The Art of Undercutting

Posting on Warcraft’s auction house is both simple and complex. You can post one or many. You can make them cheap or expensive. You can be a good citizen, but you can also be a dick. At the root of this is the practice of undercutting your competitors on price to make sure yours sells first. There’s nothing wrong with undercutting. It’s just a tool, and you can use it like a scalpel, a hammer, or grenade.

The Scalpel

In almost all cases, I encourage minimal undercutting. If the lowest price on that piece of armor is 420 gold, price yours at 419.99 gold. Very likely, the next person to come along will price theirs at 419.98. Each successive undercutter shaves off a trivial sum, and the prices stay high.

Yes, high prices are good for sellers. Sorry buyers, I’m in business mostly for myself, not for you. You go run three more daily quests and get back to me with another 50 gold.

The Hammer

I see bigger undercuts all too often. Someone sees that piece of armor priced at 420 gold and decides to whack a chunk off of that and sell for 400 or maybe even 350. There are a few possible reasons for this, but they’re all wrongheaded.

Bad Reason #1: “Round numbers sell better.” This is baloney. The items are sorted by price. Buyers don’t look for the round number. They look for the cheapest. And they’re not waiting for a round number either. They go with the lowest price at the time that they want to buy.

Bad Reason #2: “A bigger price drop will get me noticed.” Again, the buyers don’t care. They just want the cheapest at the moment. The only way it gets you noticed is by your competitors.

Bad Reason #3: “A bigger price drop will keep my competitors from undercutting me.” This is maybe 20% true, but that’s not enough to save it. The truth is that most profitable markets will have multiple sellers, especially towards the end of an expansion. A small fraction of these will be fleeting competitors, just trying the market out, and an aggressive price drop might scare a few of them off. But the majority of your competitors are there to stay, and they’ll be right back, undercutting you by a minimal amount.

Bad Reason #4: “Minimal undercutting is too much work.” Yeah, typing those extra characters is just soooooo hard. I’ll admit there’s a shade of truth to this, and it’s one of the reasons I rarely bother to undercut by 0.0001. But I almost never undercut by more than a single gold. Typing 400 is as many keystrokes as typing 419.

Basically, this level of undercutting is an annoying move, and if you do it repetitively, you will earn the reputation for being a dick. It’s also stupid.


Because you left money on the table. That’s almost 20 gold you left out here. I wouldn’t care if it were only you, but when I come back to undercut – and believe me, I will be back to undercut – that’s also almost 20 gold that I had to leave on the table. Now instead of selling my item for 419.98, I’m selling it for 399.99.

Get enough of you hammer-heads together, and before long, we’re having the same price war as before except it’s around 200 gold instead of 400 gold. Usually it takes a server shutdown before the prices can rise back up.

So, in short, DON’T DO THIS. Keep with minimal undercuts.

The Grenade

That is, unless you’re trying to blow up the entire market.

Some items sell at very high markup. They cost next to nothing and sell for hundreds of gold. There are lots of competitors working that market, and your only hope for sales is to time your undercuts just before the buyer shows up. It means you’re camping at the auction house, reposting every hour or two to undercut the other five guys who are doing the exact same thing.

One approach to get out of this reposting trap is to nuke the market. Figure out your costs down to the copper. Do what you can to get that price down. Remember to include posting costs and auction house commission costs. Know your down-to-the-bone minimal price.

And then start posting just a little above that.

Suddenly, items that had been selling for 120 gold are now being priced at 10 gold.

Holy hate-mail, Batman, but that’s going to stir up trouble. Competitors will argue with you. People will say you’re ruining the market. People will ask you to play along and bring prices back up. They’ll buy you out and repost at the original prices. In short, they’ll do anything to keep those prices high.

But if you’re committed to doing this, you have to press on. Keep posting at these rock-bottom prices. Sooner or later, your competitors will stop posting their wares. They’ll stop buying you out and realize they have bags full of items they can’t sell. Eventually, you’ll own the entire market. Then start raising your prices. You never get back to the original prices, but with 100% of the market you can sell enough to be making more money than you did before.

I admit this is a serious dick move. Asshole mother-fucking cunt-shitting dick move. (Thanks to George Carlin for that…) But in many ways, the auction house is the ultimate player vs. player arena, and sometimes you decide it’s necessary to be a dick. The biggest proponent of this goes by the moniker “The Greedy Goblin”, and if you read his blog, yeah, he’s a real dick, and apparently anyone who disagrees with him is an idiot living in the world of rainbows and unicorns.  (And I would know — by the time you read this, I’ll be holding on to Poonalooey’s mane as we ride across the rainbow fields of Everjoy!)

You want some idea of how much hatred you’ll get for this? Look at how many folks in the book industry (from bookstores to publishers) hate Amazon. Yeah, we’re talking “with the passionate heat of a thousand fiery suns” kind of hatred.

And yeah, you can also say that Amazon is providing a great service to the customers by cutting out all this bloat and middleman profit. I suppose you can also say the same thing about the Greedy Goblin, that he’s trying to bring cheap armor to the masses. Except Amazon at least talks the talk. Greedy Goblins make no bones about being in it for pure profit.

But ultimately, we’re all just playing a game. We’re all here to enjoy ourselves, not to pay the bills or finance our retirement. There really no joy in fucking someone else over, or at least, there shouldn’t be. As the great Wil Wheaton said, don’t be a dick.

Future gaming columns will include the way to beat the Greedy Goblin, thoughts on posting in quantity, some exceptions to my suggestions above, and even an argument for when it’s not so bad to pull a Greedy Goblin.