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Introduction
In this article I will try to explain how to calculate the profitability of hiring workers to work in your factories and raw companies. Using current market prices in eCroatia, I will be exploring whether or not it is profitable to hire workers at all, and if it's profitable to have them working in raw companies, as well as factories. Finally, I will provide a formula to calculate the profitability of hiring any worker with any salary and any price of the final product. By "final product" I mean either food or weapons. Calculating the profitability of selling a raw product is fairly simple, if you can find a buyer.

For those uninterested in the mathematics of the problem, you may skip to the Summary at the end of the article. Ask away if anything is unclear, and feel free to share your insights, or tell me if I did something incorrectly.

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Bonuses and raw materials
Let's look at our factories first. Each factory requires a certain amount of raw materials so that your workers could make final products. The amount varies depending on the level of your factory (also referred to as quality), and the bonus in raw materials of your country.

If Cb is the basic consumption of your factory (amount required per worker when there are no bonuses), and B is your country's bonus regarding that factory, then your factory requires

units of raw materials per worker.

Also depending on your country's bonus is the amount of final products that the worker produces. With weapons factories, the number of products is

and with food factories, it is
.
This is regardless of the factory level. Let's make things general, and use N to denote basic productivity of any factory. This then gives us:

products per factory workplace.

Now let's look at raw companies. The situation there is quite similar. The amount of raw materials produced per worker depends on the bonus B and the basic production Pb of the company, like so:
.

Now we can calculate the number of raw company workplaces (WPn) required to cover the needs of a single worker in a single factory. We get this number by dividing the amount of raw materials required by a single worker in a single factory, with the amount of raw materials produced by a single worker in a single raw company:
.

It turns out that the number doesn't depend on the bonus at all, but only upon the basic consumption of the factory and basic production of the raw company. I'll leave it to the reader to decide which raw company to build, if any.

The basic consumption of your factories is given in the following table:


Basic productivity of raw companies is:


Keep in mind that all raw companies have only one workplace available besides the manager's, except Rubber Plantation and Hunting Lodge, which have four. This is relevant if you want your workers to produce all your raw materials. If you have a Q7 food factory, you would need 8 fisheries per factory workplace, assuming you work as manager (16 if you don't), which would cost you 80 gold (160 gold!), but you would only need 1.6 hunting lodges, which cost an average of 56 gold per factory workplace.

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Income and expenses
Now let's use S to denote the salary of a worker. Personally, the way the game currently works, I see no reason why your workers should have different salaries, unless they are willing to work for less than the current market price of workforce. For this reason, I will assume that all workers have the same salaries. Also, let's use P to denote the price of a single unit of the final product. Now our profits depend solely on our management decision: do we produce our own raw materials, or do we buy them off the market?

Let's use I to denote our income per factory workplace. This amount is equal to the number of products produced per workplace, multiplied by the price of the product, and subtracted tax T:


There are three taxes in eRepublik: income, import and VAT. Of these, only import tax (Ti) and VAT (Tv) are interesting when selling. Adding them together will yield you total tax percentage you need to pay when selling. Note that when selling raw materials, VAT is not included. So:

Ti is zero when selling products in the country of your citizenship.

To generate this income, we need to generate certain expenses (😵 first. These expenses include the worker's salary, and the total price of the raw materials. The price of the raw materials (Pr) is either the price we find on the market (Prm), or the price we pay our workers to produce it (Prw):

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Buy raw or produce raw?
Our profit R per worker then equals our income, minus our expenses:


If we buy our raw materials from the market then we get Rm, and if we produce our own, we get Rw, like so:


In order to figure out when it is more profitable to have our workers work in raw companies, and when it is more profitable to buy our raw products off the market, we need to find when Rm = Rw:


Expressions are equal when the amount we spend on the market buying raw materials is equal to the sum of all salaries we give to workers in our raw companies. If we can get raw materials off the market for less than the salaries, we are better off buying raw materials, otherwise we are better off producing our own. In order to find when it is more profitable to produce our own, we need to find when the expression on the right is less than the expression on the left of the equals sign:


Since WPn is fixed for a given raw company, we need to find the maximum salary Smax:


The salary of the worker should be less than Smax for this to pay off. According to this formula, Smax is equal to the amount we would spend buying the amount of raw materials that a single worker can produce in one of our raw materials companies. For some of the more common prices of raw materials, this amounts to wages according to the following tables:

Iron Mine/Grain Farm:


Oil Rig/Fruit Orchar😛


Aluminium Mine/Fishery:


Saltpeter Mine/Cattle Farm:


Rubber Plantation/Hunting Lodge:


Currently in eCroatia, the market price for raw weapon materials is 0.04 cc, and bonuses are at 60%, so if you have Rubber Plantations, buy raw material if your employee's wages are above 16 cc. On the other hand, if you only have Iron Mines, always buy raw materials, because Smax in that table is always below the country's minimum wage. The best course of action is to sell the mines and buy something better (like Rubber Plantation).

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Profit
But how much do we actually profit per worker? Do we profit at all? If we buy raw materials, we profit when:


This relation basically states that we profit when the total price of the products we sold is greater than our total expenses, with expenses broken down into employee salary S, total price of raw material we bought (1 + B ) * Cb * Prm, all multiplied by tax rates (1 + T), which consist of VAT and Import tax if we are selling abroad.

Values (1 + B ) * N = Np and (1 + B ) * Cb = Nr are given on your company pages, so there's no need to calculate them, so we can shorten the above relation like this:

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Examples
With 60% bonus, Np is 16 for weapon factories. Nr depends on your factory level (quality) as shown above. For example, let's take a Q6 weapons factory. At 60% bonus, it takes 960 units of raw materials to produce Np = 16 weapons. VAT in eCroatia is currently 7% on weapons, and let's assume we are selling at home, which gives 1 + T = 1.07. Price of the raw weapon material on the market is 0.04 cc, and salary is 16 cc (Smax is exactly equal to 16 cc, so it doesn't matter whether we produce raw materials, or we buy them). Finally, we have the values required to calculate. We find the minimum price for profit by equating the left and right sides of the above expression:


The current market price of a Q6 weapon is 5.10 cc (thanks to All for one One for all missions), which means we can make a profit:

We can earn 1.462 cc per unit produced by one of our workers, which means 23.392 cc per worker.

In the case of a Q7 weapons factory, Nr = 3200, which gives:

Current market price of a Q7 weapon is 9 cc, which means we can currently only lose money with Q7 weapons, unless we lower the wages of our employees.

If we create our own raw materials, we profit when:


Suppose we have Rubber Factories. Then in the above two cases, we get WPn = 2.4 and WPn = 8. In the first case, this gives:

Which confirms that it doesn't matter whether we buy or produce raw materials. In the second case, this gives:
.

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Summary
Let's summarize. In order to determine which management decision is better - buying raw or producing raw, we need to determine the salary of our employees. If it is higher than the salary found in the above tables for a given raw material company, a given raw material price, and a given bonus, we buy raw material. If it is lower, we produce our own. If it is equal, it doesn't matter, although buying raw material will result in more products for sale if you cannot fill every workplace you need.

Before we begin production, we calculate profits for this management decision. If the inequality

does not hold when we need to buy raw material, or inequality

does not hold when we need to produce our own raw material, then production is unprofitable and should not be undertaken. In such case the employer should lower the wages of his employees, as far as it takes for the inequality to hold, with an arbitrary profit margin. Employees will then most likely quit, which is far better than cause losses. Those who work instead, will generate profits.

As a reminder, in these inequalities, Np is the number of products a worker will produce; P is the price at which you can sell the product; T are taxes (VAT + Import); Nr is the number of raw materials you will use per worker and Prm is the price at which you will buy these products; S is the worker's salary; WPn is the number of workplaces you will fill in your raw companies per single factory worker on average, so they produce enough raw materials for that factory worker to use.

However, the real trick is that you need to calculate your profits before you determine your strategy, because you need to adjust salaries before your workers actually do work, or you may lose money. This requires some knowledge of how the market prices will change, as well as having reliable workers that you know will work. In my experience, very few workers, if any, develop loyalty to their employer and work regardless of what their salary is in relation to current market salaries. This is understandable and is not that bad, because hiring workers is another way to make sure that they work when you want them to work. The vast majority of them will work immediately after they take the job, and then never work again. This means that you almost always need to have a market offer open. Just make sure you can afford the salary that you're offering, and good luck.

Reason Sharp

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