Calculating Canonical Prices

[Lyrositor]

I am trying to determine what should be the canonical price of resources (that is a price everyone can agree on to be reasonable and just for both producers and consumers), my objective being to then start selling my resources at these prices, and never higher.

I have tried to come up with prices that seem reasonable, based on the difficulty of producing them and their availability, but I would appreciate it if people could provide other opinions and justifications. Keep in mind this is based on the assumption that all resource improvements have been maxed out (at least for the resources which are being sold by the producer) and that the resource improvements haven't been built. Oil's price was my basis for the subsequent calculations (with the exception of food). My conceit was that prices should be based on how much is produced, not how much a resource is desired, since the latter is more subject to fluctuation and I am looking for immutable prices.

For my initial round of calculations, I simply took into account how many installations could be built, how much they produced per day and how many resources they required. This worked rather well for basic resources but not so much for manufactured resources, so I just added a factor of 10 (I am not very satisfied with this method, though, so if anyone has a better idea of how to accurately represent it, go ahead):

• Food: 90 (arbitrary)
• Oil: 750 (arbitrary)
• Coal: 1125 (6 tons/day/mine, 6 per city -> 750*9*6/6/6 = 1125)
• Bauxite: 2250 (6 tons/day/mine, 3 per city -> 750*9*6/6/3 = 2250)
• Iron: 2250 (6 tons/day/mine, 3 per city -> 750*9*6/6/3 = 2250)
• Lead: 900 (9 tons/day/well, 5 per city -> 750*9*6/9/5 = 900)
• Uranium: 6750 (3 tons/day/mine, 2 per city -> 750*9*6/3/2 = 6750)
• Gasoline: 1250 (3 tons of oil for 6 tons of gasoline, 3 per city -> 3*750/6/3 = 125)
• Steel: 3750 (3 tons of coal, 3 tons of iron for 9 tons of steel, 3 per city -> (3*1125+3*2250)/9/3 = 375)
• Aluminum: 2500 (3 tons of bauxite for 9 tons of aluminum, 3 per city -> 3*2250/9/3 = 250)
• Munitions: 1000 (6 tons of lead for 18 tons of lead, 3 per city -> 6*900/18/3 = 100)

These more or less correlate with the prices I've been seeing on the market generally, but as you can see some prices are very different (e.g. uranium is much higher). If someone has a better method to calculate fair and equitable prices, I'd like to hear it.

[Saru]

The free market is the best at determining the value.

[Lyrositor]

The free market is the best at determining the value.

There are times when prices skyrocket and I no longer feel comfortable selling my resources for those prices. Gasoline is at about 3,000 right now, and it doesn't seem fair for me to take advantage of the war situation and its inflated prices. In those times, I want to have a guideline of fair prices to fall back on.

[Dwemyrn]

The prices you have here exceed the normal prices the markets have when there isn't war going on. I can get iron for about 1100, coal for 1200, bauxite for 1600, aluminum for 1500, (Yes I aware that I just said bauxite sells for more than aluminum.) Steel for 1600, gasoline for 1300, Uranium for 2800-3000, lead for 700, munitions for 800-900. You can't control the market, this is why it is "free" trade because it is in no way restricted and should stay that way.

[Blake Gillman]

Uranium during peacetime I have found to be a good 4k

[seabasstion]

• Food: 90
• Oil: 750
• Coal: 975
• Bauxite: 1700
• Iron: 1050
• Lead: 850
• Uranium: 3400
• Gasoline: 1500
• Steel: 1600
• Aluminum: 1550
• Munitions: 850

 

These were approximately the prices of each resource during the last couple weeks prior to the latest war time push.

 

What you are asking is a complicated question simply summarized with supply/demand. The way you are trying to calculate price is simply focusing on supply whereas demands (projects, tanks, planes etc) are what drive the sales.

 

If you're looking to determine when to buy and when to sell for long term speculative plays you will need to consider the direction of the game. Will more nrf come around? That's more gas/steel. More cce? That's more bauxite. I'm sure I'm not telling you something you don't already know.

 

If you're looking to set a consistent flat price like a retail shop you're going to need to still incorporate demand and then incentivize buyers either through lower prices or locked in rates akin to insurance.

 

Either way demand is something best observed since this environment is primarily human driven. I have historical prices for all my sales dating back to February (I think). I can go back through and find prices during certain periods you deem "normal" if you wish

[Dwemyrn]

Uranium during peacetime I have found to be a good 4k

Uranium steadily went up shortly after rumours of war. Then Gas and Steel went way the hell up shortly after uranium went up. "Back in my day, uranium only cost me a little over 2k" ;p Edited August 26, 2015 by Ansom

[Crust]

This is actually a pretty interesting idea. How does one sell outside the principle of supply/demand? And where do we set that price.

 

Even if one wasn't as morally upstanding as you are (I have no problem selling steel for $5000) the answer might be interesting due to markets between alliances and such. You could just set it at an arbitrary price that's lower than the market price, but it would be an interesting idea having resources there at a fixed price.

 

However, it's kinda odd for me that the price for refined resources in your calculations are lower than the unrefined kind. That to me makes no sense.

[Jroc]

The free market is the best at determining the value.

If free markets weren't flawed....

[Dwemyrn]

This idea is communist. Drop it.

[Crust]

Did I hear someone say communism?

 

[Aerys Targaryen]

Trading with a fixed price is good only if you buy AND sell with fixed price. And if you are interested in that kind of exchange, send me a message in-game.

Edited August 26, 2015 by Aerys Targaryen

[Arthur James]

Standard Price:

Food (F)=100 dollars

1 Coal       = 10 F            Iron = 10 F              Steel = 20 F

1 Oil          = 10 F     Brauxite = 15 F      Aluminium = 20 F

1 Uranium = 40 F    Gasoline = 20 F

1 lead       =  9  F     Munition = 12 F

[Kurdanak]

This idea is communist. Drop it.

Yeah, shame on you for caring about more than your sole profit, Lyro. Don't you know there's nothing more to the world than that?

 

I've never been too great at the trading system, but I approve of your values nevertheless.

[Pfeiffer]

Since you don't want to take advantage of these prices, feel free to send me trade offers at pre-war prices. I'll accept them all.

[Lu Xun]

This is the entire basis of value investing and similar types of trading. When prices are too high, sell, when prices are too low, buy, and skim the difference as profit. The idea of trying to determine "correct" prices is useful, but not in the sense of determining fair prices but rather in creating profit.

 

On the moral aspect of it, well, honestly, if you buy when it's low, you push up the price closer to its fair value, if you sell when it's high, you push the price down closer to its true value. The opposite type of trading is momentum trading, where you buy when it's on an uptrend, seeking to benefit off the trend and accelerate it, and you sell or short-sell when it's on a downtrend, with the same goals as before.

 

If you have friends, give them your fair valuation system and trade it with them; they can improve it and as long as it's value-based as opposed to momentum-based, it'll decrease market volatility while garnering you guys a good profit.

[LordRahl2]

There are times when prices skyrocket and I no longer feel comfortable selling my resources for those prices. Gasoline is at about 3,000 right now, and it doesn't seem fair for me to take advantage of the war situation and its inflated prices. In those times, I want to have a guideline of fair prices to fall back on.

 

I like your logic good sir.  Please send me an in game offer for gasoline at a fair price and I will buy it.

[PigInZen]

When Inst likes your thread, it's time to 

 

BURN THREAD GAS OP

[Lyrositor]

I think some people are misunderstanding my purpose with this effort. The idea is not to sell at these prices and these prices only. The point is to find out what is a reasonable price for each resource in normal times, so that I have a guideline that I must never exceed in times of war, while also making it easier for me to set up long-term resource trade agreements accurately reflecting the value of the resources being exchanged.
 

• Food: 90
• Oil: 750
• Coal: 975
• Bauxite: 1700
• Iron: 1050
• Lead: 850
• Uranium: 3400
• Gasoline: 1500
• Steel: 1600
• Aluminum: 1550
• Munitions: 850

These were approximately the prices of each resource during the last couple weeks prior to the latest war time push.

 

Thanks for that data - I have updated my values to correspond, at least for the resources I produce.
 

What you are asking is a complicated question simply summarized with supply/demand. The way you are trying to calculate price is simply focusing on supply whereas demands (projects, tanks, planes etc) are what drive the sales.

If you're looking to determine when to buy and when to sell for long term speculative plays you will need to consider the direction of the game. Will more nrf come around? That's more gas/steel. More cce? That's more bauxite. I'm sure I'm not telling you something you don't already know.

If you're looking to set a consistent flat price like a retail shop you're going to need to still incorporate demand and then incentivize buyers either through lower prices or locked in rates akin to insurance.

Either way demand is something best observed since this environment is primarily human driven. I have historical prices for all my sales dating back to February (I think). I can go back through and find prices during certain periods you deem "normal" if you wish

I think the data you posted above will be enough to begin with. My objective is not to find a price that will always work, but to find one that will always seem just (of course, market trends will make it impossible for me to consistently maintain that price, so I will occasionally have to sell lower). This loses a great deal of its relevance in peace time, but in times like this it is much more important for me.
 

However, it's kinda odd for me that the price for refined resources in your calculations are lower than the unrefined kind. That to me makes no sense.

This has actually often been the case - I can make more of a profit selling bauxite than aluminum (as you can see in seabasstion's data).
 

Trading with a fixed price is good only if you buy AND sell with fixed price. And if you are interested in that kind of exchange, send me a message in-game.

We might have different notions of what is "good" then. Of course, it would certainly be more interesting if I could find trading partners which agreed to these prices both-ways, which is why the final prices I decide on will be reflected in my trading thread.

[seabasstion]

here are scatters of my trades dating to the end of march. i started collecting data differently at this time so this includes BOTH my buy and sell offers that were fulfilled. i have data dating back to early january but i don't want to make it confusing with two different formats. the big gap in june was me being blockaded. im also blockaded now explaining no data for the past week or so

 

 

 

 

 

 

 

 

 

 

 

[seabasstion]

 

However, it's kinda odd for me that the price for refined resources in your calculations are lower than the unrefined kind. That to me makes no sense.

 

in the real world yes, but you have to remember that this game breaks fundamental conservation laws. 1 aluminum refinery can produce 9 tons of aluminum out of 3 tons of bauxite. in reality it would probably be reversed but in this universe we'll just accept that as fact.

 

bauxite mines can only be purchased in south america, africa, and australia. the majority of the game is not on these 3 continents, and they only produce 6 tons of bauxite each with a max of 3 mines per city

 

im doing some back of the envelope math here with HUGE error margins but lets say 1/4 of the game has bauxite mines and 1/2 of the game has aluminum refineries (i have no idea if this is remotely true), and lets say the average nation has 10 cities

 

that means that the average nation has 1/4 (factor) * 3 (# allowable mines)  * 10 (cities) = 7.5 bauxite mines

that means that the average nation has 1/2 (factor) * 3 (# allowable refineres) * 10 (cities) = 15 aluminum refineries

 

this means that 7.5 bauxite mines * 6 tons = 45 tons produced a day

this means that 15 aluminum refineries * 3 tons required = 45 tons required a day = 135 aluminum produced a day.

 

while there is a greater demand for aluminum (projects, planes, nukes), if it isn't 3x the demand of bauxite (aluminum refineries, cce) than the price will shift towards a higher price for bauxite compared to aluminum because of limited supply.

 

if this game followed real life mining/smelting and it took 9 tons of bauxite to make 3 tons of aluminum, the price of aluminum would probably be over 12,000 since all the factors flop

[Lu Xun]

@Lyrositor / Aerys Targaryen: That's called a futures' contract, you make an agreement to provide a resource at a fixed price in the future. If spot prices change, the futures' contract is still intact and either the buyer or the seller will lose out, but it reduces uncertainty.

 

Problem is, in real life, futures' contracts are enforced by sovereign governments, you violate them, you can be taken to court for breach of contract. In game, there is no global authority that can enforce or violate futures' contracts, unless Sheepy wants to code something in.