“Free:” Point of contention
Foo and I have talked (thought?) at cross-purposes recently. Now, I doubt we actually disagree on the actions one should take, but we do describe situations differently.
Specifically, I claimed that the materials cost of glyphs was “free,” in the context of Blackfallow Ink being a byproduct of a profitable Inferno Ink crafting enterprise. Foo wisely offered to take the ink off my hands for free.
The issue here needs to be parsed.
My point was that you can cover herb costs entirely through milling and selling resulting Inferno Ink stuff. (I suspect you’d cover labor costs, too).
Now imagine a world where Blackfallow Ink is instead just a healing potion with no other potential use. In this alternate world, even if Blackfallow sold for 1g per ink, you could sell at that price and make a profit, assuming you were profiting in the Inferno Ink crafting market. (Foo: just because I could profit at 1g does not mean I would be willing to sell it that cheap when the market price is much higher.)
“Cross-subsidy” as used by Foo is accurate though a bit harsh (the entire “profit reduction” exercise is theoretical, after all, I’m not going to sell an 8g Blackfallow for 1g, ever); a reader might infer that you’re taking the profits from one product line to sell glyphs below mats cost. Which is not the case.
Now back to our world, what I’m saying is you could make a “mats cost” profit on 5g glyphs.
Of course, none of us would bother with that. Because goblins value their time, and at Foo’s pay rate, or mine, 5g per glyph would be stupid.
(Note: I’ve seen places where Foo has alluded to having “up to 18g / glyph” costs. Seems extremely high to me…as if he might… just… be thinking of the Inferno Inks as if they were “free.” I’ll take those off your hands, Foo! >;P)
Perhaps we goldmakers should adopt verbal shorthand to differentiate between economic loss (to include the value of our time, i.e., opportunity cost, so we’re making money but it’s not worth doing cause we’re not getting paid enough) and accounting loss (where we tally up mats costs but don’t really count labor, and still show a negative return).
I’m really talking about accounting loss, and Foo is correctly focusing on economic loss (particularly in his post today about the misperception about “free.” Farming ain’t free.).
Yeah, I’m being kind of mean to “accounting” with my usage here, since true accounting would factor in labor costs, but have you ever seen a mmorpg financial enterprise accounting statement factoring in labor? I certainly haven’t. Besides, the actual “goblin pay rate” varies wildly depending on the activity, day of the week, the competition, and what cereal people had for breakfast.