VpWT, PBEP, and Why You Need To Know What That Means
Gnilraps
All Stripped Down (Mandatory listening)
Day 3170 of the New World
July 25, 2016
I have been somewhat quiet for these last 2 weeks.
The reason for this will be evident as you read the article below.
What I am publishing today is the result of the data I gathered between Days 3159 and 3168.
All of the data was submitted by a group of entrepreneurs who own holdings in Washington State, eUSA in the Housing Industry. For their participation, each entrepreneur was awarded 10 Gold and 5,000 cc.
The purpose of the study was to examine the profit dynamics of the Housing industry through the implementation of an EVERY OTHER DAY, or “Rolling” production method. In short, participants produced products on even-numbered days (using eRep’s day numbers) and rested their companies on odd-numbered days. Each day the participants submitted their Work Ticket’s Used Per Industry data to me using a Google Form. None of the participants’ names were shared with anyone - my promise of privacy.
In short, I wanted to evaluate the effects of pollution on profit, while also gathering evidence that rolling production creates benefits for those who use it.
(It should also be noted that during the course of this study, Plato introduced a new marketplace, Air-to-Air missiles. I have many thoughts about this industry, but I have been focused on this study, so have not had time to publish them. I mention it here, though, because the market dynamics went haywire during the explosion of ATA products).
The data that was collected every day was the following:
Work Tickets used per product (HRM, Q1, Q2, etc.)
Pollution numbers
Retail prices
Market wage
Tycoon Pack (Yes or No)
Using this data, I developed a dynamic spreadsheet that enabled me to evaluate production with a variable I called, “Value per Work Ticket” (VpWT). This variable was determined using the following formula:
((produced goods X market price) - cost of production) / Work Tickets spent
Notice that I did not bother with taxes. I was not trying to evaluate actual profits, I was merely interested in observing the effects of pollution on profit.
I will not be publishing the hard data I collected. I worked too hard for it and paid too much for it to give it away. Consider my data proprietary.
However, I want to share with the eWorld what I discovered in hopes that manufacturers and company owners will pay more attention to pollution and wages before they mindlessly click their company production. At the end of the article, I will reiterate this point and reflect a little bit on how the ATA industry even further bolsters my point.
Observation #1 - Raw Materials are the King
Despite the efforts of our “team”, we were unable to impact the pollution data in the Raw Materials industry. This is tragic. Among all 6 housing product types, HRM produced the highest VpWT. Over the course of 10 days, HRM provided an average VpWT of 5.79cc. As you will see, this is comparitively stunning considering the fact that on no day did HRM pollution ever drop below 25% in Washington.
Also, HRM was the only one of the 6 housing products studied that turned a profit every day.
In short, if you want to get into the housing industry, just make HRM. If you produce in Washington, you will never make a killing, but you should always turn a profit every day.
That said, Washington is not the best place to set up your HRM companies. As of this writing, there are at 87 regions in the eWorld that would produce a better VpWT than Washington. In fact, there are only two other eUSA regions that produce either the same or worse as Washington, Kentucky and Florida. Thanks, Plato.
Observation #2 - Q5 Houses make profits. Sometimes.
I’d like to introduce the concept of the “Pollution Break Even Point”, or PBEP. This is the level of pollution at which a particular product - based on average market dynamics - breaks even for the producer. In other words, considering the cost of production, retail value, wages, and pollution (and NOT factoring taxes!), the PBEP is the pollution number above which the producer will lose money by running his factories of that product type.
In Washington State, the only finished product whose PBEP was higher than the actual pollution (meaning you would profit by producing) was Q5 Housing. And the Q5 pollution was ONLY lower than the PBEP on even numbered days. In other words, rolling production was responsible for Q5 housing to be profitable. Once our study was ended and Q5 houses began to be produced daily again in Washington (by our participants), the actual pollution exceeded the PBEP and Q5 houses once more lose money.
If you want to build a Q5 Housing company, Washington isn’t a horrible place to be as long as you partner up with other Q5 producers and utilize the “rolling production” method. (For a comparison between “rolling production” and “flat out production”, see Observation #5).
Observation #3 - Q4 Houses should be shot and killed. It would be mercy.
The Q4 house is the best comparitive “value” on the retail market. I say this because anyone producing them in Washington is losing (a lot of) money on each one he sells (if he is also paying market salary). In other words, it would be wonderful if everyone who is producing Q4 houses would just re-price them about 300cc higher, then the Q4 PBEP would roughly equal actual pollution. Until then, if you are producing Q4’s in Washington, it isn’t the houses that should be shot and killed, it is YOU.
So where are people producing these Q4’s so cheaply that they can actually turn a profit?
Actually, I don’t really know. As of this writing there are only four regions worldwide that have a better Q4 House productivity than Washington. And judging by the pollution figures in those four regions, not too many houses are being produced there either.
Please. Have mercy on the Q4 Housing market. RAISE YOUR PRICES!!!
Observation #4 - Manufacturing is dirty business.
My study convinced me that if you want to produce houses in Washington State, you are living in a dream. The profits are elusive in Washington, due to several factors.
First, there are so many people producing HRM there that it would take a miracle to get them all to cooperate in a rolling production scheme despite the fact that my findings prove beyond a doubt that this would increase their bottom lines.
Second, there are also too many people producing Q1 and Q2 houses in Washington. During the 10 days of our study, pollution figures never dropped below 25%. Remember not to feel sorry for my participants for the 5 days of production they lost, they were paid handsomely for their participation. Actually, my participants should thank me. Why? Why???
Because at 25% pollution, Q1 and Q2 housing was a money-losing industry. The PBEP for Q1 is 20.3% and the PBEP for Q2 is 21.6%. That’s right kids, if you are manufacturing Q1 or Q2 houses in Washington at market wages, you are losing money.
In fact, when we look at the PBEP for Q3 (4.75
😵, we see that it is a money-losing industry in Washington as well, because rolling production was only able to decrease pollution in Q3 to just below 20%.
In other words, among all finished housing goods industries in Washington, only Q5 is capable of turning a profit, and ONLY if rolling production is enforced.
Which brings me to…
Observation #5 - Rolling Production is the wisest way to do business in eRepublik.
Let me state right up front: the participants in my survey lost less money than everyone else producing goods in Washington during those 10 days.
Now I didn’t ask my participants to report the wages they paid out, so I don’t actually know who made how much. Remember, I was basing all of my research on market wages. But if everyone operating in Washington was paying the exact same wages, I now have the data to prove that the rolling production method benefitted those who used it despite the fact that only a fraction of the industrial population was participating. In other words, those who claimed that my rolling method would be ‘foiled’ by ‘cheaters’ who would take advantage of the lower pollution every other day while not actually participating… are dead wrong.
The reason I can say this unequivocally is because everyone was losing money. It’s just that rolling producers were losing less of it than flat out producers. The only winners are those of you who don’t own a housing company in Washington to begin with. You lost nothing.
The caveat to that point is the Q5 industry. If you were a flat-out producer of Q5’s, over our 10 day study, you lost an average of 0.4 cc per Work Ticket spent. If you were a rolling producer of Q5 houses in Washington over the 10 days of our study, you profitted an average of 4.36 cc per Work Ticket spent. Congratulations on your wise choice to play along.
Obviously rolling production did not impact HRM producers. Our participants would have lost income on the days they did not produce. This is because our little group was not large enough to reduce pollution. However, if we were able to grow our team of rolling producers so that we could reduce HRM pollution in Washington to 17% on non-producing days, then rolling production would yield higher TOTAL PROFITS (that is, more than double the VpWT) than flat out production. Could this happen? I think so.
In fact, if a team of rolling producers would be able to drop the pollution rates below each product’s PBEP every other day, they would be the ONLY producers making money while all of the flat-out producers would be losing money.
Gnilraps’ Conclusions
I realize I need to keep this short. Most of you are probably asleep by now. Thank you for reading this much already. But if you are still reading then I will abuse you further with my thoughts, opinions, and reflections.
First, as I have believed for the last 7 years, most people producing goods in this game have no idea what their costs are. They simply price their products at or near the basement of the retail market in hopes their products will sell quickly. This is, sorry to be blunt, idiotic and it is more responsible for the bad economy than Plato is. There, Plato, I threw you a bone. Look, it doesn’t take but a few moments to create a spreadsheet to calculate how much you spent to make the products you now want to sell. Then, armed with that number, DON’T SELL THEM FOR LESS. Don’t know how to make a spreadsheet? I’ll help you. Contact me. Offer limited to the first 3 to respond.
Second, I am constantly amazed at how cool people are in this game. The people I asked to help me with this study were polite, patient, and forthcoming with their data. I happily paid them for their participation and I hope they will think of me as their friend.
Third, you need to carefully consider several factors before you set up any industry. How stable is the region you are interested in? Is it “rented”? What does the pollution look like? What will it look like after you are there? What is that nation’s wage and tax (also consider this question from the perspective of region stability!)? What about potential embargoes?
Using all of this data, and Fourth, I recommend the following regions (as of this writing) for you to set up your housing industry if you are an eAmerican:
HRM: Set up anywhere in eUSA but Washington, Florida, and Kentucky. They are the worst. Bukovina in Romania is a top choice, but it is rented, so meh.
Q1: Same as HRM.
Q2: Same as HRM.
Q3: Don’t. You’ll lose money. But if you have a source of cheap wages, Washington is the best spot for Q3 production except for Canary Islands. But Canary Islands is unstable, its advantage would likely be lost once Q3 production there increases, and ew, Spain.
Q4: Again, don’t. But if you must, Florida is better than Washington. People in Canary Islands might actually be able to break even on Q4 due to low pollution if they would roll production, but nobody listens to reason, so don’t count on it. Avoid Q4.
Q5: I would set up in Florida. Pollution there is very attractive (below PBEP). Lower Kartli (RO) and Canary Islands both have better pollution figures too, but neither are as stable as Florida.
Fifth, if I could increase the number of people who would participate with me in rolling production, we could all significantly increase our OVERALL INCOME (not just our margin.) If I find the energy to get something like this set up, I will. What we really need is an Environmental Protection Agency of the eUS Government which will reach out on a constant basis to all eUS producers across all industries to encourage rolling production. In my opinion, it would take a team of 10 people to do this effectively, given the scope of the operation, the burnout associated with working for free, and the troll factor of holding a government job.
Also fifth, the introduction of a new industry actually created an additional dynamic in support of rolling production. Why? Because it drives up wages. It also creates a WT drain without providing any new source of WT. These two factors make margins in housing all the more slim, making rolling production all the more attractive. But I will save my thoughts about all of this for my future article about the ATA industry.
And Sixth, though I did not report this above, I can tell you that the Tycoon pack is now a silent killer. Using the TP, every industry becomes viable for the person who bought it while simultaneously increasing the losses experienced by those without it. And life without the TP… well, reread my article.
WHEW.
Now go read this interview I did with HadrianX, and subscribe to his awesome paper.
You may now return to your regularly scheduled clicking
Comments
http://www.erepublik.com/en/article/2607225/1/20
VpWT and PBEP fully explained.
My deepest respect for the work you have done here Gnillraps!
Well done. I pity the idiots that set up in "bonus" regions. You poor suckers.
The idea is that in the long run these idiots will win because the other regions will get more and more companies and eventually the pollution numbers will sink their production below the full bonus regions. A safe bet, I'd say but please don't do as I do. 🙂
The other safe bet is in war. When a region is conquered you loose your current national bonus. When you live in a region with 4 bonus if conquered the regional bonus is with you and the new ruler has those bonuses (it could be halved when the region has no connection to its capital).
That is very useful info I had not realized. The good news is that I've got both options!
good job
nice work
(note to self: stop making houses, go back to making HRM)
I welcome the work done.
Salaries have had a quite huge inflation the day of introduction of airplane fights.
There was a delay, however, about the time when houses price increase started to reach in a level in accordance with job market, which exacerbated the money lose from house industry last week. Did you take that in account in your analysis?
Yes I did.
In fact, my spreadsheet is now a laboratory where I can adjust all of the variables and render accurate results (sans taxes). So I have been playing with numbers quite a bit.
The retail market fell behind wages in housing which would have skewed the numbers terrribly. I will continue to watch things.
Many producers had already a lot of WT in storage. Many producers have workers for low wages. So I think many producers do make profits.
Agreed. That is certainly my situation. But as I stated, my aim was to evaluate which clicks yielded the greatest results.
o/
tl;dr
Voted for information and effort.
Excellent investigation. o7
Good job. 🙂
well i am sad. I had a lot of hope that you would have been able to control the markets by forming a production collusion to reduce pollution for q1 houses and house raws. because those impact me. but alas i will just have to keep doing what it is i do and hope i can break even!
I think it is possible. I didn't put a huge effort into building a coalition. If we made that into a concerted effort, we could put a dent in pollution.
I was in the plan but sadly due to needing 340 gold to upgrade my q5 weps factory to a q7 factory i never stopped producing and produced full production in 2 HRM Factories(the biggest one) 4 q1 house factories and 4 q2 factories. I needed to turn my work tickets to gold as soon as possible. am now at 440 gold. so you dont need to send me the gold and sorry i could not run your test.
Thk u for the effort u put into ur study and letting us know the results. But Erep has always worked the same way. Each time they introduce a new economic feature( or an upgrade of an old one) or a new industry the old ones became obsolete in terms of profitability.
\o/
Great article. It's not surprising that organizing who spends work tickets when yields some benefits, but I am not sure if it's worth the effort. I suggested everyone to pick a state where there weren't many people precisely because Plato was dumb enough to let the pollution penalty to exceed max regional bonuses. If you are the only producer in a region, you can organize how you spend the tickets just by yourself (like max one day, none on the second, max on the third, etc)
What about no TP Gnil? And wht is VpWT?
Value per Work Ticket
ThaaaanXX!
I do really appreciate ur efforts put in calculations & writings, thnx.
The results are, as always, informative, useful and hopefully catches one´s thoughts too.