ETS vs HTS, When Economics is Fooled
This is the second in my possible series of economics articles, proceeding on from the article on Daily Dare item price economics. It will grasp a completely separate section of the Neopian economy by explaining the economic reasonings between ETS and HTS items, along with giving ideas which may help traders understand enough to make more money off ETS and HTS items.
How often does one see an item so rare it gets snapped up instantly? Or perhaps an item which rots in the bottom of our SDB for all eternity? Both of these common trading post problems have been plaguing re-stockers and trading post users for a very long time, but just what is driving these two terms? As before, the answer is simple; Supply and Demand.
These terms are normally only coined in the trading post, as it allows sales of up to 800,000 NP. But just what do ETS and HTS stand for? Although they are common terms, it is often possible to be confused, so before I get started I will explain these two terms.
Easy to Sell: Items that traders often need to overpay on to get. Often, these items will get many offers. They are high demand items that can be sold for a profit easily, often referred to as ETS.
Hard to Sell: Items which clog up the system. Often retired items, these are high priced items with very little demand. Often, traders are forced to sell these at a very large discount, making it harder to make a profit. These items are classed as HTS and are often classed as gallery only items.
ETS items are highly sought after items, which may either be set price such as a Baby Paint Brush, or rare and constantly dreamed about like an avatar item. Baby Paint Brushes are a perfect example of an ETS with a set price. Since their price is set in the Hidden Tower, no one may sell for higher and make a profit, and anything lower is a loss. However, unlike a lot of set price items, they have a very high demand attached to them and they can be sold for slightly under HT price comfortably. Why are there so many in circulation, though? Well, due to the 800k limit on trades, these items have became a sort of currency and often wish lists contain such demands as "1 mil or 2 Baby Paint Brushes". This basically means that up to 6.8 million can be offered on larger more expensive items using Baby PBs depending on the seller. However, this paint brush is not the only ETS item, and as its supply is unlimited, it is not the major point of this paper.
Often, the expensive rare event paint brushes are classed as ETS also. These items, given away via random events or dailies, are all one use and thus consumable. They have a low supply, but a high demand, which normally means a high price. However, no matter how expensive paint brushes may seem, the fact that they are ETS proves that there is more to it. These items are undervalued, to an extent, and sellers could easily raise the price of them and still sell, albeit slower.
If an item, however, is unique in the ability it gives, or has other demand related pulls, this may be changed. The item Kacheek Flour, for example, rises and falls in price but is normally easy to sell. This item is priced based on the buying power of the Neopian people, and it could be raised far into the 20-30 mil neopoint range and still have a high demand. This is due to Kacheek Flour’s unique effect. It allows you to turn an opponent into a Kacheek, and when combined with a friend and a stealing item allows a very cheap and powerful healer to be used in the Battledome. Due to this, Kacheek Flour should be viably sellable until it reaches the price point of other full healers such as a Leaded Elemental Vial, but this is not the case.
All non retired items have a price limit, based on their effect and the supply of neopoints in the market it is aimed at. For example, naturally users of a Kacheek Flour cannot afford a full healer, so a Kacheek Flour’s price point must be noticeably smaller than that of the full healer. The idea of an ETS seller should be to work out which market you are aiming at, what level of player, and raise your point to a level in which they can afford it and demand is still high enough for a sale. If you raise any item’s price too high, demand will reduce to a point that it will become HTS. In real life, this would be classed as in-elastic demand. In real life, in-elastic demand finds an example in food, in which price increases do not significantly affect demand since we all need to eat. In Neopia, this attributes itself mainly to paint brushes or unique items such as the Kflour.
This is due to the fact that for many Neopians, paint brushes, the lab ray or weapons are considered to be a goal or needed items. If the price of a Baby Paint Brush in the tower were to rise from 600k to 750k, we would see some response emotionally, mainly complaints, but the people who wanted the brush before would still most likely aim for the brush. The point in which demand finally starts to go down is the max point in which an ETS item may be sold, and often ends up being the price most people pay to begin with when they overpay for the item. Both easy and hard to sell items are on the same playing field, but opposite ends, and may be considered elastic instead.
Looking at HTS, we can see items that are drastically overpriced. The owners of these items are stuck on a single price, and will not budge unless literally offered something lower. A good example is black roses. It is not that no one wants the item; it is that no one wants to pay that much for the item. Everyone is always asking around the 600k point for them right now, but when offered 300k, the seller accepted. This is due to the fact that the item was hard to sell in the first place. Items that are HTS often offer weaker abilities for the cost, or have been artificially boosted. Some items that often seem to be hard to sell, gallery only items are weak Hidden Tower items, high rarity items or retired items. Hidden Tower items, however, are doomed to be HTS forever, as if you sell them too far under their purchase point in the tower, the profit is too immense. With other items, though, the problem of HTS can be easily rectified and explained.
First, let’s look at high rarity items. While a lot of these items are sought after and powerful, some are not. Due to their inability to be searched in the shop wiz, and their small numbers, often they have very high prices and are labelled as gallery only items. The main problem behind this, though, is that no one even wants them in their gallery to begin with. Like other HTS items, these are not unsellable and may have their price lowered to a point that they get bought regardless of ability. If you have an item that is unable to be searched on the wiz, but should be under 99k, it may be smart just to have other items in there to act as bait, and then sell the R99 item from there. Often, however, prices in the Neopian shop itself may be too high to make a profit if you lower the price. I must question if these items are even worth purchasing in the first place. Overpaying on items with HTS ones is common practice, but technically if you take away this concept of “overpay” and just lower your prices by that figure, you get the same effect without having to sell the item you get after.
All HTS items suffer the opposite problem to ETS ones. These are highly elastic items in which their current price is too high for any people to demand it, demand drops as price rises and falls as price falls and is thus classed as elastic. Unlike highly sought after and often inelastic ETS goods, elastic means that price directly effects demand. People often believe that the smaller the supply means automatically the higher demand, but this is not always the case.
Let us now begin to look at retired items. Retired items are unique in that they are often not ETS or HTS before they are retired. For this example, we shall be looking at utility fish. Long ago, utility fish were commonplace; these useless animated fish items were seen as more of a novelty than anything else and often ignored by the new player. But Maraqua, the world of the utility fish, was destroyed, the items never to return to Neopets again in shops. As a collector, I noticed a trend in these fish. Fish I bought for small sums, 30k or so, had risen to 99k and soon after that, 150k. Why such a massive jump? Well, the original jump was due to demand for retired items raising, but the moment it reached 99k, it jumped again.
This second jump was large, and jumped the fish from being an ETS buyable item, to being a HTS unwanted fish. When the price rose, people checking the wizard for the fish’s price did not see any; also, in the trading post there was no price. So, through no fault of its own, the fish was put up on the trading post at a much higher price than before. Soon, others noticed the fish had risen in price, and put their fish up around the same incorrect price. This fish was overpriced, and the people who demanded it did not have enough to pay for it and thus it became HTS. These giant leaps in price are common for retired items that just become un-buyable, and it is because of this that retired item prices stagnate.
If the fish was posted at say, 110k, it may still be easy to sell and then the price would have risen until reaching a possibly higher point. This is because, if an item appears to be more fluid in the marketplace, there is a higher consumer confidence in that good, while for an object which stays in the TP constantly reposted without selling, confidence will be lower.
But what causes this overpricing? The answer is simple; perceived value. One person posts an item at a certain price, and everyone else with that item instantly assumes that is the value, and if there are none of a certain item on a TP besides the one with the price, other people will also assume that. As an example, there was a long time when the Yooyu Celebration Stamp was priced at 20 mil. Now, this item was highly overpriced, and while one or two people may have fallen for it and bought it at that price, it does not reflect the actual value, as it was hard to sell. Soon, people began chipping millions of NP at a time off that price, and half a year down the track the value was all the way down to 2 mil. This is due to people who think they can make a huge profit by lowering the price by 2 mil, trying to make it ETS. However, everyone then lowers their price to that, and although they believe people are selling it at that price, it is still HTS.
Just because an item has lower than normal supply, or no similar items on the trading post, does not instantly mean I could get any price I wanted for the item. Even though the supply/demand curve of that item is not active right now, the market still decides what is too expensive and what is too cheap. As an example, if I was to sell my Minty Shrimp, a retired item that has no price on the TP, for say 4 million neopoints, would it sell? No, it is really only worth around 200k, maybe less, but would that stop other Minty Shrimp owners trying to get 4 mil for it? Most likely not; in fact, by setting the price that high, all I would succeed in doing is making the minty shrimp item even harder to sell. Let us now look at another example, this time of an un-retired item.
For security purposes, and so I can get my account back if it is ever stolen, I keep a list of all my items and their current values on my computer. This is to prove that my account is my own if I have to. The problem is, with all my items it is impossible to keep this list up to date, and often my pricing is a few months old. Looking at the item Grundo Transmogrification Potion in my records, I have its value down as 800k. However, when I cross check this with trading post records, now the price is only 240k. This shows just how easily items can move from the HTS to the ETS side, and how trading post value and perceived value does affect which the item falls under.
So, while most conclusions found in this paper may seem to be rather obvious, raise the price when ETS, lower when HTS, I hope it manages to explain the reasoning behind it. Very few single users can affect the economy of Neopets as a whole, and even if you raise the bar to a certain point, it is impossible to know for sure what will sell and what won't. Try to treat set price items differently than normal items; chances are you won’t ever be able to sell that sunshine shield even close to the amount you bought it for until it is either retired or TNT upgrades it. If I decide to write another article about Neopian economics, the next one will be on my favorite topic; Retired items. So I hope you enjoyed this article and learnt a lot.
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