#2 - Understand your market:
If you understand the market for something well enough, it's actually possible to predict some price trends before they happen. The key is keeping in mind the relationship between each stage of your market's production chain and not just the ones you're involved in. For example, when the prices of certain advanced materials change, this has a slightly delayed knock-on effect to the Tech 2 component market and so to the build cost of certain Tech 2 modules. If you see a downward trend in advanced material prices, you could predict that the build costs of Tech 2 items that make heavy use of that material are about to drop. You could invent some blueprints of it and wait for the drop to capitalise on it faster than other inventors.
Learning about the complete production chain
involved in an industry before entering any part of it is advisable. Remember also to consider the opportunity cost
of each stage of a production chain. There are sometimes cases where a particular step in the production chain will lose ISK and you should bypass it by buying the product rather than making it. I've seen people sell Tech 3 polymers for less than the value of the gas used to make them, for example.
#1 - Division of labour:
Perhaps the best piece of general advice I can give for any industrial activity, be it manufacturing or research, is to treat each stage of the production chain as a completely separate business. Judge the profit of each stage in the production chain independently and skip any parts that aren't very profitable. For example, if you want to invent and build Tech 2 items, you might be tempted to buy a full set of Tech 2 component blueprints. You could then make your own components from advanced materials rather than buying them off the market, potentially saving on build costs. However, if you judge the component construction as its own independent business you might find that the profit margins aren't very high.
If the average profit margins on the components you need are about 5%, that means buying the finished component from the market rather than building it yourself will only effectively raise your build costs by 5%. You might find that the time you're putting into that side of the business isn't worth just another 5% profit and there's something better you could be doing with your limited number of build slots. Similarly, it would be a mistake to produce all your own Tech 2 or 3 components if some of them are currently not very profitable to build or are making a loss. Instead, you should build only those that are particularly profitable to build and then buy the rest from the market. This will make very effective use of all your available resources, including your build slots.
Whether you're building from the blueprints yourself, passing them to a corp-mate or selling them on contracts, research can be a great money-maker for EVE
pilots without a lot of time to play. Research ties into every industry and uses many of the same market principles as trading
. The entry-level skill requirements are very low and there's a clear skill progression from Tech 1 research through to Tech 2 invention and Tech 3 reverse engineering. This ends EVE Evolved
's massive guide to research in EVE Online
. Next week I return to my regular column with another topic from the wide world of New Eden.
Brendan "Nyphur" Drain is an early veteran of EVE Online and writer of the weekly EVE Evolved column here at massively.com. The column covers anything and everything relating to EVE Online, from in-depth guides to speculative opinion pieces. If you want to message him, send him an e-mail at brendan.drain AT weblogsinc DOT com.