Monday, May 2, 2011

Running The Numbers: Why I Won't Jump Into The Tech 2 Market

I have been flying around in my nice new Mastodon for a couple of weeks now and have just gotten around to looking at the cost of actually building it.  Let's just say I'm glad I'm not trying to make a living out of building tech 2 ships or I'd go broke pretty quick.  Of course, as a hobby, building tech 2 ships is expensive, but I have a goal of building at least one of each Minmatar sub-capital ship.  Why?  I like making my own stuff.




My Mastodon, Soundwave's Bane


At this time I'm not going to try to calculate exactly how I should include the cost of the Mammoth BPO I bought in order to create the blue print copies I used to create my Mastodon BPCs.  Part of that is because I intend on trying to sell Mammoths later on.  I also haven't figured out how to include the price of the Cryptic Ship Data Interface, since it can be used multiple times and I have so many T2 ships to make.  I also won't include the costs of making copies, doing the inventions and then the actual fees for the construction slot.  One, those costs aren't that great but, more importantly, I forgot to write them down.  So let's just look at the major costs: decryptors and materials.

I only really looked at two possible decryptors when inventing my Mastodon BPCs, Advanced Theories and Calibration Data.  While Calibration Data reduces the material efficiency of a Mastodon BPC to -1, I chose the Advanced Theories decryptor because of the additional run I would get for a successful invention. The other advantage is the slightly better chance of an invention succeeding using Advanced Theories over Calibration Data.  I normally attempt 5 inventions of a single type whenever I try to make T2 BPCs.  Given my skills (all level 4 in the relevant skills), making 5 attempts and factoring in the additional run from using Advanced Theories, I had a 89.4% chance of getting at least 2 runs worth of Mastodon vs the 53.6% chance of getting at least 2 runs using Calibration Data.  Of course, the downside was getting blueprint copies with a material efficiency of -2.  So I purchased 5 Advanced Theories and crossed my fingers.

As it turns out, I was successful in creating 2 2-run Mastodon BPCs, so I was pretty happy that I used 5 decryptors to make 4 Mastodons.  But was it a good use of isk?  In order for using a decryptor to make sense, at least to me, the savings in materials has to be greater than the cost of the decryptors used.  For the rest of the post, I will use the average prices of items actually sold on the Heimar (Rens) market on 29 April 2011 for all calculations.  I'm not using The Forge prices because I'm a Minmatar pilot and I didn't feel like flying all the way out to Jita.

According to the prices on Friday, 5 Advanced Theories cost 57.5 million isk.  Divide that by four to divide the cost across all four runs I achieved and the associated cost per run was 14.4 million isk?  So did I save that much on the building materials over not using a decrytpor at all?



Table 1 - Mastodon Construction Materials
No decryptor (ME -4) vs. Advanced Theories (ME -2)


ItemME -4ME -2
Construction Blocks225195
Deflection Shield Emitter375325
Electrolytic Capacitor Unit300260
Fernite Carbide Composite Armor Plate5,2504,550
Isogen4,6644,042
Ladar Sensor Cluster135117
Mammoth11
Megacyte5043
Morphite10591
Nanomechanical Microprocessor1,8001,560
Nocxium515446
Nuclear Reactor Unit4539
Plasma Thruster7565
Pyerite30,92626,802
R.A.M. Starship Tech1010
Tritanium123,707107,212
Zydrine21


According to my calculations, I saved 17.2 million isk in materials.  Of course, decrytpors are not the only items consumed during the T2 blueprint copy invention process.  Each invention attempt requires 8 mechanical engineering and 8 Minmatar starship engineering datacores, the value of which was slightly more than 4 million isk per attempt, or 5 million isk per production run I obtained on my two blueprint copies.  Because I am using small numbers, for the purposes of calculating the costs of not using decryptors, I'll just assume I would have also succeeded in 2 out of 5 invention attempts and so the cost per production run would be 10 million isk per production run.  So the total cost savings using Advanced Theories was 7.8 million isk.

Of course, if I had only been successful 1 out of the 5 invention attempts, I would have actually lost 8 million isk by using decryptors.  So the break even point seems to be needing to succeed in 40% of my attempts.  And what is the probability of succeeding only 1 time or totally failing?  40.6%

Well, for that type of risk, I'm saving money, right?  No.  On 29 April the average Mastodon sold for 105.6 million isk.  And, not counting NPC fees and factoring in my start-up costs, I spent 132.2 million isk.

But wait a minute, you may ask.  I actually purchased some of the moon mats and created my own finished moon products.  Surely that saved me money, right?



Table 2 - Mastodon Construction Moon Materials
No decryptor (ME -4) vs. Advanced Theories (ME -2)


ItemME -4ME -2
Fermionic Condensates4539
Fernite Carbide274,800238,160
Ferrogel495429
Fullerides5,1004,420
Hypersynaptic Fibers270234
Nanotransistors11,2359,737
Phenolic Composites20251755
Sylramic Fibers61,12552,975


Yes, but not that much.  According to my price sheet, manufacturing the products in table 2 only saved me about 500 thousand isk.  So for arguments sake (and to make the math easier) lets assume all of my NPC costs are equal to the amount of isk I saved by manufacturing the items in table 2.  So why are my costs to make a Mastodon 25.2% higher than the average sales price of a Mastodon on the Heimar market?

The answer is simple.  Mastodon BPOs.  I had heard a lot about the advantages that people who have BPOs have in the market, but I'd never really looked closely at the numbers before.  Now I understand all the complaining about Tech 2 BPOs by those who have no hope of ever owning one and why the T20 scandal was such a big deal.  Players that own BPOs can do material efficiency research and if they only research the BPO to ME 9 the base waste factor goes down to 1%.  At ME -2, the base waste factor is 30% and my skills only take that down to 23%.

Even with the waste factor against me, my material cost is only about 8 million isk, or approximately 7.5% greater than what the ship is selling for on the open market.  According to the Evelopedia, the best I can do is produce a blueprint copy with ME -1 (using Calibration Data).  Where owners of BPOs have a distinct advantage is they do not have to go through the invention process.  I wound up spending 19.4 million isk per run on decryptors and datacores, which is 18.4% of the sales price of the average ship.  And that is 19.4 million isk that those who have BPOs don't have to pass on to their customers.

Unless I can find a market in some out of the way system someplace in low-sec, I won't be jumping into the Tech 2 market, as I have no chance of competing in the major trade hubs.  I'll just make my tech 2 ships because I want to say I built them.  And who knows?  Maybe one day the situation will change and I will be glad that I have some tech 2 BPCs in a station somewhere.

4 comments:

  1. T2 BPO owners have an advantage in production costs, but are bottlenecked in terms of volume or making switches to other products.

    But if you want to do T2 production and avoid competing with BPO owners, the heavy Interdictors cruisers, Maruaders and Black Ops battleships all were released without T2 BPOs and can be only made through invention.

    Also, I made a fortune doing Covert Ops Cloaks invention.

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  2. The issue you're facing here isn't that of BPOs. The output of ships from a T2 BPO is strongly limited compared to invention, which means that you only see an influence from a BPO in niche items.

    What you're seeing is a combination of people building ships because they're cool, and who don't care about profit, and people who don't know how to run the numbers, so think they're running at a profit when they're not.

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  3. And I was already on the path to start Broadsword bpc invention in 2 weeks. Sweet! Thanks for the tips.

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  4. GREAT blog. I think the best money in T2 production is in modules like KK said. I had two toons working together to build T2 LSEs and Armor Hardeners depending on the market. I was making a LOT of money off of it. T3 production is nice as well.

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