Do Trading Guilds operate at a loss?

OldGamerESO · January 2017

This is one thread I wish I could post anonymously LOL...

I am not trying to be ungrateful for being in great trading guilds, but I am trying to understand the economics behind the guild trading locations. When I see a guild bank with 36 million gold and I see that they get a cut of every sale I assume they are economically sound. Why then the e-mails berating the guild members for not buying raffle tickets? Or donating goods for raffle tickets. I really want to understand how this works. Is running a trading guild inherently profitable or is it always operating at a loss? I have been in many trading guilds and most of them operate this way. The people running them act like they are doing you a favor to provide the trader and raise money to pay for it. And they claim how hard it is and how much of their free time they sacrifice for us. Is that all for real? If it is, then I am truly appreciative. But that also means the whole, system is broken badly. Maybe they need a way to adjust the guild cut so they can raise it until they can pay for the spot. When I join a trading guild they usually have rules: sell X amount a week, don't sell items worth less than Y, keep your items full, etc. I "feel" that meeting that criteria should be sufficient to participate and for everyone to be making money. Maybe the trading guild needs to increase their selling requirements? I sell about 50k-100k per trader per week. Maybe that is way too low and I need to be replaced with 1m/week players to keep the traders viable?

widowmakerx · January 2017

Some traders to operate at a loss to keep there trader, trading guilds are exteme ly competitive so it's economy's of scale. If you introduced more money to the guild bids would go up, the competitive cut throat/ politics way trade guilds operate wouldn't change

Turelus · January 2017

I know at one time there was one of the EU PC largest trade guilds which had its own guild master investing millions of their own money into it to keep the Craglorn trader.

It's not all easy money at the top.

OldGamerESO · January 2017

Turelus wrote: »

I know at one time there was one of the EU PC largest trade guilds which had its own guild master investing millions of their own money into it to keep the Craglorn trader.

It's not all easy money at the top.

But a free market economy should balance out right? Why would guilds bid so much that they lose money? If the traders operate at a loss propped up by charitable contributions then its not really economics. We are really just allowing ESO to have a huge gold sink for no reason. If all the guild traders cooperated then they could conspire to run the price back down to manageable and economically sound levels.

It is akin to when governments subsidize their industry. It appears they create a competitive advantage, but they really just cause inflation. In this case you have guild traders subsidizing their business through donations from guild leader or donations from guild. This in turn drives the price of the guild trader up with in turn cause inflation. Its hard to legitimately bid for a spot (or a job) if your competition is willing to take a loss to win the bid.

code65536 · January 2017

If by "operating at a loss", you mean "taxes can't sustain bids", then yes, the vast majority of trade guilds operate at a loss.

When you sell through a trade guild, you lose 8% of the sale to the following:

1% listing fee, taken at the time of listing, and is a ZOS gold sink (it just disappears from the game)
7% house cut, taken at the time of the sale
- 3.5% of this goes to the guild's coffers in the form of sales taxes
- 3.5% of this disappears from the game and is a ZOS gold sink

So the cut that the guild gets from each sale is actually quite a bit lower than what the "house cut" figure suggest--the guild gets only 3.5%. And guild have absolutely no way of adjusting this tax rate.

To win bids competitively in top locations like Rawl'kha, Craglorn, and the faction capitals, you need bids in the millions per week, and even the best trade guilds can't make enough from sales taxes to cover that. Depending on the guild, taxes might cover anywhere from 1/3 to 2/3 of the bid cost.

Because guilds can't set tax rates, they have to make up the shortfall through various means of fundraising.

OldGamerESO wrote: »

But a free market economy should balance out right? Why would guilds bid so much that they lose money? If the traders operate at a loss propped up by charitable contributions then its not really economics. We are really just allowing ESO to have a huge gold sink for no reason. If all the guild traders cooperated then they could conspire to run the price back down to manageable and economically sound levels.

It does balance out--just at a different point than what you were expecting. Collusion is hard to orchestrate. You can get a number of guilds to agree not to compete against each other on bids, but all it takes is one guild outside of that agreement bidding against them to upset it all. The prices are so high precisely because of free market competition--there are limited trader stalls, guilds are risk-adverse (losing a trader for a week for a top-tier guild is very, very painful), and there is so much money sloshing around that they can afford to bid that high. And so the bids do go that high.

And finally, a lot of trade guild GMs aren't running trade guilds to become rich--most of the GMs I know run them because they are rich.

OldGamerESO · January 2017

@code65536 (or 0x10000): Thanks for taking the time to explain it to me. I will participate in these raffles with more enthusiasm in the future now that I better understand the financial issues involved.

kylewwefan · January 2017

Know that there are some players that play this game just for the market. I do believe it can be just as time consuming as running non stop dungeons and trials. Hate to throw numbers around because they mean something to some people, but it's not uncommon to bid millions of gold and lose a trader.
You can't hope to make that much back from trades, so yes to answer your question traders don't sustain themselves; raffles, auctions, contributions do.

SolarCat02 · January 2017

Some quick math...

If one player sells 100k worth of items on the trader, the guild gets 3.5k of that.
If a full guild of 500 people each sold 100k worth of items, the guild would get 1.25m from the sales.
Many top locations go for millions (plural) so it's still not enough.

If a guild with 500 people wished to procure a guild trader costing 5m per week using just the sales tax collected, each member would need to average enough sales to provide 10k in sales tax. At 3.5%, that comes out to ~285,715g in sales per week.

Danksta · January 2017

OldGamerESO wrote: »

Turelus wrote: »

I know at one time there was one of the EU PC largest trade guilds which had its own guild master investing millions of their own money into it to keep the Craglorn trader.

It's not all easy money at the top.

But a free market economy should balance out right? Why would guilds bid so much that they lose money? If the traders operate at a loss propped up by charitable contributions then its not really economics. We are really just allowing ESO to have a huge gold sink for no reason. If all the guild traders cooperated then they could conspire to run the price back down to manageable and economically sound levels.

It is akin to when governments subsidize their industry. It appears they create a competitive advantage, but they really just cause inflation. In this case you have guild traders subsidizing their business through donations from guild leader or donations from guild. This in turn drives the price of the guild trader up with in turn cause inflation. Its hard to legitimately bid for a spot (or a job) if your competition is willing to take a loss to win the bid.

There's a very good reason to have that gold sink. Gold appears out of no where through quest and drops from mobs. That gold needs to leave to prevent depreciation of gold.

Stormahawk · January 2017

Guilds in areas of high foot traffic do frequently bid at a "loss". @code65536 did a really excellent job of explaining it.

I want to also add that if a guild spot is contested in a top area (two guilds in a bid war over one stall), the bids for that stall can double or triple and can quickly drain the guild bank. I have seen a Rawl'kha guild bid 20 million on its stall once on at least one occasion. Patch weeks (and the month that follows) also doubles or triples bid prices for everyone. Guilds in Rawl'kha frequently bid 10 million+ for several weeks after a major patch. That 36 million in a guild's bank can be gone in just under a month (or less!), so in the end the guild bank balance doesn't matter as much as a guild's ability to raise gold for bids. This is from my experience as a co-guild leader on NA PC for a large trading guild.

NewBlacksmurf · January 2017

I'm sure each individual guild has its challenges and successes.

As a whole, no because the bids are funded by the players and the players can only giveif they have money so it's fine

That doesn't mean Guilds can't miss manage tho

Giraffon · January 2017

I don't run a trading guild, but I try to get a guild trader as often as I can for my guildies. I generally invest my own gold in it and lose money every time. Why do I do it? Like someone said before...because I can.

Viveun · January 2017

Here's another side to it. I like to think of many trade guilds as "old money" and "new money." Now this may not be the case on all platforms, but it certainly is on Xbox-NA.

The old money is a conglomerate of GMs who have known wealth basically since launch and have "owned" their top trading stall for a very long time. These individuals are generally sitting on hundreds of millions of gold. They have a sense of entitlement, whether earned or not is not really the debate. But to them, the stall they occupy is "their" stall.

Now we've got new money - not necessarily new guilds, but guilds that have more recently come into their bidding power and are seeking out one of the game's top trading stalls. My guild falls under this umbrella - despite the fact that we've been a trader since January, we didn't start making serious waves until last August. Us "new money" guilds are often referred to as rogue guilds, hit guilds, or snipe guilds. It creates the illusion that we're the bad guys, out to get the old guilds. Really we just want our fair share that we busted our rear for.

So here's what's happened. All these old, wealthy GMs banded together a long time ago to form a protective alliance. They don't bid against each other (in theory) and they watch each others' backs (in theory). They maintained a very comfortable bid for a very long time and they banked on that. Back then, guilds did not operate at a loss if they were efficient with both dues and sales tax.

Fast forward. New trading guilds make a bid for power. There's two tactics: a) incite a bidding war and try to strong arm a stall, or b) jump around on different stalls. The first might eventually buy your way in to the old alliance if you can actually succeed, but more likely than not, it just puts a target on your back. And when you're a guild operating on a savings of 25m against a guild operating on a savings of 200m, you're going to lose.

So we jump around. This in turn drives bids WAY up. Because the old guilds no longer have security. They need to keep their bids high - just in case. In a matter of months, Mournhold goes from a comfortable 3-4m bid to an uncertain 7-8m bid. It's reached the point that either you get lucky, risk a low bid and come out on top with no competition. Or you simply don't earn out on sales tax and dues alone anymore.

I never beg my members for gold. I'm here for them, not the other way around. Instead we seek out creative avenues to boost our bank: weekly auctions, a closet service that offers set items at discount rates, weekly raffles, liftetime membership options, rolling raffles with limited ticket sales, etc. Even still I've dumped tens of millions of my own gold in.

TL;DR Yes, most high end trading guilds operate at a loss if you only include dues and taxes in the equation.

Tan9oSuccka · January 2017

I don't understand the people defending this system.

If no one really makes money from running them, whats the point?

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

SickDuck · January 2017

I wish guild gold couldn't be retained. It should sit in the bank and be used for guild costs.

Nestor · January 2017

Tan9oSuccka wrote: »

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

There are 171 Kiosks in the game. Half the locations have more than one, usually 4 to 6 Kiosks, if not more. So, its not even 3 figures for the locations. Probably closer to 50.

Tan9oSuccka · January 2017

Nestor wrote: »

Tan9oSuccka wrote: »

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

There are 171 Kiosks in the game. Half the locations have more than one, usually 4 to 6 Kiosks, if not more. So, its not even 3 figures for the locations. Probably closer to 50.

Thanks for clearing that up, but I think the point may have been missed.

The current system is not good. I won't beat it to death since there's been numerous posts on it.

NewBlacksmurf · January 2017

Tan9oSuccka wrote: »

I don't understand the people defending this system.

If no one really makes money from running them, whats the point?

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

@Tan9oSuccka

The point of systems in game economies is circulation and to prevent inflation

It's not to help people make more money by design. This game just actually works better than some others due to the design.
It's not defending anything, it's understanding the design and how economies work.
ITS also understanding that joining a trading guild is not inline with the design so if you or anyone chooses to join one and support their idea, hopefully now you realize it's not developer design, it's people trying to game the system which by default can damage or hurt a players experiences.

Asardes · January 2017

The kiosks are distributed like this:

In each alliance:
2 in starter areas
7 in other areas, except the 2nd one: 2 in the wilderness or smaller settlement, 5 in the main settlement
9 in the 2nd zone: 2 in the wilderness, 7 in the main settlement, which is the alliance capital

For a total of 2+4x7+9=39 in each alliance

There are 3 alliances, so a total of 117 in alliance zones

Coldharbour has 2 spread out and 4 in the Hollow City, 6 in total

Craglorn has 7 in the same location, near Belkarth

Hew's Bane has a total of 5, all in the port area

Gold Coast has a total of 5, 2 on the Anvil Docks, 3 in Kvatch market

Wrothgar has 5, at the northern Orsinium gate

There is also a trader in each outlaw den, for a total of 18(?)

The total I calculated is 163. Where are the other 8 to 171? I must have forgotten something.

Tan9oSuccka · January 2017

NewBlacksmurf wrote: »

Tan9oSuccka wrote: »

I don't understand the people defending this system.

If no one really makes money from running them, whats the point?

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

@Tan9oSuccka

The point of systems in game economies is circulation and to prevent inflation

It's not to help people make more money by design. This game just actually works better than some others due to the design.
It's not defending anything, it's understanding the design and how economies work.
ITS also understanding that joining a trading guild is not inline with the design so if you or anyone chooses to join one and support their idea, hopefully now you realize it's not developer design, it's people trying to game the system which by default can damage or hurt a players experiences.

From an overall developer perspective, I can understand that.

I want to know the benefit for someone running a guild if the profit is not there? E-peen?

It's not overly profitable for the guild as a whole. As a buyer its not enjoyable running around to the plethora of kiosks in different zones.

gard · January 2017

Nestor wrote: »

Tan9oSuccka wrote: »

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

There are 171 Kiosks in the game. Half the locations have more than one, usually 4 to 6 Kiosks, if not more. So, its not even 3 figures for the locations. Probably closer to 50.

Technically correct. But are you any more likely to browse 171 kiosks than you are to browse 1000?

Everything I have bought from a guild store has been from guilds where I am a member, and can download and search the item listing.

Viveun · January 2017

Asardes wrote: »

The kiosks are distributed like this:

In each alliance:
2 in starter areas
7 in other areas, except the 2nd one: 2 in the wilderness or smaller settlement, 5 in the main settlement
9 in the 2nd zone: 2 in the wilderness, 7 in the main settlement, which is the alliance capital

For a total of 2+4x7+9=39 in each alliance

There are 3 alliances, so a total of 117 in alliance zones

Coldharbour has 2 spread out and 4 in the Hollow City, 6 in total

Craglorn has 7 in the same location, near Belkarth

Hew's Bane has a total of 5, all in the port area

Gold Coast has a total of 5, 2 on the Anvil Docks, 3 in Kvatch market

Wrothgar has 5, at the northern Orsinium gate

There is also a trader in each outlaw den, for a total of 18(?)

The total I calculated is 163. Where are the other 8 to 171? I must have forgotten something.

Missing the 4 in Morkul Stronghold, Wrothgar and there are 3 at the Anvil docks. There are five outlaw refuges per alliance, plus one in Craglorn, Wrothgar, Hews Bane and Gold Coast for 19 total. Hews Bane has 6 stalls. Missing one, lol. Let me think.

ETA Wrothgar also has 6 stalls I believe. Got em all. Where's my prize?

Viveun · January 2017

Tan9oSuccka wrote: »

NewBlacksmurf wrote: »

Tan9oSuccka wrote: »

I don't understand the people defending this system.

If no one really makes money from running them, whats the point?

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

@Tan9oSuccka

The point of systems in game economies is circulation and to prevent inflation

It's not to help people make more money by design. This game just actually works better than some others due to the design.
It's not defending anything, it's understanding the design and how economies work.
ITS also understanding that joining a trading guild is not inline with the design so if you or anyone chooses to join one and support their idea, hopefully now you realize it's not developer design, it's people trying to game the system which by default can damage or hurt a players experiences.

From an overall developer perspective, I can understand that.

I want to know the benefit for someone running a guild if the profit is not there? E-peen?

It's not overly profitable for the guild as a whole. As a buyer its not enjoyable running around to the plethora of kiosks in different zones.

Running a successful trading guild is both challenging and rewarding, imo. Wouldn't do it if there was no enjoyment in it.

Tan9oSuccka · January 2017

Viveun wrote: »

Tan9oSuccka wrote: »

NewBlacksmurf wrote: »

Tan9oSuccka wrote: »

I don't understand the people defending this system.

If no one really makes money from running them, whats the point?

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

@Tan9oSuccka

The point of systems in game economies is circulation and to prevent inflation

It's not to help people make more money by design. This game just actually works better than some others due to the design.
It's not defending anything, it's understanding the design and how economies work.
ITS also understanding that joining a trading guild is not inline with the design so if you or anyone chooses to join one and support their idea, hopefully now you realize it's not developer design, it's people trying to game the system which by default can damage or hurt a players experiences.

From an overall developer perspective, I can understand that.

I want to know the benefit for someone running a guild if the profit is not there? E-peen?

It's not overly profitable for the guild as a whole. As a buyer its not enjoyable running around to the plethora of kiosks in different zones.

Running a successful trading guild is both challenging and rewarding, imo. Wouldn't do it if there was no enjoyment in it.

That's good insight. I can appreciate that. Do you get to play the game or mostly guild upkeep?

asneakybanana · January 2017

OldGamerESO wrote: »

This is one thread I wish I could post anonymously LOL...

I am not trying to be ungrateful for being in great trading guilds, but I am trying to understand the economics behind the guild trading locations. When I see a guild bank with 36 million gold and I see that they get a cut of every sale I assume they are economically sound. Why then the e-mails berating the guild members for not buying raffle tickets? Or donating goods for raffle tickets. I really want to understand how this works. Is running a trading guild inherently profitable or is it always operating at a loss? I have been in many trading guilds and most of them operate this way. The people running them act like they are doing you a favor to provide the trader and raise money to pay for it. And they claim how hard it is and how much of their free time they sacrifice for us. Is that all for real? If it is, then I am truly appreciative. But that also means the whole, system is broken badly. Maybe they need a way to adjust the guild cut so they can raise it until they can pay for the spot. When I join a trading guild they usually have rules: sell X amount a week, don't sell items worth less than Y, keep your items full, etc. I "feel" that meeting that criteria should be sufficient to participate and for everyone to be making money. Maybe the trading guild needs to increase their selling requirements? I sell about 50k-100k per trader per week. Maybe that is way too low and I need to be replaced with 1m/week players to keep the traders viable?

On pc na for ah consistent spot in rawl its 20m+ a week. and 3% of all sales what the guild gets so in order to cover the weekly rent basically a trader must sell over 600m in goods which simply doesnt happen so they need to come up with other creative ways to generate enough income to keep their trader.

code65536 · January 2017

Tan9oSuccka wrote: »

I don't understand the people defending this system.

If no one really makes money from running them, whats the point?

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

There are people for whom the player economy is just a tool. They just want to get rid of what they don't want and get what they want and be done with it. These are the people who just want maximum convenience and want a central AH.

There are people for whom the player economy is itself a game. Instead of beating a trial or pushing for emp, their measure of success in the game is amassing as much gold as they can or building a network of successful trade guilds. These are the kinds of people that make the economic simulation gaming genre successful. For these people, the game's market adds dimensions of interesting play.

ESO's trade system gives this latter group something meaningful to play in this game. And it comes at the expensive of some inconvenience for those who don't care about the economic game--but it doesn't really affect the core gameplay of PvEer's and PvPer's, so it's a reasonable tradeoff.

Annalyse · January 2017

gard wrote: »

Nestor wrote: »

Tan9oSuccka wrote: »

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

There are 171 Kiosks in the game. Half the locations have more than one, usually 4 to 6 Kiosks, if not more. So, its not even 3 figures for the locations. Probably closer to 50.

Technically correct. But are you any more likely to browse 171 kiosks than you are to browse 1000?

Everything I have bought from a guild store has been from guilds where I am a member, and can download and search the item listing.

I always browse when I am in the market for something with a high cost. Why? With the system as it is currently, sellers aren't able to see every other listing of the same item and, rather than running around to kiosks checking, they will often just list it for what seems like a decent price to them (and especially in smaller traders, this can be a big difference). I have saved hundreds of thousands of coin by shopping around.

This doesn't happen with a global auction house. If you can see every listing of an item, you aren't going to list something that much lower. But what I have seen over and over in games with auction houses is one rich person buying out every listing for a particular item, then relisting them at double the cost. Having been in a few games where everything very quickly became impossible to afford for the average player because of tactics like this, I can say that I much prefer this system.

NewBlacksmurf · January 2017

Tan9oSuccka wrote: »

NewBlacksmurf wrote: »

Tan9oSuccka wrote: »

I don't understand the people defending this system.

If no one really makes money from running them, whats the point?

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

@Tan9oSuccka

The point of systems in game economies is circulation and to prevent inflation

It's not to help people make more money by design. This game just actually works better than some others due to the design.
It's not defending anything, it's understanding the design and how economies work.
ITS also understanding that joining a trading guild is not inline with the design so if you or anyone chooses to join one and support their idea, hopefully now you realize it's not developer design, it's people trying to game the system which by default can damage or hurt a players experiences.

From an overall developer perspective, I can understand that.

I want to know the benefit for someone running a guild if the profit is not there? E-peen?

It's not overly profitable for the guild as a whole. As a buyer its not enjoyable running around to the plethora of kiosks in different zones.

@Tan9oSuccka

Well first off, running a guild shouldn't be for gain for the individual or a few individuals.
Running a guild is to provide a great overall experience for a group of like-minded individuals who play the same game and want to play together.

Trading guilds is something people created...in their minds...they are creating and offering something that players from others games suggest this game needs. Some people enjoy it and argue it's profitable and beneficial

As a member in the past of a few, it's not something I'd support and largely it's not the best opportunity considering what the game does offer. Basically saying if it's to make money....there are lots of more efficient ways

As a buyer....there's nothing anyone can't obtain themselves but when the desire is to buy, I've found it best to be members of real guilds as you're more likely to find what you want or get help obtaining it cause you're with like minded people.

To each their own....

s7732425ub17_ESO · January 2017

Trading guilds operate at a loss with regards to tax revenue. There is no way guilds can generate millions and millions of gold in taxes to cover the cost of certain spots.

So guilds are forced to do raffles and auctions in order to not operate at a loss.

Danikat · January 2017

Danksta wrote: »

OldGamerESO wrote: »

Turelus wrote: »

I know at one time there was one of the EU PC largest trade guilds which had its own guild master investing millions of their own money into it to keep the Craglorn trader.

It's not all easy money at the top.

But a free market economy should balance out right? Why would guilds bid so much that they lose money? If the traders operate at a loss propped up by charitable contributions then its not really economics. We are really just allowing ESO to have a huge gold sink for no reason. If all the guild traders cooperated then they could conspire to run the price back down to manageable and economically sound levels.

It is akin to when governments subsidize their industry. It appears they create a competitive advantage, but they really just cause inflation. In this case you have guild traders subsidizing their business through donations from guild leader or donations from guild. This in turn drives the price of the guild trader up with in turn cause inflation. Its hard to legitimately bid for a spot (or a job) if your competition is willing to take a loss to win the bid.

There's a very good reason to have that gold sink. Gold appears out of no where through quest and drops from mobs. That gold needs to leave to prevent depreciation of gold.

Agreed. You can debate whether this is a good way to do it or not, but games absolutely need gold sinks to have a healthy economy.

I used to play Ultima Online in the early days when MMOs were still very new and the devs were learning a lot of lessons as they went along. At first there were no real gold sinks in the game (you could buy from NPC merchants, but mostly stuff you could make or find yourself) and gold constantly pouring into the game from enemies killed, items sold to NPCs and everything else. As a result the price of everything sky-rocketed. Even basic armour cost thousands of gold (in a game where that was a lot of money), mounts were tens of thousands at least and placed houses were in the millions. (You could buy a blue-print to place your own house from an NPC for a few thousand but you'd never find land to put it on because it was all taken.)

I think they sorted it out eventually by adding a bunch of gold sinks to balance out what comes into the game, but I don't know because I quit before that really started happening - partially because unless you were willing to spend 5-8 hours a day farming you couldn't really achieve anything.

On a personal level it might suck to see your gold disappear for something you know could easily be free, but on a larger scale it's absolutely a useful and important system.

alexkdd99 · January 2017

Tan9oSuccka wrote: »

I don't understand the people defending this system.

If no one really makes money from running them, whats the point?

If I want a specific armor piece, I must spend hours wading through garbage at 1,000 different locations.

You do make money. Instead of paying more sales tax we just pay dues every week. The trade guilds I am in have been gaining more and more gold every week, not losing. If guilds set dues at 10k a week per a person, they can comfortably keep a trader every week and build up the bank.

Roughly 5 mil in dues +unknown amount from raffles and auction + sales tax = very profitable.