a great way for popular low price items(yew longs, nats, ect.) to be sold at a good price. However, it will be a serious blow for merchants, with or without tax.

 

 

 

Then there are the rares. With the tax, rare merchants would be paying hundreds of thousands of gp per trade. Rare merchants would definately stick to the forums.

 

 

 

Even if there is no tax, I don't think rare merchants will very much like the GE. The GE will stabilize prices; if you're a buyer and search "easter egg," you'll see a list of players selling eggs with prices compared right next to eachother. Now, obviously you're going to choose the lowest one, ignoring all the other high prices which push the easter egg up. I think rare merchants will stick to the forums.

What about monopolising? ... what if a someone who is extremely rich decides to become the sole trader of something ... say black masks. They could hang around in the grand exchange all day buying every single black mask that appears before anyone else gets a chance to buy it. Then put the price up and resell to anyone that wants one.

 

 

 

This is called attempting to "corner the market". If you can actually get it to work, yes, you can monopolize the market and make a huge profit. The problem is getting it to work -- it's not as easy as it sounds.

 

 

 

As soon as someone starts buying up all of an item, like black masks, the price will rise. The person attempting to corner the market will have to pay more and more for each item they buy. Meanwhile, the high price will attract more and more sellers into the market.

 

 

 

If the monopolist cannot get enough cash to keep buying up everything brought onto the market, then the entire house of cards comes tumbling down. Suddenly all the new sellers will find nobody buying and will start to drop prices. Seeing the prices dropping, those who bought at high prices expecting a big gain start to dump them, driving prices down even further. In the end, the person who tried to get a monopoly takes an enormous loss.

 

 

 

This has happened in the real world, and also in RS (such as when the stupid rumor about Robin hood hats being discontinued surfaced and then was denied.)

 

 

 

~q

Firstly, people with 75+ rc can make around 500k pure profit an hour crafting nature runes.

 

 

 

Secondly, selling time should only taken to account if you make a very small amount of the produce- as someone used red chinchompas as his example- lets say i catch 100k red chinchompas and sell them, but another player catches 1k red chinchompas- would it take me 100 times more time to sell them? most likely not, infact seeing as the catching has already taken around 250 hours, the extra hour or two wouldn't change much.

 

 

 

As i see it the grand exchange won't change the market situation too much other than making it a lot easier to buy and sell your produce.

Firstly, people with 75+ rc can make around 500k pure profit an hour crafting nature runes.

 

 

 

Secondly, selling time should only taken to account if you make a very small amount of the produce- as someone used red chinchompas as his example- lets say i catch 100k red chinchompas and sell them, but another player catches 1k red chinchompas- would it take me 100 times more time to sell them? most likely not, infact seeing as the catching has already taken around 250 hours, the extra hour or two wouldn't change much.

 

 

 

As i see it the grand exchange won't change the market situation too much other than making it a lot easier to buy and sell your produce.

 

 

 

zactly what he said, plus the fact that anybody with a bit of sense combines making + selling.

Firstly, people with 75+ rc can make around 500k pure profit an hour crafting nature runes.

 

 

Doubtful. Show us the math, please.

Firstly, people with 75+ rc can make around 500k pure profit an hour crafting nature runes.

 

 

Doubtful. Show us the math, please.

 

 

 

I can do 2.5k ess an hour when i REALLY concentrate, no pkers, thats 450k..awkay so 500 was an exaggeration, but after you hit 91 it's wayyy up there.

I fully expect the Grand Exchange update to lower the cost of nature runes, but as you said, since you won't have to sell them yourself, I can be RCing some more of them while they sell. I doubt that they'll drop so low though that they'll cut into my actual gp/hour. (no idea what that is, since I've never timed myself on how long it takes to sell them)

Firstly, people with 75+ rc can make around 500k pure profit an hour crafting nature runes.

 

 

Doubtful. Show us the math, please.

 

 

 

I can do 2.5k ess an hour when i REALLY concentrate, no pkers, thats 450k..awkay so 500 was an exaggeration, but after you hit 91 it's wayyy up there.

 

 

 

45 trips per hour? Sorry, I still find that very hard to believe, especially taking into account banking time, eating occasionally, potting with super energies, fixing pouches, buying or making the potions you need, buying/selling ess and runes, etc.

 

 

 

The original poster's entire point is that people don't take these hidden costs into account. When you do, level 75 RC is still a good moneymaker, but not anywhere near 500k an hour.

you forgot the most inportent thng about Grand Exchange:

 

 

 

nearly NO MORE WORLD 2 : :thumbsup:

In other words you're talking about Opportunity Costs within the current prices of items.

 

 

 

Opportunity Cost is the cost of doing something at the price of not doing something else. In other words, you decided to go college during the day, the opportunity cost is the amount of money you could have made by getting a job, because most likely the amount of money you would have made would have been more than what you spent on to go to college, if you had decided to work instead.

 

 

 

So that's what I'm getting the implication of you mentioning in this topic is Opportunity Cost.

Buy high and sell low works easily, in fact that's another perfect demonstration of "time = money", if you are prepared to recieve a bit less money for your products or pay a little more for the things you want, you will save the time of waiting around on forums buying. This is very connected to merchants, in fact the job of merchants is to provide this service.

 

 

 

Merchants buy low and sell high from people who are willing to buy high and sell low. Therefore, the merchant does the waiting around on the forum instead of you. Therefore, you could consider this to be a service, and the profit that the merchant would be his "payment". Basically, you are paying someone to sit around on the forums.

 

 

 

The varrock exchange is basically an opportunity to eliminate the time waiting around on the forums, so you will be able to get good deals even when you are not there. This is good, however notice how it's basically doing exactly what a merchant would do. Depending on the nature of the varrock exchange, the update is likely either to replace the job of merchants or create a place where merchants will be able to roam more freely. It all depends how much time it takes to buy/sell items there and how much time people are WILLING to spend buying/selling. I'm not saying merchants will vanish, however they could be hurt as their services could very will be more limited.

 

 

 

45 trips per hour? Sorry, I still find that very hard to believe, especially taking into account banking time, eating occasionally, potting with super energies, fixing pouches, buying or making the potions you need, buying/selling ess and runes, etc.

 

 

 

45 trips per hour is, in fact, a very possible amount. Abyssal rcing is that fast. Potting, eating and banking is all done in a matter of seconds, fixing pouches is only once every few trips and the whole buying/selling issue is not even part of the 45 trips.

 

 

 

 

The original poster's entire point is that people don't take these hidden costs into account. When you do, level 75 RC is still a good moneymaker, but not anywhere near 500k an hour.

 

 

 

With all the extra costs it's still 400k per hour, that's pretty good. Then there's 91 rc which is 1 mill per hour. The ultimate and unrivaled income by skiller standards.

 

 

 

Keep in mind that the amount spent on food varies, the energy potions are not mandatory and the presents of pkers is an excluded variable here.

 

 

 

In other words you're talking about Opportunity Costs within the current prices of items.

 

 

 

Correct, I'd say that getting a good deal is, right now, done at the opportunity cost of time. Now, this varrock exchange is likely to eliminate that opportunity cost therefore more people are going to get better deals. You are most correct in your definition but you didn't mention how it relates to the current issue in this thread.

 

 

 

What about monopolising? ... what if a someone who is extremely rich decides to become the sole trader of something ... say black masks. They could hang around in the grand exchange all day buying every single black mask that appears before anyone else gets a chance to buy it. Then put the price up and resell to anyone that wants one. Previously if you wanted something you could jump around from bank to bank, world to world until you found someone selling at a decent price. I'm not sure if this is a bad thing or a good thing. Personally i can't wait for the grand exchange, in fact im quite excited

 

 

 

Don't expect to see it anytime soon

 

 

 

First of all, the few people with the money to make even a slight difference, most likely wouldn't be bothered to do so. Second, they would have to compete with ALL the people who currently already own a black mask. Third, they would have to compete with all the "black mask hunters", basically the people that, due to the tremendous boost in price, all decided to go hunt cave horrors to get back masks.

 

 

 

Monopolizing only works if you can isolate a certain resource and, considering so many people have access to the resource of black masks, it's not gonna happen. Same for any other resource in this game.

I think merchants may have to be more clever. I can see that the price of certain items will rise that have a high demand but currently a low supply. With the RS 'herd mentality' if anything starts to show a good profit people will flock into supplying it and the prices will then fall. Presumably this will then cause other commodity prices to rise as people stop supplying this commodity. If you guess right and buy a lot of a commodity before the prices rise, wait a week and then sell at the new price - a profit!

 

 

 

45 trips per hour? Sorry, I still find that very hard to believe, especially taking into account banking time, eating occasionally, potting with super energies, fixing pouches, buying or making the potions you need, buying/selling ess and runes, etc.

 

 

 

The original poster's entire point is that people don't take these hidden costs into account. When you do, level 75 RC is still a good moneymaker, but not anywhere near 500k an hour.

 

45 trips per hour is totally possible (excluding the time buying ess and pots and selling the runes, which in large amounts becomes pretty insignificant). I timed myself and was able to do 24 trips in 30min. I was reasonably lucky with obstacles etc. Then my speed dropped a bit and after 60min I had done 45 full trips. And I of course banked and ate and whatnot during this one hour.

 

 

 

I'm still trying to race myself to get 48 trips into one hour. My mining and agility are only 51 and 63 so I'm sure 48 isn't even that difficult for someone who knows what they're doing and have higher mining/agility.

 

 

 

 

 

About the GE, I think it's gonna be awesome and can't wait. I'm more of a producer type so everything that cuts the trading time helps me

Also I think there will be some more great deals to be found. Like stated previously, items such as TT rewards that normally just sit in the bank because you won't bother to sell them, can be sold a whole lot easier through the GE. There won't always be buyers for them though, but since you just want to get rid of the junk, you lower the price. I think this could be a window for merchants - buy this junk and wait for someone who needs it to pay the full price.

I agree with teatonev and qeltar, the cost of gathering raw materials (manually or by buying) is rarely taken into account.

 

 

 

Any statement of making xGP per hour really means "I have created xGP of unrealised value in a particular hour". It doesn't become realised value until the items are actually sold, and the gp/hour calculation can then only be made once the whole process is taken into account. Having a regular buyer / seller, or using forums only for trading, greatly minimises the ends of the process.

 

 

 

If you are a smart gp-focused skiller (i.e., not a 99-hunting skiller), you will be able to make the judgement call between the value gained from gathering vs. buying.

 

 

 

What the GE would provide is a consistent buyer of your product. A lot less need to even spend time on the forums, meaning more time to make your product.

Firstly, people with 75+ rc can make around 500k pure profit an hour crafting nature runes.

 

 

Doubtful. Show us the math, please.

 

 

 

I can do 2.5k ess an hour when i REALLY concentrate, no pkers, thats 450k..awkay so 500 was an exaggeration, but after you hit 91 it's wayyy up there.

 

 

 

45 trips per hour? Sorry, I still find that very hard to believe, especially taking into account banking time, eating occasionally, potting with super energies, fixing pouches, buying or making the potions you need, buying/selling ess and runes, etc.

 

 

 

The original poster's entire point is that people don't take these hidden costs into account. When you do, level 75 RC is still a good moneymaker, but not anywhere near 500k an hour.

 

 

 

I have clocked up around 2,700 natures in 1 hour. This was done about 2 months back and I know friends that can do 1k natures in 20-25 minutes. However, this requires almost no misclicks, no pkers, no lagg, smooth transitioning, knowing exactly when you need to recharge pouches, getting good spawns in the abyss. And besides, why do you need to buy ess and sell runes when you have the ess already?

 

Super energies and eating are done within the abyss to the rift, from the teleport spot to the bank, and from the bank to the ditch. This loses you no time what so ever. If you know how to runecraft properly, know the worlds, have a nice bank setup, etc. It is ever so possible.

 

I've even crafted up to 2,300 natures in an hour with pkers. It just takes time to decant and get all those (1) dose super antipoisons. 5 minutes of no poison, eating done in gaps of travelling, pkers stand no chance and just leave.

 

 

 

It is highly possible. It is not that hard.

 

 

 

=; =; =;